The panic of 2022 in European natural gas markets, when prices exploded to record highs and there were real concerns about whether Europe could secure enough supply, seems to be behind us. Volatility has declined, but gas and electricity prices are still far too high for European industry to remain internationally competitive. Traders can live with that. Aluminium smelters and fertiliser producers cannot. The reality is that Europe has only shifted its import dependency from low-cost pipeline gas from Russia to expensive LNG from the United States. That may buy us timebut it is not a long-term solution to our gas addiction. What Europe urgently needs is a coherent energy vision and strategy to take control of its own destiny and secure real energy independence.
Prices tell the real story of this ongoing energy problem. Dutch TTF, Europe’s gas benchmark, sits in the low to mid-thirties per megawatt hour. That is calmer than the crazy highs of 2022 but still double pre-Ukraine crisis averages and roughly three times U.S. domestic gas prices. The spread is a mix of logistics and profits: liquefaction, shipping, regasification, and the extra price Europe must pay to outbid Asia every time the market tightens. These high gas prices do not only hurt customers heating their homes and workplaces but they spill over into electricity prices, which remain volatile largely because expensive LNG-fuelled power plants set the power prices at certain hours of the day. In Germany, for example, daily spreads, the difference between high and low power prices, now average around €110/MWh, 3 times higher than before the Ukrainian crisis started. The result of this volatility is higher costs for all European consumers, from households to heavy industry, which has an enormous impact on competitiveness and living standards.
Today, Europe still imports the vast majority of its natural gas needs, with the U.S. now the biggest supplier. The growing concern is that we have a U.S. administration intent on making Europe even more dependent on American gas, oil, and coal and a European Commission that appears to have no coherent strategy for dealing with President Trump, or indeed the wider national security issues this dependency creates. Case in point, the announcement last week of a new trade deal between the U.S. and Europe seems to be a lose-lose for Europe.
One of the wildest pledges in that deal is Europe’s supposed commitment to buy $750 billion worth of U.S. energy over the next three years: a completely unrealistic target. To hit that number, the U.S. would need to divert virtually all of its LNG, coal, and oil shipments to Europe, triggering contractual chaos for suppliers and buyers alike. Even if those obstacles could be overcome, Europe simply doesn’t have the import facilities to take that much cargo. To further complicate the situation, commercial buyers are reluctant to sign the long-term LNG contracts Washington is pushing for, because they know two things: any future peace treaty between Russia and Ukraine will likely see pipelines from Russia reopened, bringing cheaper gas molecules back to market; and Europe’s gas demand is on a structural decline, making long-term fossil contracts risky and potentially stranded. Ursula von der Leyen’s deal with President Trump looks like political theatre designed to placate Washington, stave off tariffs, and hopefully buy time for Europe to come up with a real strategy.
Buying time makes sense, if there were serious thinking underway about life beyond expensive fossil fuel imports. Sadly, I see little sign of that thinking from Brussels or major European economies such as Germany, all of which seem fixated on doubling down on natural gas. Real energy security will not come from swapping Russian pipelines for American tankers. It will come from building an energy system that is cheap, abundant, and competitive on Europe’s own terms. Europe must learn to ‘feed’ itself, and there is only one way to do that: electrify everything that can be electrified, using locally produced renewables and nuclear, while using gas sparingly where electrons struggle.
The choice is stark. Europe can remain a Petrostate hooked on fossil fuels, exposed to geopolitical pressure and price shocks, or it can become an Electrostate built on electrification, innovation, independence, sustainability, and digitalisation. That is the only path to lasting energy security, competitiveness and future proving Europe.