Europe risks falling behind US and China unless it overhauls energy strategy.
Europe must treat energy as the foundation of economic power and competitiveness, not just a climate issue.
Power prices are 2–3x higher than competitors, with 60% of its energy being dependent on imports.
In foreword to new TBI paper, former Prime Ministers Tony Blair and Matteo Renzi say:
“[Europe] risks falling behind those already shaping the energy systems - and the economic order - of the future.”
The Tony Blair Institute for Global Change (TBI) has suggested that European leaders must shift from a “climate-first, climate-only“ approach to one focused on affordability and abundance in energy policy, or risk falling behind the US and China.
In its new paper – “The Power to Compete: Europe’s Energy Reset” – TBI says that decarbonisation must follow a more complete strategy that doesn’t see Europe fall behind on affordability and security.
Europe has treated energy primarily as a climate issue, rather than a foundation of economic power and competitiveness. As a result, energy prices are 2-3x higher than competitors and the continent is dependent on imports, leaving energy security exposed and citizens paying the price.
In the new geopolitical economy, it argues, this problem will worsen.
In their foreword to the paper, former Prime Ministers Tony Blair and Matteo Renzi say: “Europe has led the world in climate ambition and made real progress in reducing emissions. That achievement matters. But the global centre of gravity has shifted. The future of the energy system will be determined in economies where demand is rising rapidly—and where the overriding priority is to ensure that supply keeps pace…
“Unless Europe aligns its strategy with that reality, it risks falling behind those already shaping the energy systems—and the economic order—of the future.”
TBI argues that Europe has “extraordinary energy assets”, including the world’s strongest offshore wind resource, decades of nuclear expertise, and one of the most interconnected electricity systems on earth. The priority now is to deliver abundant, affordable and secure power at scale - with decarbonisation as the result of a system that works.
If the continent fails, it will fall behind not just in energy, but prosperity and geopolitical standing.
Author of the paper, TBI’s Tone Langengen, said: “Energy is now Europe’s strategic test. Thelandscape is shifting – and fast. Power used to belong to those who controlled oil and gas, but this century it’ll belong to those who can produce abundant, affordable electricity - and lead the clean-tech supply chains behind it.
“While the US and China have moved with clarity and scale, Europe hasn’t. The result is a widening competitiveness gap and a growing risk that Europe becomes a follower rather than a leader. Decarbonisation remains essential, but it must be an outcome of a successful system rather than the organising principle of strategy itself. The continent must shift from a climate-first, climate only approach.”
The paper sets out five priorities that must drive a new European energy strategy:
Plan the system as one continent:
Create a Continental System Planner to coordinate Europe’s grid, optimise investment and end fragmented national planning.
Build the physical backbone for cheap power:
Expand interconnection, deliver a continental firm-power strategy, and fix permitting and connection bottlenecks to allow clean power to flow.
Modernise markets to reflect physics:
Reform bidding zones, strengthen flexibility and long-term markets, and introduce pricing that rewards location, timing and system value.
Make electrification a competitiveness strategy:
Use clear price signals, industrial energy-demand clusters and connections reform to grow flexible demand and lower system costs.
Rebuild Europe’s clean-tech industrial base through innovation:
Prioritise technologies where Europe can lead, build continent-scale clusters, and reform financing to cut capital costs and secure supply chains.