EU to speed up electrification and review Arctic drilling to boost energy security

The European Union is preparing a variety of measures to accelerate the electrification of its economy while facing increasing scrutiny of its long-standing opposition to new oil and gas exploration in the Arctic, as policymakers respond to growing energy security concerns following the Middle East conflict.

The International Energy Agency (IEA) has called on the European Union to reconsider its opposition to new oil and gas exploration in the Arctic, arguing that the region could play a critical role in strengthening Europe’s long-term energy security.

Speaking in Brussels, IEA Executive Director Dr Fatih Birol urged the European Commission to take “a very close look” at its opposition to new Arctic oil and gas exploration, arguing that Norway remains one of Europe’s most reliable energy partners.

“I support the Commission to give a very close look at this issue, because it is extremely important for the European energy security,” Dr Birol added.  

“The world needs every drop of oil from Norway,” Dr Birol said, describing the country as a trusted supplier that “will not use energy as a weapon.” 

The EU currently supports a moratorium on new Arctic drilling on environmental grounds, but the policy is under increasing scrutiny as Europe seeks to strengthen its energy resilience. 

Norway, which is not an EU member but is the bloc’s largest supplier of natural gas, has repeatedly called on Brussels to abandon its support for the ban.

Norway’s mature gas fields are expected to decline during the 2030s unless new discoveries are made beyond existing producing areas, increasing the importance of future Arctic exploration.

Environmental groups have criticised any move to relax restrictions on Arctic drilling, arguing that new projects could take more than a decade to begin production and would do little to address Europe’s immediate energy security challenges. 

“Of course, there are environmental concerns that we have to take into account, and Norway is doing that. But to say no, there should be no oil and gas exploration in the Arctic doesn’t make sense for Norway.”

- Jens Stoltenberg, Norwegian Finance Minister

Norwegian Finance Minister Jens Stoltenberg said the recent disruption to global energy markets highlighted the importance of maintaining Norwegian oil and gas production.

“Of course, there are environmental concerns that we have to take into account, and Norway is doing that,” he said. “But to say no, there should be no oil and gas exploration in the Arctic doesn’t make sense for Norway.”

A new electrification strategy

In Europe’s increasingly complex energy strategy, the bloc is seeking secure and dependable fossil fuel supplies as it works to eliminate Russian oil and gas imports by the end of 2027. But at the same time, it is accelerating electrification and expanding renewable energy to cut emissions.

Draft proposals seen by Reuters show the European Commission plans to unveil a new electrification strategy on 17 July, which aim to reduce Europe’s dependence on imported fossil fuels after multiple geopolitical conflicts sharply increased oil and gas prices. 

Since late February, the war has added an estimated $57.1 billion to the EU’s oil and gas import bill, according to EU data.

The draft electrification strategy proposes setting a 2040 target for the minimum share of the EU’s overall energy consumption that should come from electricity. 

While no specific percentage has yet been included, the objective is to speed up the transition from fossil fuels to electricity across transport, buildings, and industry.

The strategy would support wider adoption of electric vehicles, encourage households to replace gas boilers with heat pumps, and promote the electrification of industrial processes by replacing fossil fuel-powered equipment with electric alternatives.

Financial and regulatory measures 

To help offset the high initial costs of sustainable energy technology, the Commission is exploring a variety of financial and regulatory measures.

These include exploring mandatory heat pump installations in public buildings through revised public procurement rules, stronger procurement targets for electric vehicles, and a framework allowing member states to reduce value-added tax (VAT) on household batteries, electric vehicles, and heat pumps.

Brussels also plans to launch an EU funding auction later this year to support industrial projects that generate heat using electricity and renewable energy, alongside proposals to phase out fossil fuel subsidies to improve the competitiveness of electricity relative to oil and gas.

The draft strategy describes energy independence as a strategic priority, stating that “an energy-independent Union powered by clean, abundant, homegrown, cybersecure, and affordable energy is a matter of sovereignty” and calling for a “radical shift towards efficient electrification of demand.”