Estimated time of reading: ~ 4 minutes

The European Union will face many challenges in 2025, and the energy sector is going to be one of them, as the bloc needs to find a balance between its energy security and the ambitious aims set for the green transition. In particular, the European governments are aware of the need to reevaluate some of the most advanced programs linked to the energy transition, as well as to change some of the main emission targets for the next decades. The European Green Deal will remain the central pillar of the EU’s energy policy, and by 2025, Brussels expects significant progress toward achieving its long-term target of becoming the first climate-neutral continent by 2050. Subsequently, increased efforts to decarbonise energy-intensive industries, such as steel, cement, and chemicals, could lead to new incentives or mandates for the use of green hydrogen and other low-carbon technologies. On this issue, we should take into account how the various positions of the member states differ on the timing and scope of their industrial plans, as well as the political will to effectively reach the target set by the EU Commission. On the economic side, every government in the EU is aware of the need and the advantages in pushing for the expansion of renewable energy, with a focus on solar, wind, and hydrogen technologies. As a consequence, we can expect that in 2025, more investments will be made in offshore wind projects and solar power integration, especially in southern EU countries. Still, the internal debate in different countries is dominated by the “resurgence” of the nuclear option, as this source is viewed by some member states, such as France, as part of the clean energy transition, while others, like Germany, have already committed to phasing it out. Still, in the case of Germany, the 2025 elections will be pivotal to determine how the future government, potentially led by the Christian Democrats (CDU) and its Bavarian counterpart (CSU), will decide to approach the issue. Nuclear plants in Germany could find a new life, or new projects could be launched in the coming years. Many governments are also sharing a growing interest in small modular reactors (SMRs), which could even receive funding for research and development as part of the EU’s innovation agenda as a potential solution for a source that should allow a minor impact on the environment. Generally speaking, some European countries may continue to lobby for nuclear power as part of the energy transition, especially if clean hydrogen production and other renewable solutions fail to scale as expected. It comes not as a surprise that the total cost of some sources has been shaped by external factors, like the limited amount of rare minerals that the EU economies can count on. Another issue to consider is the “threat” represented by the Trump administration in the US. The president-elect already warned the EU that it will face trade tariffs on its exports to the United States unless its member states buy more American oil and gas. “I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!,” Trump wrote in a post on his social media site Truth. This is a clear threat to the already existing process of energy transition in the EU, and the bloc should find a way to pursue the objectives set by the past Commission without entering a trade war against the US.

Written by: Francesco Marino