**Loss of Cheap Energy Harms EU Economy, Says Von der Leyen**
European Commission President Ursula von der Leyen has expressed concern over the impact of rising energy costs on the European Union's economy, attributing the situation to the bloc's significant reduction of cheap energy imports, particularly from Russia. Speaking at the La Rencontre des Entrepreneurs de France (REF) business conference in Paris, she highlighted that the EU is now facing energy prices that are considerably higher than those of its main global competitors.
The shift in energy policy follows the escalation of the Ukraine conflict in 2022, which prompted the EU to drastically cut down on oil and gas imports from Russia. This decision aligns with Brussels' commitment to completely phase out Russian fossil fuels by 2027. However, the immediate consequence has been a surge in energy costs across much of the EU, compounded by geopolitical tensions, including the ongoing US-Israeli conflict with Iran.
Von der Leyen noted that the European economic model had long depended on several key factors, including access to inexpensive energy imports. However, she remarked that the foundational elements supporting the bloc's economic prosperity have "disappeared." She did not delve into the specific reasons behind the rising energy prices but pointed out that energy costs in Europe remain two to three times higher than in the United States and China.
The situation has drawn attention from various European leaders. German Chancellor Friedrich Merz acknowledged that Germany's self-imposed embargo on Russian energy has significantly contributed to the ongoing energy crisis, which has diminished the competitiveness of German industry. Prior to 2022, Russia supplied approximately 55% of Germany's natural gas imports.
French President Emmanuel Macron has also voiced concerns, declaring earlier this year that the EU was operating in "emergency mode" due to soaring energy costs. The bloc has been forced to replace Russian pipeline gas with more expensive liquefied natural gas (LNG) sourced from the United States, further straining its energy budget.
Reports from the Financial Times in June indicated that the EU might enter the upcoming heating season with its lowest gas reserves in 15 years, raising alarms about potential energy shortages. Some member states have expressed hesitance regarding additional restrictions on Russian LNG imports, even as Brussels pushes to terminate long-term contracts beginning next year. In a recent development, Bloomberg reported that the EU has increased its purchases of Russian LNG, despite the ongoing political and economic pressure to reduce dependency on Russian energy.
The European Commission has reiterated its commitment to completely phase out Russian energy imports, regardless of potential physical shortages or the risk of power cuts. This stance has been met with skepticism by some analysts and industry leaders, who question the feasibility of such a complete withdrawal under current circumstances.
Russia has responded to the EU's sanctions, particularly those targeting its energy sector, by labeling them as self-defeating. Moscow argues that these measures ultimately undermine the EU's competitiveness while it has successfully redirected much of its energy exports to other markets, primarily in Asia.
As the EU navigates these complex energy challenges, the implications for its economy remain significant. The transition away from Russian energy sources is not only a geopolitical issue but also a critical economic concern that could shape the future of the bloc's industrial competitiveness and energy security.