The Continent of Accumulated Liabilities
The concept of energy inelasticity initially emerged as a tool for explaining the inability of energy systems to adapt rapidly to geopolitical upheavals. However, as the European and global landscape evolves, it is becoming clear that this concept is much broader. It does not merely concern the impact of crises on energy markets. It concerns the gradual accumulation of constraints that restrict the freedom of action of states, businesses and societies.
Many might reasonably argue that wars, geopolitical crises, major investments and long-term depreciation have always existed. And indeed, history is full of conflicts, economic transitions and cycles of major infrastructure projects. The reconstruction of Europe after the Second World War, the oil crisis of 1973, the Cold War, and even the major industrial transformations of the 19th century were accompanied by massive investment and significant geopolitical tensions.
The question, therefore, is not whether crises or investments are anything new. The question is what has changed to justify the use of a new concept. The answer lies in four factors: scale, speed, simultaneous overlap and demographics.
The Memory of Crises
The first dimension of energy inelasticity is the accumulation of crises. In previous decades, periods of relative stabilisation usually intervened between two major upheavals. Today, this is not the case. The war in Ukraine has not yet produced all its economic and geopolitical consequences, whilst at the same time the Middle East, the Red Sea, trade rivalries, supply chains and cyber threats are creating new layers of uncertainty.
One crisis begins before the effects of the previous one have been fully absorbed. The market never truly returns to its original state. Businesses are constantly revising their calculations. Governments are increasing their safety reserves. Risk premiums remain embedded in prices. Geopolitical uncertainty is gradually transforming from an exceptional phenomenon into a permanent operating cost.
At the same time, a fundamental structural shift is taking place: the transition from the ‘Just-In-Time’ model (cheap, marginal energy via pipelines) to the ‘Just-In-Case’ model (excess LNG capacity, strategic reserves, cyber security). The cost of maintaining these strategic reserves and the change in trade routes (e.g. sailing round Africa instead of through the Suez Canal) add permanent transport and insurance costs of 15–30 per cent to the energy supply chain.
The Illusion of the End of Geopolitics
Today’s rigidity did not arise solely from the return of crises. It also stemmed from a strategic error that dominated European thinking for nearly three decades after the end of the Cold War.
The fall of the Berlin Wall and the collapse of the Soviet Union created the impression that economic interdependence would gradually replace geopolitical confrontation. Security was largely taken for granted, whilst efficiency and cost reduction emerged as overriding priorities.
Europe cut defence spending, reduced strategic reserves, underestimated the value of the reserve forces, and accepted growing dependencies in critical sectors such as energy, raw materials, industrial production and, later, digital technologies. The reasoning was that a globalised economy would no longer allow for large-scale conflicts and that the markets would, on their own, ensure the optimal allocation of resources.
For around thirty years, strategic resilience took a back seat to economic optimisation. Infrastructure was designed for maximum efficiency rather than maximum resilience. Supply chains were organised on the basis of the lowest cost rather than security. Spare production capacity was often regarded as an inefficient use of capital.
The sharp downturn began gradually with the global financial crisis of 2008, accelerated with the pandemic, peaked with the energy crisis of 2022 and continues with the war in Ukraine, tensions in the Middle East and disruptions to shipping. Within a few years, Europe has discovered that security, energy, raw materials, data and defence remain closely linked to geopolitical power.
This abrupt shift from the illusion of permanent stability to the reality of permanent uncertainty is perhaps the main reason why the continent found itself faced with simultaneous needs to reinvest in energy, infrastructure, defence and technological autonomy. In other words, energy inflexibility is not merely the result of the current crises. It is also the price paid for three decades during which Europe believed that geopolitics had ceased to be a determining factor in economic reality.
The Legacy of Investment
The second dimension is even more significant and perhaps less well understood. Europe is not merely faced with the need to manage crises. It is simultaneously facing an unprecedented concentration of investment needs. According to European Commission estimates, €584 billion in investment in electricity networks is required by 2030, of which €170 billion is earmarked exclusively for digitalisation, whilst achieving the 2050 targets will entail even greater capital requirements.
At the same time, Europe is called upon to invest in electricity grids, interconnections, energy storage, LNG, nuclear technology, digital infrastructure and defence systems, creating an unprecedented concentration of capital requirements in the post-war period.
At the same time, a new demand is emerging that was practically non-existent a decade ago: large data centres for artificial intelligence (Data Centres & AI). Electricity demand from data centres in Europe is expected to rise by more than 150 per cent by 2030, reaching ~150 TWh (for example, in Ireland, data centres already consume over 20 per cent of the country’s total electricity). A single next-generation data centre may require 200 to 500 MW of electrical power, whilst complexes currently being planned in the US and Europe are even targeting levels in excess of 1 GW, a consumption comparable to that of a medium-sized nuclear power station or a city with hundreds of thousands of inhabitants.
