Home-grown electricity is Europe’s only future-proof energy strategy

With the closure of the Strait of Hormuz, Europe wakes up, yet again, to its dependence on unreliable fossil fuel imports. This is not a one-off. This is the new normal.

Europe needs to come together and focus ruthlessly on switching from fossil fuels to home-grown clean electricity.

Powering our economy with abundant renewable electricity is Europe's only future-proof energy strategy.

This requires an "whole of Government" approach to jumpstart electrification. Policymakers can double-down on lowering electricity taxes, channelling ETS revenues towards industrial electrification, and turbocharging the EU Industrial Decarbonization Bank.

In parallel, Europe must enable industrial consumers to better tap into competitive renewable power generation. Power Purchase Agreements (PPAs) can provide this benefit today. The European Investment Bank must play a bigger role here. The EIB's current €500mn guarantees for PPAs are simply too small to meet the moment.

National Governments are looking for answers. But hastily designed market interventions that drive up gas demand and disrupt electricity trading will only make matters worse. They will freeze the much-needed investments in new wind capacity.

National Governments are now discussing ETS carve-outs, subsidies to gas-powered electricity generation, and tempering with marginal price setting. We know from the past that these measures are not the answer. They create countless distortions, starting with higher gas demand. This would only entrench our structural energy challenge. And set off a race for further costly market interventions to correct unintended distortions.

Accelerating electrification will dramatically lower the impact of the next energy shock. Shifting to clean home-grown renewable electricity is Europe's only future-proof energy strategy.