EU Shifts Strategy: Less Aid, More Renewables as Energy Costs Rise

The European Union's ability to provide large-scale support to citizens and businesses is limited, said European Commissioner for Climate Wopke Hoekstra, citing the ongoing energy crisis.

Photo: Flickr by Jorge Franganillo, https://creativecommons.org/licenses/by/2.0/

Brussels, Belgium

Limited Budgets and Rising Energy Costs

According to him, due to constrained budgetary resources, EU member states cannot fully compensate households and businesses for rising energy prices.

Hoekstra noted that this problem has no "simple financial solutions,” while residents across the European Union continue to feel the impact of rising costs.

"Citizens continue to face sharp increases in commodity prices, and there are no shortcuts here,” he said in an interview with Financial Times.

Brussels Sees Structural Shift as the Only Way Out

Is there a way out of this situation? There is, according to the European Commission, and Hoekstra once again pointed to it.

He stated that the current situation demonstrates the need for the EU to reduce its dependence on imported fossil fuels.

As key measures, he named the accelerated development of electrification, nuclear power, and renewable energy, as well as the expansion of energy infrastructure.

Fossil Fuels to Become the Most Expensive Option

Recently, European Commission President Ursula von der Leyen stated that electricity generated from fossil fuels will soon become the most expensive option in the EU.

"For our continent, the harsh reality is that energy from fossil fuels will become the most expensive option in the coming years,” she said.

According to von der Leyen, renewable energy sources and nuclear power — particularly the development of small modular reactors — should help correct the situation.

Strategic Choice: Less Russian Energy, More Expensive Imports

It is clear where Brussels is placing its bets.

This also serves as a response to European politicians who advocate maintaining or increasing oil and gas supplies from Russia. That position has become too prominent to ignore.

However, the European Commission has repeatedly stated at various levels that abandoning plans to phase out Russian energy imports would be a "strategic mistake.” This means that the choice has been made in favor of paying more for supplies from other countries.

The United States comes first in this regard. Under the trade agreement between the US and the EU, European countries have committed to purchasing American energy resources worth $750 billion by 2028. Revising these obligations is unlikely, as Washington is closely monitoring their implementation.

Hundreds of Billions Already Spent

As for support measures, it is worth recalling that during the COVID-19 pandemic, the EU created a special mechanism to preserve jobs and support the population — the SURE program.

The total volume of financial assistance provided through SURE amounted to €98.4 billion.

However, far more funds were spent during the 2022 energy crisis.

According to the analytical center Bruegel, the total amount allocated by European countries (including the United Kingdom and Norway) to combat the energy crisis approached €800 billion. Direct support measures for citizens and businesses within the EU were estimated at around €681 billion.

According to a European Commission report, special anti-crisis measures in the energy sector alone cost EU countries €187 billion in 2022.

In total, nearly €900 billion has been spent over several years — and this does not even include all expenditures, such as centralized vaccine procurement during the pandemic.

Brussels Prepares the Public for Constraints

Against this backdrop, it becomes clear why European officials are already preparing the public for limited support, repeatedly emphasizing that there will not be enough money for everyone.