The particular focus of this paper is how Europe is being affected by the energy crisis, what policies and steps the European Union (EU) is taking to deal with the situation, and what the implications will be for European energy security. The paper also discusses geopolitics and climate change policy, along with their implications for markets, government policies, international relations and global energy security.

According to the author, the scope of Europe’s energy crisis is unprecedented - wholesale prices of electricity and gas have increased by a factor of 15 compared to early 2021. Whereas the EU has been able to shift its dependence to energy supplied from countries like the United States and Norway, energy prices have been both rising since mid-2021 and volatile due to changing commodity prices, heat waves, low water levels, and cutbacks in nuclear generation.

Consequently, the EU’s ambitious targets for renewable power mean that the demand for rare earth and critical minerals, crucial for the manufacture of a renewable energy infrastructure, may far exceed supply. The EU system, burdened with regulation and bureaucracy, risks losing out to the new incentives-based system in the US.