Europe's Next Energy Crisis: Lessons from the 1970s

The euro area is facing another energy crisis, echoing the 1970s when large oil shocks had a profound impact on Europe's economy. The current challenge is not just about absorbing external energy shocks, but also to reduce future exposure to fossil fuel price volatility.

In the 1970s, the weight of coal and oil declined significantly in most European countries, while nuclear energy gained ground. Natural gas and renewables also saw an increase in total energy supply. This diversification reduced Europe's high exposure to oil-dominated energy systems.

However, fossil fuels remained deeply embedded in sectors such as transport, heating, and industry. Today, the technologies needed for structural change exist on a large scale and have become increasingly competitive. According to the International Renewable Energy Agency, 91% of new renewable power projects commissioned in 2024 were cheaper than fossil fuel-based alternatives.

The share of renewables in electricity generation has increased significantly, with renewables generating a record 47% of total EU electricity in 2024. But Europe still relies heavily on imported energy products, spending €336.7 billion in 2025 and an extra €27 billion since the war in Iran started.