Ever since the advent of oil-powered combustion engines, Europe has found itself in the precarious position of dependence on fossil fuels and other resources from regimes that have at times been at odds with it. This dynamic, which the report terms the “Permanent Suez” due to its strong resemblance to the 1956 Suez Crisis, emerged in its latest iteration amid the onset of Russia’s invasion of Ukraine in 2022, when Russia cut off Europe’s gas supplies.
Compounding issues further for Europe’s energy supply was a combination of low European gas storage levels and climate change-related extreme heat and drought lowering domestic production capacities in nuclear and hydropower. Although Europe was able to navigate through these trials, the energy transition remains urgent as the continent witnesses the largest military campaign since World War II.
While European policymakers sought to accelerate the adoption of clean energy technologies, they soon faced further difficulties in this endeavor between the United States and China, each pursuing their own green industrial policies that created economic competition with Europe’s own decarbonization. Europe thus enters the net zero race at a disadvantage, unable to draw upon either its own equivalent of the Inflation Reduction Act or an already-existing manufacturing capacity for clean energy technologies that China boasts.
In light of these structural challenges, this report by Ben Judah, Shahin Vallée, and Tim Sahay argues that Europe will need to completely overhaul its economic, trade and fiscal policies, secure critical minerals for clean energy technologies, and lead reforms of Bretton Woods institutions in relation to climate financing.
ORIGINAL AIRDATE: 01/25/2024