This winter, Europe will face the most severe energy crisis in recent decades, putting the continent and beyond at risk of high inflation and a recession half a century after the concept of the “energy weapon” was first coined. “The oil weapon,” a US general wrote in 1974 after oil prices spiked in many Western countries due to political disruptions in the Middle East, was being used as a peaceful and seemingly innocent means to undermine NATO and Western economies resulting, without the direct involvement of the Kremlin, in an “economic war by proxy.”

Of course, Russia’s military aggression against Ukraine is neither innocent nor indirect—it is the center of the current global energy disruption, with the Kremlin trying to force the energy-dependent European Union (EU) to lift the sanctions it imposed in response to Russia’s invasion of Ukraine on February 24.

On March 8, the EU announced its REPowerEU plan to phase down, and ultimately end, its dependence on Russian energy by 2030, as well as accelerate a green transformation of the sector, with the 2030 target for renewable energy being revised up from 40 to 45 percent. The plan also pays more attention to energy conservation and efficiency. The European Commission estimates that delivering REPowerEU objectives requires an additional investment of €210 billion between now and 2027, but this would save almost €100 billion per year in reduced fossil-fuel imports.

While this longer-term approach could be considered a conservative response to a war that was almost universally viewed as catastrophic for Ukraine and deeply troubling for Europe in general, it can also be viewed as the technocratic bloc’s baseline framework for shifting energy policy. Given that more than half of Russia’s export revenues came from energy in 2021, more targeted measures followed from both the EU and individual member states in regard to Russia’s coal, oil, and gas.

First, the EU introduced an embargo on Russian coal in its fifth package of sanctions, agreed on this past April and put into effect last month. Of the three fossil fuels imported from Russia, coal plays the least significant role in the EU market, and it is considered the easiest to replace through other sources and resources.

Oil proved a trickier target. In its sixth sanctions package, agreed in June after almost a month of negotiations, the EU imposed a partial ban on Russian oil, which effectively bans seaborne crude oil and petroleum products, but excludes pipeline imports to accommodate countries including Hungary, Slovakia, and the Czech Republic. Germany and Poland have voluntarily opted to end pipeline imports. The EU has said these measures will reduce oil imports by 90 percent when the ban comes into effect at the end of the year.

But it is gas that is the main source of strain. Prior to the invasion, EU reliance on Russian gas was very high—about 40 percent of all gas consumed—and a lack of natural gas suppliers and infrastructure bottlenecks complicated immediate relief of this dependence, opening the door for Russia to interfere in European energy markets.

By the end of March, Russia was demanding that “unfriendly countries” pay for gas in rubles, and it later cut off supplies to the EU member states that refused: Poland, Bulgaria, Finland, Denmark, the Netherlands, and partly Germany. This was the start of Moscow’s crooked game with pipelines delivering gas to Europe. It imposed sanctions against the Yamal-Europe transit pipeline, which runs to Germany through Belarus and Poland. When Ukraine reported that Russian forces were attempting to interfere with the operation of gas transit equipment in occupied territories, Gazprom started underusing the Ukrainian transit route, violating its contract. Gazprom gradually reduced deliveries through the Nord Stream 1 pipeline, suspending it in late August. The Kremlin stated that the pipeline would not operate at the designed capacity until sanctions were lifted.

As of early September, Russian gas deliveries to Europe have fallen about five times below usual levels, and 13 EU member states have not received Russian gas or experienced reduced supplies. Gas prices were 10-14 times higher than at the beginning of the year, reaching $2,500-3,500 per thousand cubic meters. And electricity prices hit a record at 1,000 euros per MWh. To solve the problem of surplus, Gazprom was burning its natural gas.

Hot weather contributed to the crisis over the summer. It restricted the operation of nuclear power plants in France (turning the country into an electricity importer) and Germany. In addition, dried-up rivers created obstacles for coal deliveries and affected hydropower plants.

Under such circumstances, European citizens are distressed by rising bills. Many companies may face collapse or forced reductions in production, along with resulting job losses, because of energy costs. Countries are already experiencing skyrocketing inflation. And governments are concerned about surviving the winter both politically and in terms of the support they can afford to provide to households and businesses.

The energy crisis was not an ultimate aim for Russia. It was done to provoke a political crisis in European states in order to give Russia a stronger hand in negotiating to lift some sanctions. But despite the acute harms being felt across European economies, Russia has so far not achieved its goals. According to the most recent survey, 78 percent of Europeans support the economic sanctions imposed by the EU against Russia; 86 percent of respondents believe that the EU should reduce its dependence on Russian energy; and 78 percent have recently taken action to reduce their energy consumption or plan to do so soon.

