Kathmandu— European Commission President Ursula von der Leyen stated that the European Union’s economic model, previously reliant on inexpensive energy imports, has been negatively impacted by the loss of those resources. Speaking at a business conference in Paris on Thursday, she noted that key pillars of EU prosperity have disappeared as energy costs surged following reduced Russian oil and gas imports after the 2022 escalation of the Ukraine conflict. The shift has left European prices significantly higher than those in major competitor nations like the United States and China.

Energy Shift Impacts Competitiveness

Von der Leyen highlighted that for a prolonged period, the EU’s economic strength was built on access to affordable energy imports. However, she acknowledged this foundation has eroded, leading to a competitive disadvantage for European businesses. She noted that current European prices are two to three times higher than those in the United States and China.

German Chancellor Friedrich Merz recently stated that Berlin's embargo on Russian energy was a primary driver of the “ongoing energy crisis” impacting German industry’s competitiveness, noting Russia previously supplied around 55% of Germany’s natural gas.

Rising Costs and Reserve Concerns

The EU drastically reduced its reliance on Russian oil and gas following the conflict in Ukraine, with a commitment to completely phase out Russian fossil fuels by 2027. This transition has been compounded by geopolitical factors such as the US-Israeli war on Iran, further increasing energy costs across the bloc.

The Financial Times reported projections from consultancy Wood Mackenzie indicating that the EU could face its lowest gas reserves in fifteen years heading into the upcoming heating season. Some member states have expressed reluctance towards additional restrictions on Russian LNG imports as Brussels aims to end long-term purchases next year.

EU Maintains Phase-Out Despite Challenges

Despite resistance from some members and a recent increase in EU purchases of Russian liquefied natural gas (LNG), the European Commission remains committed to its goal of completely phasing out Russian energy imports. This stance will be maintained even if it leads to physical shortages or potential power cuts.

French President Emmanuel Macron previously warned that the EU was operating in “emergency mode” due to soaring energy costs after replacing cheaper Russian pipeline gas with more expensive LNG from the US.

Russia Redirects Exports

Moscow has consistently argued that EU sanctions, particularly those targeting its energy sector, are counterproductive and harm the bloc’s economic standing. Russia has responded by redirecting a significant portion of its energy exports to other markets, primarily in Asia.

The European Commission continues to pursue a complete phase-out of Russian energy imports despite ongoing challenges to affordability and supply, while member states grapple with balancing energy security and economic competitiveness.

(With inputs from RT)

Originally published on abcnews.com.np.