The European Union is revisiting its long-term policy regarding oil refineries. The European Commission held its first "high-level dialogue" with the refining industry on October 28, 2026. The aim of this meeting was to discuss energy security, industry competitiveness, and defense readiness.
Rising natural gas prices and dependence on imports
On October 30, 2026, the price of natural gas in Europe surpassed 100 euros per megawatt-hour. This figure is the highest since Russia's invasion of Ukraine in 2022. Disruptions in liquefied gas supply from the Strait of Hormuz and concerns over escalating conflicts following the U.S. midterm elections have exacerbated this increase. For European households, this level typically leads to higher energy and transportation costs.
Declining refining capacity and environmental challenges
Europe has closed about a quarter of its refineries in the past 20 years, and the continent's refining capacity has decreased by nearly 10%. Policymakers expected that the transition to clean energy would gradually reduce demand for gasoline and diesel. A significant portion of these closures is attributed to strict environmental regulations.
In the EU's carbon emissions trading system, the cap on refinery emissions decreases each year, and their free allowances are reduced, meaning increased operational costs. Additionally, industrial emissions regulations require costly upgrades, which reduce refining margins. This situation has led Europe to become more dependent on imported petroleum products. The recent energy shock has added over 100 billion euros (about 111 billion dollars) to the continent's import bill, which calculates to nearly 250 dollars for each EU resident.
Poland, the Czech Republic, and Slovakia have asked the European Commission to define a long-term supportive strategy for refineries. They argue that stringent climate rules are making the continent more dependent on imported fuels while simultaneously calling for refineries to have access to EU financial resources for modernization. Data from the meeting shows that European refineries still supply about 70% of the continent's jet fuel and 85% of its diesel.
Andrius Kubilius, the Commissioner for Defense and Space, emphasized that fuel is vital for the movement of military forces. According to NATO's readiness model, the alliance must deploy and sustain 100,000 troops within the first 10 days of a crisis. Crude oil alone does not meet this need, as it cannot be converted into gasoline, diesel, and jet fuel without refineries. The Commission is amending regulations under the "Accelerating Europe" initiative to ensure that strategic fuel reserves are available for military use in exceptional circumstances. A joint roadmap with the industry for investment in biofuels and electronic fuels has also been announced. This shift between defense requirements and long-term goals for Europe's green transition has created tensions.