How Russia used energy means over Europe before the current crisis

This is not the first time the Kremlin has manipulated energy markets. During the severe frosts in Europe in late January and February 2012, Russia refused to supply extra gas volumes to help with the energy shortage; markets reacted with price spikes. The Kremlin blamed renewables for the crises and the failure of spot markets to respond to increased demand. Analysts suggested that, while there was no gas shortfall in Russia, political considerations, as well as Gazprom’s lack of storage capacity, played a role in the crisis.

In 2021, Europe experienced a gas rally—market natural gas prices had risen ten times during the year—initially driven by a “post-Covid” economic recovery and the relaxing of pandemic-related restrictions. These caused higher demand for gas and coal globally. However, production, especially of coal, had not recovered fully in some regions. Pressures on other energy sources, including droughts that affected hydropower plants, also increased demand for coal and gas. Likewise, higher gas demand in Asia in a post-Covid recovery affected liquefied natural gas prices worldwide.

In the case of Europe, additional factors, including low winds, together with higher demand in hot periods of summer and cold snaps in winter, pressured the market and prices. The lack of natural gas and its high price increased demand for coal, which pushed carbon emission prices up and further contributed to higher electricity prices.

But another critical factor that put pressure on the price of natural gas and, correspondingly, electricity, was Russia’s undersupplies. In the second half of 2021, Russia refused to add more gas to the already-in-crisis European market, and Gazprom did not fill its gas storages in Europe in time. Russia fulfilled its long-term contracts but supplied less gas to spot trade. Again, the Kremlin blamed Europe’s energy transition and a shift toward spot trade pricing instead of long-term contracts (when gas price is linked to oil price or the “take-or-pay” principle is used) for the gas rally.

Russia favored this undersupply for obvious reasons: raised prices increased Russian export revenues. In 2021, Gazprom earned a record high profit. Pushing Europe into long-term contracts would mean more financial predictability for Gazprom and could help to slow down the EU’s energy transition—a threat for an energy exporting country.

More insidiously, these undersupplies were used to “persuade” the EU to launch the already constructed Nord Stream 2 pipeline as soon as possible. Russia promised extra supplies would be made available once the pipeline was put into operation, despite there being no lack of capacity to supply the necessary volumes of gas.

The energy crises of 2021-2022 can be seen as a result of some European states neglecting their colossal energy reliance on Russia and the risk of the Kremlin misusing this leverage. While some countries—Central and Eastern European states in particular—have long argued that closer economic interdependence with Russia presented a security risk, Germany, which is the largest consumer of Russian gas in the EU, treated energy imports and dependence mostly as economic, not political and security, issues. Germany was looking to become the biggest gas-transit state with the construction of pipelines under the Baltic Sea. It defended these projects as part of its policy of “change through trade,” the theory that deepening economic ties would foster more peaceful, mutually beneficial relations. Lessons from 2014, when Russia annexed Crimea, went unlearned.

How can Europe cope with the crisis and withstand Russia?

Europe’s transition away from Russian energy together with the recent sanctions has further inflamed the tensions between them. Russia continues to bet heavily on its ability to hold European governments hostage both politically and economically through its market meddling. However, most EU member states are demonstrating a readiness to withstand this pressure.

Crucially, the crisis has drastically changed the EU’s perception of Russia’s energy policy, now using words like “blackmail” and calling out Russia’s manipulation of energy as a weapon. In Germany, the most prominent Russian energy ally, the economy minister Robert Habeck, said it was “stupid” to have let the country become dependent on Russia for about half its gas supplies.

Realizing the risk of completely cutting off gas supplied by Russia during colder months, the European Commission adopted a plan of voluntary decrease of gas consumption this winter by 15 percent. This stipulated saving gas and substituting it with alternative sources (including coal) with no regard for environmental impacts. Only Hungary rejected the idea and later received more gas from Russia, despite previous commitments to reduce reliance on Russian gas. Member states agreed on joint gas purchases and to coordinate its use in the case of shortages in some countries. Coal power plants closed in previous years will come back online. And some countries are reviewing their earlier plans to move away from or refuse to build nuclear power plants.

European states have fulfilled their targets on gas storage more quickly than planned, but storage will not completely make up the gap in gas supplies. Some energy conservation will be necessary.

