Georg Zachmann
Senior Fellow
Bruegel / Helmholtz Zentrum Berlin
Belgium / Germany
The Baltic Sea is crucial for the energy supply of most bordering countries. Most of the fuel imports of Sweden, Finland, Estonia, Latvia, Lithuania and Poland happen via the Baltic Sea – while Russia organizes a significant share of its oil and (now less) gas exports through the Baltic Sea.
An end to decade-long relations
The decoupling between Russia and the EU, in the aftermath of Russia’s brutal aggression against Ukraine, strongly affected the energy supply configuration of all bordering countries. Russia reduced and ultimately stopped gas supplies via pipeline to Poland and Germany. A month later, the spectacular Nord Stream pipelines explosion likely ended a four decade-long energy relation with a bang. The four East Baltic states[i] also managed to stop their imports of Russian gas.
The EU embargo on Russian sea-borne crude oil (December 2022) and oil products (January 2023) had in terms of pure energy-content the biggest impact – but as the global oil market is relatively fungible, consumers in Sweden, Finland or Denmark barely noticed the switch to other sources. The Druzhba oil pipeline from Russia proved more difficult to replace. It does not fall under EU sanctions and the German claim to now only use it to import Kazakh oil is a bit dubious.
For electricity, Finland stopped its limited imports from Russia – that were previously organized via an asynchronous direct link – in May 2022. The three Baltic countries also stopped importing bulk electricity from Russia – but until February 2025 remain synchronized with the Russian power system.
The EU embargo on Russian coal – that dominated EU imports in 2021 – caused substantial reconfiguration. Now, Kazakh coal is exported via the Russian ports in the Baltic Sea.
New links emerging
Replacing Russian fossil fuels with fossil fuels from other sources strengthened the cooperation between EU-countries around the Baltic.
The Lithuanian Klaipėda LNG terminal (2015) as well as the Finish floating LNG terminal Inkoo (2023) now serve as major import points for the entire region. The GIPL-link between Poland and Lithuania opened in May 2022, the Baltic Pipe between Denmark and Poland, as well as the Balticconnector between Estonia and Finland operating since 2020 were crucial to enable such regional flows.
And even Germany and Poland – that find it hard to collaborate trustfully on energy-matters – are enabling the use of the Gdansk oil terminal to supply East German refineries to displace Russian pipeline oil imports.
The decoupling from Russian fossil fuel imports within less than two years —prompted by Russia's brutal aggression against Ukraine—is accelerating a shift towards clean fuels over the next two decades. This will see a strong increase in the role of electricity. The high capital cost and low marginal cost of low carbon sources of electricity thereby drastically increase the benefits of coordination and system integration across borders. The upcoming synchronization of the Baltic countries’ electricity grids in February 2025 with the continental European grid is an important step to facilitate such security, competitiveness and sustainability, increasing collaboration.
Important gaps in cooperation remain
The Baltic Sea region has seen a profound reconfiguration of energy flows during the past three years. Close cooperation was very successful in ensuring supply security in the region. But national egoisms and lack of institutionalized coordination hold back on reaping further substantial gains from cooperation.
Several projects to increase cross-border connectivity for electricity (DE-SWE, DE-PL, PL-LT) are struggling to gather the necessary support to build a resilient Baltic electricity network. Off-shore wind hubs that could connect most Baltic nations are progressing much more slowly than their counterparts in the North Sea. And capacities available for commercial exchanges remain limited – leading to substantial and inefficient price-differentials.
At the same time, Europe has not yet managed to define a common position on future imports of Russian gas. Especially the lack of a clear German position on the (non-) future of the remaining Nord Stream is disconcerting for its Baltic partners. Moreover, the inability of Germany and Poland to coordinate their only 75 km distant LNG-terminals Świnoujście and Mukran, shows a worrisome lack of trust.
Necessary coordination on national energy system development plans (e.g., the National Energy and Climate Plans could be a useful anchor for consultations) and on crucial market design choices (e.g., capacity mechanisms) is insufficient to rteap the benefits from greater collaboration.
Mistrust on nuclear plans in other countries still seem to overshadow important discussions on pragmatic steps towards more energy-cooperation. The same holds for cooperation on carbon capture and storage infrastructure in the Baltic Sea – at that stage, interested (Poland) and sceptical (Germany, Sweden) countries seem to lack constructive discussion.
Finally, in the new world of hard security threads – as illustrated by the Balticconnector incident in October 2023 - a much tighter cooperation of regional surveillance and response capabilities is urgently needed.
Towards a new Baltic energy cooperation
The speedy decoupling from Russian energy showed the value of regional integration and cooperation. But EU member states around the Baltic are quickly returning to an inward-looking energy policy. This risks to obstruct major projects to jointly reap the vast untapped potential of infrastructure and market integration.
[i] Finland, Estonia, Latvia, Lithuania