EU gets hit with $1 trillion energy bill as supply from Russia halted due to war

As a result of the ongoing Russia-Ukraine war, Europe has mounted roughly $1 trillion in energy bills in 2022, being described as the "deepest energy crisis in decades" that is speculated to worsen during the winter. The bloc is struggling to replenish its energy reserves as the deliveries from Russia have been cut off.

While the prices and costs for energy in the EU is depending on several factors like the prices of inputs, market competition and market integration conditions, regulatory and policy-related costs, taxation as well as consumers’ needs and behavioural patterns, the war, mainly expected to critically fluctuate the market prices until 2026, according to the Bloomberg's energy index. 

More facilities struggling to find alternative

The competition for tankers of fuel has intensified, and more facilities are struggling to find alternative means of import for liquefied natural gas. The market is expected to ease with a boost in the production capacity from the US to Qatar, but until then, no respite in the soaring energy prices is speculated for the bloc.

On December 19, EU energy ministers concluded the talks on the Market Correction Mechanism, which focused on limiting the episodes of excessive gas price spikes across the member nations. The EU formally approved two emergency proposals put forward by the Commission aimed at combating the high energy prices and ensuring the security of supply amid the shortage and other challenges. 

EU's Emergency Regulation was proposed on October 18 to introduce joint gas purchasing, new measures on transparent infrastructure use and solidarity between member states, and a new complementary benchmark for LNG as supply from Russia halted after the Nord Streams pipelines sabotage. The second Emergency Regulation aimed at simplification permitting procedures to accelerate the deployment of renewable energy, as well as introducing the regulation to reduce methane emissions in the energy sector. EU Commission President Ursula von der Leyen meanwhile attended the high-profile energy summit in Bucharest on energy security hosted by the President of Romania, Klaus Iohannis, and the Prime Minister, Nicolae Ciucă.

EU inked an agreement on a strategic partnership in the field of green energy development and transmission between Azerbaijan, Georgia, Hungary and Romania. The agreement will bring the EU closer to its partners in the South Caucasus and help both regions through the clean energy transition, while also boosting the security of supply, the bloc informed in a statement.