European Union leaders have correctly identified high energy prices as a threat to households, industry and the wider economy, but their proposed response remains inadequate, energy systems expert Andreas Poullikkas has warned.
Writing after the EU summit held on October 15-16, the former Cyprus Energy Regulatory Authority (CERA) chairman and vice-rector of Frederick University argued that Europe needed structural investment in electricity networks, interconnections and energy storage rather than continued reliance on temporary support measures.
“The diagnosis is correct, but the treatment remains largely inadequate,” Poullikkas said, assessing the summit’s conclusions.
EU leaders called for a coordinated response based on targeted and temporary measures, welcoming delays to certain obligations under the methane regulation and the proposed extension of the temporary state aid framework for the industrial sectors most exposed to high energy costs.
They also supported voluntary pooling of energy demand by businesses and industries, allowing larger combined purchasing volumes to strengthen negotiating power and potentially secure lower, more stable prices.
On the EU emissions trading system (ETS), leaders called for faster legislative work on the Market Stability Reserve to limit excessive volatility and for an updated assessment of the impact of the ETS2 system.
Poullikkas welcomed the recognition that the energy transition could help address both energy security and affordability, describing it as the most positive aspect of the summit’s conclusions.
“The energy transition, with faster electrification, more renewables and other low-emission sources, stronger grids, storage and energy efficiency, is the most effective strategy for structurally lower prices,” he said.
However, he warned that the volatility of carbon allowance prices was already affecting energy costs rather than representing a theoretical concern.
Carbon allowances approached €88 per tonne in early October 2026 and remained above €85 in the middle of the month, according to his analysis.
“When fossil fuel power plants set the electricity market price, every increase or decrease in the price of emissions allowances is transferred directly to the consumer’s bill,” Poullikkas said.
He argued that the EU needed a clear and predictable intervention mechanism to ensure carbon pricing continued to encourage investment without becoming an additional source of uncertainty.
The first weakness in the summit’s approach, he said, was that temporary measures could ease immediate pressure without changing the underlying cost structure.
“If state aid is not linked to investment in renewables, storage and energy savings, it risks entrenching the dependence it is supposed to reduce,” Poullikkas warned.
He also questioned the consistency of the EU’s approach to regulatory certainty, with leaders calling for a transparent and predictable carbon market while simultaneously welcoming delays to certain methane obligations.
“Investors and importers need stable rules, not continuous revisions,” he said.
In his assessment, every postponement risked reinforcing the impression that regulatory requirements could be changed under pressure.
Poullikkas identified infrastructure as the third and most serious weakness, noting that the package of measures for European electricity grids was among the files expected to be completed by the end of the year.
However, the summit conclusions did not set quantitative targets, specify funding or establish an implementation timetable for the necessary infrastructure.
“Interconnections and storage are not a luxury,” he said, describing them as essential infrastructure for security of supply and price stability.
Although EU leaders explicitly recognised the role of cross-border electricity interconnections in supporting Ukraine, Poullikkas argued that the conclusions did not provide equivalent attention to the bloc’s own island and isolated energy systems.
The protection of vulnerable consumers represented another gap, particularly in relation to ETS2, the emissions trading system intended to cover additional sectors.
Under the mechanism, additional allowances can be released from the Market Stability Reserve if the average auction price exceeds €45 per tonne in 2020 prices, adjusted for inflation, for two consecutive months.
“This is a mechanism for easing price pressures, not an absolute price cap,” Poullikkas said.
While he considered the direction appropriate, he argued that household protection needed to be explicit and adequately funded to prevent climate policy from becoming a social burden.
He called for a more substantial European intervention built around binding targets and EU funding for electricity grids and interconnections, with specific provision for island and isolated energy systems.
Clear targets and market mechanisms for energy storage were also needed to absorb more renewable electricity and reduce reliance on expensive peak-generation plants.
At the same time, Poullikkas argued that Europe needed a genuinely competitive electricity market with transparent price signals that encouraged investment and prevented market distortions.
He proposed introducing a price shock absorber to limit the temporary pass-through of extreme fossil fuel price fluctuations into wholesale electricity prices.
“During periods of extreme fluctuations in fossil fuel prices, their transmission to the wholesale electricity market should be temporarily limited, protecting consumers and businesses without undermining the functioning of the market,” he said.
Temporary support measures should also be tied to investment commitments and clear expiry dates, he added, so they acted as a bridge towards a different energy system rather than becoming permanent exceptions.
Poullikkas also highlighted the strategic importance of the Eastern Mediterranean, arguing that the region could become an energy corridor to Europe and strengthen security of supply.
Concerns expressed by EU leaders over the Strait of Hormuz and the Red Sea, as well as the possibility of prolonged disruption to international energy supply chains, made the need for regional energy cooperation more urgent, he said.
“The EU will not solve the cost of energy through successive emergency interventions,” Poullikkas warned.
“Grids, storage, interconnections and a stable carbon market are needed,” he added.
Unless the summit’s diagnosis is translated into binding targets, specific timetables and sufficient funding, Europe risks returning to the same emergency measures every winter, he concluded.