In focus: Europe’s energy security caught between high prices and climate crisis

Winter is at our doorstep and concerns over the security of energy supplies are growing with each passing day. Over the past several months, governments and industries put their efforts into finding ways to tackle both energy and climate crises at the same time. The struggle continues with new regulations and incentives being introduced across Europe to address high prices and accelerate green energy projects.

This week, oil and gas company Neptune Energy called on the Dutch government to include an investment allowance in its tax plans, similar to measures already in place in Norway and the UK.

Neptune is urging the government to introduce an investment allowance in its plans to raise levies on energy companies to avoid risks to the country’s energy security and net-zero targets.

With an appropriate fiscal regime in place, Neptune said that, in addition to the planned €1 billion, it could invest a further €1 billion, including in lower carbon developments, repurposing existing offshore infrastructure to support carbon capture and storage and hydrogen production.

The Dutch government intends to significantly increase levies under the Mining Act for the energy sector in 2023 and 2024, with additional tax revenues helping finance support for Dutch homes and businesses facing high energy bills.

European Commission (EC) also proposed a new emergency regulation to fight high gas prices and energy crisis through joint gas purchasing, LNG price limiting mechanisms on the TTF gas exchange, new measures on transparent infrastructure use and solidarity between the Member States, and continuous efforts to reduce gas demand.

At the same time, the shipping industry is pushing for LNG as an alternative to traditional marine fuels, which is seen as ‘irresponsible in times of energy crisis’ by Transport and Environment (T&E) given that its recent study estimates that, in 2030, Europe’s shipping industry will need over 6.3 million metric tonnes of LNG to power its growing fleet of gas-powered ships – enough to power 7 million homes.

The study coincided with the adoption of the FuelEU Maritime report by the European Parliament, which voted in favour of a 2% mandate for green shipping fuels by 2030 on 19 October.

The report establishes a clear trajectory for greenhouse gas (GHG) intensity reductions calling for the maritime sector to cut its GHG emissions from ships by 2% as of 2025, 20% as of 2035 and 80% as of 2050 compared to the 2020 level.

Meanwhile, this week’s headlines were also filled with reports documenting the state of the tidal and wave energy markets once again highlighting the potential of this source of renewable energy.

A new report by the Offshore Renewable Energy (ORE) Catapult predicted that tidal stream energy could plummet below £80 (€90) per MWh by 2035 if current opportunity is realized such as scaling up the size and power of tidal devices, and the development of larger tidal stream energy farms. 

It was also estimated that the sector could contribute up to £17 billion (€19.5 billion) to the UK economy by 2050.

Furthermore, a collaboration between 14 international partners was established to deliver a €19.6 million wave energy project named WEDUSEA.

Co-funded by the EU Horizon Europe program and the UK’s innovation agency Innovate UK, the project’s ultimate goal is to create a technology deployment pathway for a 20MW pilot farm by achieving a significant decrease in the levelised cost of energy (LCOE) for wave energy industry.

Finally, it is worth noting that another key infrastructure project strengthening the EU’s energy security, the EuroAsia interconnector, entered the construction stage.

The interconnector is a Project of Common Interest (PCI) under the 5th Union List comprising a 1,200-kilometre subsea cable from Israel to Crete via Cyprus.

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