Key facts
- Europe has shut down about a quarter of its oil refineries over two decades.
- Refineries face declining carbon emission caps and fewer free pollution allowances under the EU ETS.
- European natural gas prices exceeded €100 per megawatt-hour on Friday.
- The energy shock has added over €100 billion ($111 billion) to Europe's import bills.
- EU refineries supply approximately 70% of jet fuel and 85% of diesel consumed in Europe.
- The EU will revise regulations to ensure strategic fuel stocks are accessible for military operations.
Europe is reassessing its long-standing strategy of phasing down oil refineries as a severe energy crisis unfolds, exacerbated by geopolitical conflicts. The continent has reduced its refining capacity by approximately 10% over the past two decades, driven by stringent environmental regulations and a focus on clean energy transition. However, recent disruptions in oil and gas supplies, particularly through the Strait of Hormuz, have led to soaring natural gas prices and significantly increased import bills, exposing vulnerabilities in its energy infrastructure. Central European nations have been advocating for a protective strategy for refineries, citing concerns over over-reliance on foreign fuel imports. In response, the European Commission has initiated a high-level dialogue with the industry to discuss energy security, industrial competitiveness, and defense readiness, signaling a potential policy pivot.