Europe's Energy Woes Shift from Supply to Affordability
Europe's biggest energy challenge is no longer supply shortages but expensive electricity. According to the 2026 Energy and Climate Security Risk Index (ECSRI), affordability has overtaken geopolitics as the largest source of energy security risk for most European economies.
The region's vulnerability to energy supply disruptions has decreased significantly since the 2022 Russia crisis, thanks in part to massive investments in liquefied natural gas terminals and increased reliance on US LNG. However, Europe still faces risks from global fossil fuel markets, including shipping disruptions, geopolitical instability, and competition with Asian buyers for LNG.
European natural gas and electricity prices were down 34% and 14%, respectively, from their 2022 averages by the end of 2025, but remained about 50% and 38% above pre-war levels. Elevated energy prices have already had a significant economic impact in Europe, with the continent losing over one million industrial jobs between 2019 and 2023.
Countries that combine renewables with reliable, low-carbon generation, stronger interconnections, and greater investment in grid infrastructure appear to be significantly more resilient than their fossil-fuel-dependent peers. To address these challenges, the EU could develop common deployment programs based on standardized procedures and commercially viable financing models.