EU energy transition and sovereignty: what lies ahead

Key takeaways

• Gas remains necessary medium-term energy source to keep power systems stable while renewables scale.
• European energy sovereignty extends across entire low carbon value chain, where critical materials and cleantech supply chains are increasingly exposed to geopolitical and geoeconomic tensions.
• EU has made meaningful decarbonisation progress, but technical constraints mean path to greater sovereignty will be long and investment intensive.

In a recent publication, BNP Paribas’ Economic Research department explores the EU energy transition and sovereignty. While the low-carbon transition is advancing, persistent reliance on gas, fragile supply chains and geopolitical tensions continue to challenge both energy sovereignty and the pace of change.

Energy crisis in Europe: is progress on energy sovereignty being overstated?

BNP Paribas’ Economic Research in a recent report discusses the impact that the conflict in the Middle East can have on EU energy transition and sovereignty, in addition to Europe’s dependence on imported gas previously brought to the fore by the 2022 energy crisis. The sharp rise in oil and gas prices – which, for now, are lower than during the previous shock of 2022 – and particularly gas, is expected to have significant negative economic consequences.

While critics argue that Europe has made slow progress since 2022 and has not significantly reduced its dependence on gas, the author states that this issue has been misrepresented: “Our analysis of the convergence between the energy transition and energy sovereignty in Europe shows that the continuing role of gas in the European electricity mix is not incompatible with efforts to achieve energy sovereignty.”

BNP Paribas’ Economic Research highlights that it is essential, at least in the medium term, to rely on a controllable energy source to make progress without compromising the operation of electricity systems in light of the complexities of integrating renewables into existing systems, the need for supply flexibility that cannot be managed by battery storage alone for the time being, and the current lack of sufficient alternatives: this is precisely the role that gas currently plays.

Sovereignty key across the full energy value chain

The author notes that the sovereignty applies not just to oil and gas but to the entire value chain of the low-carbon transition. European policy is also addressing this aspect, for example by forging international partnerships on critical materials, which underscores an urgent need to step up efforts on both aspects, in light of the current situation in the Middle East and the resulting energy crisis.

Progress made in decarbonising Europe, but still a long way to go

The European Union stands out as the region that has achieved the most significant reduction in greenhouse gas emissions among advanced economies. Since the introduction of its Green Deal in 2019, the share of renewable energy in the European electricity mix has risen from 34% to 48% (2025 figures).

However, the pace of progress towards energy sovereignty is slow, with Europe still heavily dependent on imports, both in terms of its primary energy mix and the supply chain for the equipment needed for the low-carbon transition.

Technical constraints delaying progress to European energy sovereignty?

The author points to the various technical aspects that are delaying progress towards greater sovereignty. On the one hand, integration of renewable energies into electricity grids is complex, largely as a result of the intermittent nature of renewable electricity generation, which reduces its flexibility, as well as insufficient electrification of energy uses. On the other hand, new infrastructure is needed to develop battery capacity, while adaptation to the power grid is lengthy and faces production chain pressures. He also notes that the development of data centres in concentrated locations is disrupting the grid, particularly in Ireland for example.

A cleantech value chain weakened by the geopolitical and geo-economic situation

The potential for the development of clean technologies (cleantechs) in Europe is substantial. The author points out the current lack of production capacity in this sector, mainly due to the considerable cost gap when compared with Chinese competitors. In terms of the number of patents filed, Europe has been lagging behind China since 2017, though the gap is narrowing.

He singles out the vulnerability of the clean technology value chain to geopolitical and geo-economic tensions as an important obstacle. Access to critical materials has become central to international agreements, and trade restrictions have proliferated. Rare earths, in particular, have assumed geopolitical significance due to ever-increasing global demand.

From Green Deal to RESourceEU: how the EU is building energy sovereignty

The implementation of ambitious programmes, such as the Green Deal and Fit for 55, together with Europe’s current production capabilities in clean technologies, should facilitate progress on both fronts, according to BNP Paribas’ Economic Research. Meanwhile, European sovereignty features prominently in transition programmes. RePower, launched in 2022, aims to reduce European economies’ dependence on Russian oil and gas, and the Green Deal Industrial Plan (2023) further enhances competitiveness and sovereignty in the transition industries. More recently, the European Commission introduced its RESourceEU project (December 2025), aimed at ensuring Europe’s access to rare earths and critical minerals.

The EU energy transition and sovereignty agenda is advancing, with gas still supporting the European electricity mix as renewables and grids scale. Achieving European energy sovereignty means decarbonising Europe, investing in networks, storage and flexibility, and drawing on a resilient European cleantech supply chain from critical minerals to manufacturing capacity.

Read the full EcoInsight for an overview of the European strategy on the low-carbon transition and energy sovereignty.