In addition to high energy prices, Europe must deal with financial imbalances in markets. Some energy companies—especially those working in oil and gas production, as well as some in renewable power generation—are experiencing super-profits. In many cases, however, energy suppliers have experienced huge losses. Governments may resort to taxing super-profits and use these revenue streams to finance other companies and subsidize households (something being discussed in Germany). And the countries that do not have super-profiting energy companies will use other sources for subsidization (e.g., Greece will use tourism revenues). We may also see governments providing loans (as planned in Italy), buying energy companies suffering from illiquidity, providing liquidity guarantees (like in Finland and Sweden), or even some nationalizations.

Governments may also cap non-fossil fuel electricity market prices (the case of nuclear power in France). Some governments are looking at fixing household utility prices for a year or so (discussed in the UK) or cutting these with direct subsidies (like in Norway and Austria) for specific groups of households. To reduce energy prices, some states will continue cutting taxes (like the Netherlands and Germany).

The European Commission may cap the price of gas coming from Russia. The Kremlin announced it would halt supplies in this case. If so, Europe should be ready to introduce mandatory gas and electricity savings alongside the steps mentioned above to protect households and companies.

While the invasion of Ukraine has awoken Europe to the security risks of energy dependence, it can also be argued that, had the security situation not forced change, the climate crisis and the post-Covid economic landscape would—or should—have done something similar. This is important because it might provide insight as to why Putin’s strategy—to provoke energy disruption in Europe as a means to another end—is failing.

In February 2021, even as Russian troops amassed on the Ukrainian border, Jason Bordoff argued that winter-time energy crises in Europe were not an aberration, but that “Europe’s energy woes today reflect the success of its own reforms to liberalize European gas markets and shift to reliance on market prices.” He warned that these reforms have not been followed by the necessary regulatory measures to handle the precarity to which the markets are extremely exposed. And he called for many of the measures toward greater energy security and saving now underway, as well as investment in transport and import infrastructure.

From this perspective, Russia’s war against Ukraine can be viewed as a catalyst for a much-needed transition. The war is helping to justify large-scale market interventions that may have been ideologically difficult for the EU to pursue without the shared purpose of opposing Russian warmongering. The responses have been typically technocratic, but broader, speedier, and more political than the EU might otherwise have had an appetite for.

Importantly, as the energy crisis spirals into a more diffuse cost-of-living crisis, European citizens don’t appear to be blaming their governments for not easing the sanctions and softening the blow to their own economies. Their demands are generally focused on what their governments can do for them domestically and how the EU can support this internally. If anything, Russia’s role in the crisis might even help insulate Western governments from some of the public backlash they will likely face as the energy crisis deepens this winter.

In short, the EU response has not necessarily been one of realpolitik or Cold-War-like politics. It has to some extent refused to engage with Russia’s weaponization of energy on its terms.

Impacts: far beyond tomorrow

The European Commission’s political decision to end EU dependence on Russian energy was a seismic policy shift that will have lasting effects on the economic and security landscapes of the region.

Considering the speed of developments and the level of the EU’s dependency on Russian gas, it is not easy to make accurate short- and mid-term forecasts. It is possible that under existing supplies and price pressure, Russia will gain a few new allies, like Hungary, especially if an energy crisis leads to a political crisis in some states. But this effect, at least as it relates to energy, is unlikely to be sustained as the European Commission’s new requirements for supply diversification take shape. Shrinking Russia’s energy dominance within 7-10 years is almost a certainty.

Considering the price shocks that countries have experienced, the European Commission and Energy Community may amend energy markets rules and principles to soften such volatility in the future. And energy security, especially through supply diversification, will continue as a priority.

During the next 2-3 years we will likely see a “coal renaissance” in Europe, particularly in Germany, the Netherland, and France, though in the bigger picture, the EU will speed up its energy transition to decrease dependency on both fossil fuels and Russia. An exception may be in domestic gas production—the trend of rapidly decreasing gas production in Europe may slow down in favor of energy self-sufficiency, especially as the resource was included in the EU’s green taxonomy as a transition fuel. And prospects of nuclear power for the upcoming 2-3 decades may improve in some European countries.

The European Union is capable of decreasing its dependence on Russia, but also of weakening the Kremlin’s ability to wield energy as a weapon to achieve greater geopolitical influence and facilitate warfare. But to do this, the EU, at great cost, must withstand Russia’s energy blackmailing.

Andrian Prokip is the Director of the Energy Program at the Ukrainian Institute for the Future (an independent think tank in Kyiv) and serves as a Senior Associate at the Kennan Institute (Woodrow Wilson Center, Washington DC).