Fatih Birol (IEA): Europe Lags Behind China and the US After Monumental Energy Mistakes

The head of the International Energy Agency (IEA) criticized Europe for lagging behind China and the US after making ‘two historic monumental mistakes’ in energy policy, relying on Russian gas and moving away from nuclear energy.

Fatih Birol, the agency’s executive director, told the Financial Times that the European industry is now paying the price for these mistakes and that the bloc will need a ‘new industrial master plan’ to recover. Birol points out that the EU is falling behind China and the US in areas such as clean technology production and says this has happened due to a combination of heavy and burdensome regulations as well as higher energy prices. He adds that electricity prices in the EU are typically twice as high as those in the US.

– Existing industries, especially heavy industries, will experience a significant cost disadvantage compared to other major economies like China and the United States – Birol said to FT.

Data from the energy monitoring agency shows that the EU has successfully moved away from Russian gas after the invasion of Ukraine. In 2023, the EU produced more electricity from wind energy than from gas for the first time. Gas from Russia previously accounted for over 40 percent of the bloc’s supplies, but it fell to 15 percent in 2023 despite an increase in liquefied natural gas imports shipped from Russia.

Gas supplies from Norway and the US played a crucial role in enabling the EU to avoid power outages, making up 30 percent and 19 percent of total imports, respectively.

However, the debate over nuclear energy has become even more polarized among the member states themselves.

Countries like France, Hungary, and the Czech Republic advocate for nuclear energy, but other EU member states like Germany, Austria, and Luxembourg strongly oppose it, arguing that nuclear projects are often subject to delays and high costs and that they will drain funds that could be better spent on renewable energy sources.

Amund Vik, former Norwegian Secretary of State for Energy and senior advisor at the consulting firm Eurasia Group, said that ‘it is harder to execute an energy transition without nuclear energy’ because ‘consistent baseload energy is needed to support inconsistent energy production from wind and solar.’

– Some nuclear discussions are really healthy and some countries need nuclear energy. But some of the discussions that say ‘we shouldn’t invest in wind turbines, we should invest in new nuclear’ don’t help anyone – Vik says.

In 2019, the EU set one of the most ambitious climate goals in the world with a commitment to reduce emissions by 55 percent by 2030 and achieve net zero by 2050. Since then, the EU has been adopting laws that should transform the economies of member states to meet these rather unattainable goals. However, as some energy experts point out, politicians still fear citizens’ reactions to laws such as the ban on new internal combustion engines or stricter energy efficiency rules, so it is still unclear what the reactions will be when that time actually comes. They also note that green policies are slowly falling down the list of political priorities due to the turbulent geopolitical situation that ‘occupies EU leaders.’

Dan Jørgensen, the Danish Minister for Climate and Development, said that the EU needs to ‘do its homework’ and ensure that climate policy is integrated to maintain public support for the Green Deal. Jørgensen says if it had to be done in a way that ‘does not harm European competitiveness, employment, and does not lead to greater inequality but does the opposite.’ However, the problem is that everything has been done contrary to that, harming European competitiveness and leading to greater inequality.

– It is high time we lead a discussion on what all this looks like – concludes Jørgensen.