The views expressed here are from Ugnė Keliauskaitė and do not necessarily reflect those of the think tank Bruegel.
Do your findings suggest that Europe is shifting from fossil fuel dependency towards new forms of dependency, for example on critical materials or external clean energy supply chains?
Ugnė Keliauskaitė: China dominates global production of the clean technologies most relevant to Europe’s transition, holding most of the global production capacity in solar panels, batteries and EVs. However, Europe’s dependence on clean technology and its dependence on fossil fuel imports are very different in nature. With fossil fuels, dependence is permanent and operational. That is the leverage Russia exploited in 2022, and what the Iran conflict is now threatening again. With clean technology, dependence is largely concentrated in the construction phase. Once a solar panel is installed, the “fuel” is free and entirely domestic. Nobody can sanction European sunlight; this is a structurally different and more manageable vulnerability.
Secondly, domestic gas and oil production in the EU is limited; the EU therefore relies almost entirely on crude oil imports. In the clean technology supply chain, there is still an opportunity to establish a strong domestic manufacturing base across several sectors. In fact, investment in clean technology manufacturing is slowing in China and the US, while investment in Europe remains broadly stable.
What impact could a lack of oil have on access to renewable energy, and on industrial production?
Ugnė Keliauskaitė: Oil is still the dominant primary energy source in Europe; disruptions and high prices affect the economy, drawing resources away from other uses. We should be careful not to compromise investment in alternatives to fossil fuels when resources are tight, because the fossil fuels we still have to import are likely to become much more expensive.
What would be the best strategy, or the key areas for improvement, for Europe to reduce its vulnerability to energy crises, as experienced with Russia and Iran? What solutions can be proposed?
Ugnė Keliauskaitė: Fossil fuel dependence in Europe means remaining vulnerable to external pressure and reliant on gas suppliers. To avoid repeating these vulnerabilities, Europe must prioritise the transition to a system based on domestic generation. In the EU’s case, this means electrification powered by renewable energy.
The EU has made real progress on the supply side: the share of renewables in electricity generation rose from 37% in 2021 to 48% in 2025. However, the share of electricity in final energy demand has been stuck at 23% since 2011. In transport, it is the lowest among sectors, at just 2%.
What is needed are targeted measures that incentivise electrification. There is a range of options, from financial instruments to reduce the relatively high upfront costs of electric vehicles and heat pumps, to measures that bring down electricity prices, which in some countries remain as much as three times higher than gas.
How does the energy transition align with industrial demand and competitiveness?
Ugnė Keliauskaitė: Europe has a structural disadvantage in a system that relies on fossil-fuel generation. Gas itself is roughly three times as expensive in Europe as in the US. Remaining reliant on fossil fuel imports means European industry faces higher energy costs and remains more vulnerable to external price shocks, as seen in the situation in Iran. Higher renewable shares directly suppress wholesale electricity prices through the merit-order effect. Spain, having reduced the share of time that gas sets prices from 75% in 2019 to just 15% by 2026, faced structurally lower electricity prices during the Iran shock than Italy, where gas sets prices 90% of the time. Cheap, stable electricity is a competitive advantage for industry.
In terms of infrastructure, is it possible to run a system dominated by renewable energy?
Ugnė Keliauskaitė: However, there are infrastructure-related challenges to consider. Fossil fuels have a built-in storage advantage: it is possible to stockpile gas, coal and oil, and release them when needed. Renewables generate electricity when the sun shines and the wind blows, which is not necessarily when demand peaks. This creates a structural mismatch that requires a new infrastructure logic.
First, grid infrastructure and cross-border interconnections must keep pace with generation capacity. Second, demand-side flexibility must become a systemic feature. Smart EV chargers, heat pumps and battery storage can shift consumption to match supply, reducing the peaks and troughs that make renewable-dominated systems hard to operate. Third, storage and back-up generation become much more important. Finally, a renewable-dominated system implies a new industrial geography: a system built on cheap renewable electricity rewards proximity to generation. Energy-intensive industries should increasingly locate where renewable energy is abundant and inexpensive, such as near wind resources in the North Sea or solar resources in southern Europe.