Europe's Energy Transition Shifts Dependence but Not Costs

Europe has made progress in reducing its reliance on Russian energy, but it has not achieved full energy independence. The continent has shifted from Russian pipeline gas to imported liquefied natural gas (LNG), primarily from the United States, but this has come at a higher cost. In 2025, EU gas imports reached 289 billion cubic meters, with LNG accounting for 45% of the total. While this provides flexibility, it also exposes Europe to global market fluctuations and geopolitical risks.

The energy transition has expanded low-carbon generation, but it has not resolved the structural issues embedded in Europe’s energy system. The EU remains a major importer of hydrocarbons, with a supplier mix that has changed but not eliminated dependency. For instance, the United States supplied 56% of the EU’s LNG imports in 2025, making it the essential supplier in this new system. This shift has not reduced energy costs, as household and industrial energy prices remain high.

In the second half of 2025, the average EU household electricity price was €28.96 per 100 kWh, three times higher than in the United States. Germany, for example, had one of the highest household electricity prices in the EU, at €38.69 per 100 kWh. Industrial electricity prices were also high, with the EU average for non-household consumers at €18.37 per 100 kWh. This cost disadvantage makes European industries less competitive internationally.

The full cost of a reliable power system includes not just the generation of renewable energy but also the investment in transmission, distribution, and backup capacity. The transition has also not ended Europe’s use of imported coal, as Russian coal imports were banned, but coal consumption and imports persisted. The challenge is to internalize the total cost of a secure, affordable, and dispatchable system without imposing excessive bills on consumers and industry.