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Competitiveness
Europe has sounded the alarm over its competitiveness gap with the US, with high energy prices partly to blame. This comes after a period of skyrocketing inflation squeezing household budgets, with the industry in turmoil over significant costs. The European Commission has pledged a series of energy market reforms to help—and may also leverage its trillion-euro budget and subsidy controls.
Climate change and the energy mix
The EU has vowed to achieve climate-neutrality by 2050 – an emissions reduction target with major impact on energy policies. Backlash against high energy prices and a political shift to the right have cast doubt on the future of the EU’s landmark Green Deal. Success will rely on key decisions over the role of fossil fuels, renewables, hydrogen, and the sensitive issue of nuclear power – in addition to large-scale infrastructure development.
Geopolitics
Europe’s energy challenges sit at the heart of a geopolitical storm. Stable supplies, crucial for economic security, are under threat. The Ukraine invasion highlighted Europe’s dependence on Russia, while energy products have become a key battleground in Donald Trump’s trade war with the EU. In the Baltic Sea, energy infrastructure may have been deliberately sabotaged. The idea of cutting off Moscow’s gas sparked howls of protest from EU members – but the bloc must also prioritise securing access to key minerals vital for the green revolution.
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