Europe’s energy future is running out of time

Energy is the pillar of modern society. Without energy, no innovation, no economic growth or progress. And yet, energy security, long taken for granted for decades, has a completely different reality today. Geopolitical tensions, market volatility, new technology leaders and decarbonization requirements have unleashed the perfect storm. For Europe, this is not just an energy challenge, but a long-term strategic issue. The Ukrainian conflict, which is more than three years now, has unveiled weaknesses that could no longer be ignored.

Europe has been relying for decades on external providers to satisfy its energy needs, something that has unveiled huge vulnerabilities when fuels have been employed as weapons of politics.

At the same time, rising global demand for energy, driven by digitalization and economic recovery across geographies, has made access to energy sources more disputed and uncertain. Europe has seen an unprecedented transformation of the energy sector in the past three years. Before the war, almost half of the gas consumed in the European Union (EU) was Russian. Today, this dependence has been substantially cut back. The EU reaction was to invest in liquefied natural gas (LNG), develop strategic infrastructure, and accelerate the electrification of the economy. What had been considered a long-term climate goal now became an urgent imperative to provide economic and geopolitical stability. Portugal, in contrast to some of its European partners, was more prepared for this new reality. Without Russian gas via pipelines, the country invested early in LNG installations and has significantly bet on renewable energy sources. At present, the successful strategy puts Portugal in an advantageous position to lead the energy transition in Europe. In January 2025, figures show that 79.9% of the national electricity matrix is now renewable, with fossil fuel thermal power only representing 14.5% of production. Energy security today is not merely ensuring provision of energy.

Having a stable, dependable supply of electricity and gas is important, but that is not enough. One must have an assured resilient, diversified and sustainable energy system that can withstand geopolitics crises, market volatility and rising global demand.

The Ukraine conflict was merely the beginning of the iceberg of an unfolding long-troubled energy crisis. Underneath, there are decades of structural vulnerabilities, underinvestment in networks and too much bureaucracy, and it is evident that diversifying energy sources and speeding up the shift to renewables are no longer options but pressing imperatives. Never have there been such strategic decisions for European leaders to make about the energy fate of the Old Continent. In a situation marked by consecutive crises, exponential growth in global demand for energy and strategic products, and environmental concerns, the assurance of a stable energy supply requires far more than diversification of sources and technological progress. Improved energy efficiency and energy education are required, creating citizens and companies with greater awareness and resilience as consumers. Efficiency in energy consumption should no longer be regarded as a technical specification or secondary benefit. It is, nevertheless, a key tool for the European energy system and cost stabilization. European companies spend between three to five times higher prices on natural gas compared to their North American counterparts. At the same time, Europeans continue to pay top dollar for power, whereas energy in America and China is cheaper, an aspect which deciphers the industrial competitiveness of Europeans. When we look at China, we see how things get even worse in Europe. The government of Beijing subsidizes the companies directly through subsidies and tax breaks, providing them with an enormous competitive advantage.

As of 2023, nearly 99% of Chinese companies had received direct subsidies, totaling more than 32 billion euros. These supports, together with lower energy prices, offer an environment where Chinese companies can compete mercilessly in the global market, but European companies are faced with barriers that put them at a disadvantage.

US President Donald Trump has recently imposed a 25% tariff on US imports from the European Union on key industries such as the auto industry. This, to reduce the US trade deficit, is mounting pressure on the already struggling European economy which is struggling with domestic issues and global competition. Be aware that it is not by chance that the EU prices are high. They are due to a combination of several factors such as low investment in energy infrastructure, persistence of traditional rules of the market and heavy tax for energy. Europe needs to change the taxation policy for energy, harmonize taxation of gas and electricity and invest in a competitive energy market across EU member states. The other significant concern of Europe is investment in power grids. The growth of the economy depends on new infrastructure to ensure that the market can be integrated with renewable energy and produce energy storage technology. However, with a fragmented market, Europe is failing to exploit the maximum use of renewable energy in European space. This obstacle will not enable the green economy to grow and incorporate new technologies such as artificial intelligence (AI) applied to energy management.

Europe needs to find solutions that render it more energy independent and use its resources to the fullest, not just to ensure its energy security, but also to remain competitive in an increasingly troubled world. The US and China are progressing so much that pressure is building on the European economy.

If the continent is to continue playing leadership and attaining sustainable economic growth, then it must invest in an innovative, efficient and sustainable strategy. But between ambition and reality there’s a disturbing margin. Over the past decade, Europe’s share of world revenue from technology dropped from 22% to 18%, but that of the US increased from 30% to 38%. The US and China take the lead instead in new areas such as AI and 5G, whilst Europe remains still more focused on traditional technologies. This innovation deficit is a threat to the short-term competitiveness of Europe that very much exists. The AI race is one such great illustration of this transformation at the global level and waning European hegemony. The fierce war between companies like OpenAI’s ChatGPT and DeepSeek, a new Chinese company that has become a challenger of US dominance in AI, is an indicator of how nodes of innovation are anchored in non-European countries. While the US and China are investing heavily in new technologies, Europe is trying to find its niche but is hampered by straitjacket regulations, a dearth of investment and the lack of technology giants that can compete globally. The answer has been well-known for some time, and it lies in the expansion of investment in R&D, supporting innovative start-ups and promoting strategic collaboration between Member States. ADENE has played a central role in this in Portugal, stimulating innovation in the energy sector, encouraging collaboration between energy institutions and agencies, and supporting the establishment of policies to ensure a more efficient and sustainable energy market. In 2025, ADENE reinforces such engagement with strategic action that advances citizens, businesses and policymakers towards more effective and sustainable consumption of energy. Some of the high-performing initiatives include the Energy Route, due to spread this year to Portuguese-speaking African countries, promoting cross-national energy literacy. This will raise awareness for youths and adults alike on how individual simple changes to daily lifestyles could make significant differences as savings and ensure that the future becomes sustainable.

ADENE Academy is also a key vehicle for the training of energy sector technicians and managers, certifying professionals in the creation of new areas of the energy transition, including efficient building management, sustainable mobility and industry decarbonization.

The Building Energy Certification System is still an example of how to promote energy efficiency in the real estate sector, making owners and tenants conscious of the benefits of investing in more energy-efficient buildings, not only for environmental purposes, but also economically. But innovation is not enough if society does not prepare itself for the transition. Energy literacy must be a priority. There is no point in installing millions of solar panels if no one knows how to unlock their full potential. Energy efficiency starts at home, in small gestures, and is transferred to business, which needs to invest in smart solutions to save money and become competitive. Europe is at a crossroads. The transition is underway but needs to be accelerated. To achieve a more sustainable and resilient Europe, we must invest today. Energy efficiency is no luxury, but the basis for the continent’s security, economic growth and energy independence.