At the same time, geopolitics is making a strong comeback. Defence spending is rising across Europe. NATO’s target of spending 2 per cent of GDP (and now 2.5–3 per cent in many eastern and northern EU countries) takes 100–150 billion euros of fiscal space out of the budget each year, which could otherwise be channelled into subsidies or infrastructure to ease the cost burden on consumers and domestic industry.
This simultaneous and colossal demand for Networks, AI, LNG, nuclear power and defence inevitably creates an unprecedented shortage of raw materials (copper, critical metals, transformers), as well as a shortage of specialised technical and engineering staff.
The Overlap in Depreciation
This is perhaps the most critical aspect of inelasticity. Major infrastructure projects are not purchased or written off within a few years. An electricity transmission network operates for 40 or even 50 years. A major interconnector cable can have a lifespan of over 40 years. A nuclear power station is designed to operate for 60 to 80 years. An LNG terminal takes two or three decades to be fully depreciated. Large data centres have a life cycle of 15 to 25 years, but require constant equipment upgrades. For most of the 20th century, investment cycles were more sequential in nature. Today, this is no longer the case.
- Europe is called upon to maintain the following simultaneously:
- Networks built in the 1970s,
- Natural gas infrastructure upgraded after 2000,
- LNG terminals to be commissioned after 2022,
- Storage technologies being installed today, and
- Potential new nuclear power stations that will remain in operation after 2080.
Thus, rather than one investment cycle following on from the previous one, many cycles are unfolding simultaneously. Depreciation overlaps. The capital burden accumulates rather than being replaced.
Demographic Memory and the Great Reversal
A historical comparison between 1950 and 2050 perhaps reveals, better than anything else, the depth of the problem posed by the Great Reversal.
In 1950, what is now the 27-member European Union had a population of around 290 million, whilst Europe as a whole had a population of around 550 million. It was a continent with one of the youngest populations in its history. In many countries, there were between five and seven people of working age for every person over the age of 65. Post-war growth was underpinned by the entry of millions of young workers into the labour market and by a rapid rise in productivity.
By the middle of the century, the challenge was to build roads, ports, electricity networks, refineries and factories. Infrastructure was built by societies that were constantly expanding their tax base. Each new generation was more numerous than the previous one, and each investment cycle relied on more workers than had funded it in the past.
By 2050, the picture will be almost the reverse. The population of the European Union is expected to remain at roughly current levels, at around 450 million people, but with a radically different age structure. The ratio of workers to pensioners will have fallen significantly, approaching just two people of working age for every citizen over the age of 65.
In other words, whilst the need for investment in energy, digitalisation and defence is growing exponentially, the number of citizens called upon to fund these needs is proportionally decreasing.
To put it another way, in 1950 Europe was building new networks with a steadily growing workforce and economic capacity. By 2050, it will be called upon to renew, expand and protect a far more complex infrastructure system with a less favourable demographic base.
It is no coincidence that pensions are now at the centre of many European debates. The challenge is not a conflict between generations but the management of a historically unprecedented situation, in which societies themselves are called upon to maintain the infrastructure of the past, cover rising social expenditure and, at the same time, finance a new generation of energy, digital and defence investments. The demographic reality of ageing societies acts as a multiplier for all other constraints, as it coincides with the greatest wave of investment Europe has seen since the Second World War.
Of course, this picture is not entirely one-dimensional. Technological progress, the exponential growth in productivity through artificial intelligence and automation, as well as the potential to deepen European integration through joint European borrowing for defence and energy or the mobilisation of private capital, offer significant counterbalances. At the same time, the strategic management of migration flows may provide some demographic replenishment. However, these tools do not address the core of the problem: the simultaneous pressure of time, resources and obligations that renders the European system structurally inflexible.
The True Meaning of Inflexibility
Crises do not have time to heal. Investments do not have time to be recouped. And the population called upon to finance these obligations is not growing in the way it did in the decades following the Second World War. Under these circumstances, linking the demographic issue to the funding needs of the energy transition, the digital economy, social protection and defence is no longer a theoretical debate. The European political class has a responsibility to address this issue and bring it into the public debate, not for short-term political gain. Delaying the issue does not make it go away; it merely shifts the cost of the decisions onto future generations.
If 1950 was the era when a youthful Europe was building the infrastructure of the future, 2050 may well be the era in which an ageing Europe will have to maintain, simultaneously, several generations of energy, digital and defence infrastructure, whilst also facing rising social expenditure and a far more unstable geopolitical world.
It is precisely this simultaneous accumulation of geopolitical memory, investment memory and demographic memory that constitutes the fullest expression of energy rigidity in the new global energy order.
ENERGIA.gr / By Invitation, Saturday, September 26, 2026
https://www.energia.gr/article/249577/h-hpeiros-ton-syssoreymenon-ypohreoseon