Europe Reevaluates Plans to Phase Out Oil Refineries

Over the past couple of decades, Europe has pursued some of the world’s most ambitious clean energy policies, aiming to become the first climate-neutral continent by 2050. Hardly surprisingly, Europe is now further along the clean energy transition compared to its western peers, with renewables accounting for roughly half of the continent’s power mix compared to about 26% by the U.S. However, Europe is now being forced to reckon with its decision to ditch some of its fossil fuel assets as yet another global energy crisis unfolds just…

admin October 30, 2026

**Europe Re-evaluates Refining Industry Strategy Amid Supply Security Concerns**

*By Alex Kimani*

While the European Union leads global efforts in clean energy adoption—with renewable sources delivering approximately 50% of the region’s power—ongoing geopolitical conflicts have exposed vulnerabilities caused by a reduced fossil fuel infrastructure.

Over the last two decades, strict environmental regulations under the EU Emissions Trading System (ETS) and the Industrial Emissions Directive (IED) raised operational costs for European processors, resulting in the closure of roughly 25% of the continent’s oil refineries and a 10% decline in overall processing capacity. Policymakers originally expected green initiatives to steadily reduce reliance on fossil fuels; instead, the loss of capacity boosted dependence on imported refined products.

Recent regional conflicts and supply disruptions in the Middle East have driven European natural gas benchmark prices above €100 per megawatt-hour, adding over €100 billion to import costs and creating a severe squeeze on fuel supplies, particularly diesel.

In response, several Central European member states—including Poland, Czechia, and Slovakia—have advocated for policies to protect local refineries from carbon leakage, ease financial and administrative burdens under the ETS, and allow access to EU modernization funds.

Acknowledging these security risks, the European Commission launched its first High-Level Dialogue with the refining sector. EU Energy Commissioner Dan Jørgensen and Defense Commissioner Andrius Kubilius noted that local refineries currently satisfy 70% of Europe’s jet fuel demand and 85% of its diesel consumption.

The Commission highlighted the role of fuel availability in military readiness, pointing out that NATO deployment plans require immediate access to operational fuel reserves during a crisis. Under the proposed AccelerateEU framework, the EU plans to update regulations regarding strategic fuel stocks, secure transport logistics, and explore expanding the Central Europe Pipeline System to support defence and energy resilience.

Moving forward, European regulators face the challenge of reconciling military and energy security imperatives with the EU’s target to reach carbon neutrality by 2050. The Commission intends to establish a joint roadmap with industry leaders to maintain refining capacity while developing alternative low-carbon fuels, including biofuels and e-fuels.