Europe must urgently devise a pragmatic strategy for transforming itself from a lucrative market for others to an innovative industrial powerhouse in its own right, and enhancing its strategic autonomy in a rapidly shifting world. To succeed, a robust and cohesive energy union is essential.
MADRID – In aworld in turmoil, the European Union’s security agenda is as expansive as it is urgent. From building economic resilience to achieving rapid rearmament, progress on almost any of its components depends on one thing: energy.
Tworecent landmarkreports on EU competitiveness – both by former Italian prime ministers,Mario Draghi andEnrico Letta – highlight what should be obvious: high energy prices and insecure supplies directly undercut economic stability and dynamism. While environmental sustainability is crucial to Europe’s long-term well-being – and, indeed, to humanity’s survival – this ambition must be balanced with the imperative of delivering affordable, reliable, and robust energy supplies, not least to industrial sectors.
European industry forms the backbone of European competitiveness and has a vital role to play in European rearmament. For example, the German arms manufacturer Rheinmetall recentlyreached a market value of €23 billion ($24 billion), surpassing Volkswagen (€19 billion). The continued competitiveness of such military-equipment firms – and, more broadly, the re-industrialization on which European security depends – will be impossible without a significant increase in energy realism.
The European Commission’sClean Industrial Deal aims to balance the twin imperatives of re-industrialization and decarbonization, including by promoting public and private investment in clean technologies and supporting energy-intensive industries, such as steel and chemicals, in the green transition. But the vision remains incomplete, not least because it neglects Europe’s fuel-manufacturing industry.
This “silent” sector, whichsupplies 97% of the energy for transport and 50% of the feedstock used by the chemical industry, is more than a relic of a fossil-fuel-powered past; it is a cornerstone of the European economy. Entire value chains rely on the stability and affordability it provides, which renewables will not match anytime soon.
And yet, the Clean Industrial Deal includes no strategy for the fuel industry’s development. Nor does it mention European fuel companies’ ongoing decarbonization initiatives, such as Repsol’sEcoplant project, which will transform urban solid waste into renewable fuels and circular products. The companyprojects that, beyond creating hundreds of jobs, Ecoplant will reduce carbon dioxide emissions by 3.4 million tons over its first decade of operation.
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In line with the Clean Industrial Deal’s pledge to “engage in a dialogue with industries to develop sectoral transition pathways,” the European Commission must take immediate steps to develop atransition pathway for fuel manufacturing. A well-designed strategy could unlock billions of euros in investment and advance key EU goals: decarbonizing transport and heavy industry, strengthening European industry’s global competitiveness, and bolstering Europe’s strategic autonomy by reducing its dependence on foreign producers.
Other energy-intensive sectors, too, should be reassessed and integrated into European decarbonization and re-industrialization strategies, not sidelined. This will require the EU to take a pragmatic approach and promote all energy sources that can contribute to a stable, affordable supply, including renewables, fossil fuels, nuclear energy, and hydrogen power.
Hydrogen power is particularly important for energy-intensive sectors which cannot be fully electrified. TheRePowerEU plan, introduced in 2022, aims to produce ten million metric tons of renewable hydrogen (and import the same amount) by 2030. In order to achieve these goals, the EU must leverage its internal strengths. This means building on Germany’s existing production capacity: itproduced 2.2 million metric tons of hydrogen in 2022, more than any other EU country. And it means taking advantage of Spain’s position between Europe and North Africa to establish it as a clean hydrogen hub, withconnections to Algeria and Morocco.
The establishment of cross-border hydrogen corridors – within the EU and, ultimately, between the EU and other countries – will require EU-level action, buttressed by private-sector support. This must include the alignment of relevant regulations – that is, a true energy union.
Contrary to popular belief, the energy union is not part of the EU’s single market. It is subject to a fundamental contradiction: under theTreaty on the Functioning of the EU, “sustainability” falls under the EU’s mandate, but the security of energy supplies remains in the hands of the member states, each of which decides its own energy mix. By now, it should be clear that this is untenable. The only way EU member states can achieve true energy security (or its corollary, energy affordability) is together.
Of course, the EU has a lot on its plate – not least devising a cohesive vision for its global role at a time when the United States under Donald Trump’s second presidency is proving erratic, unreliable, and increasingly autocratic, and great-power politics are shaping international relations. Such a vision should include deepening relations with a wide range of non-Western countries – such as Brazil, India, Morocco, and the United Arab Emirates – that share its interest in preserving some semblance of a rules-based order.
But if the EU is to play such a leadership role – providing the kind of legal certainty that can help to counterbalance the transactional, capricious, and intemperate behavior we are seeing from the US – it must be united, confident, resilient, and competitive. This demands a pragmatic, industry-aligned strategy for transforming itself from a lucrative market for others to an innovative industrial powerhouse in its own right, and enhancing its strategic autonomy on rapidly shifting geopolitical terrain. To succeed, a robust energy union is essential.
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MADRID – In a world in turmoil, the European Union’s security agenda is as expansive as it is urgent. From building economic resilience to achieving rapid rearmament, progress on almost any of its components depends on one thing: energy.
Two recent landmark reports on EU competitiveness – both by former Italian prime ministers, Mario Draghi and Enrico Letta – highlight what should be obvious: high energy prices and insecure supplies directly undercut economic stability and dynamism. While environmental sustainability is crucial to Europe’s long-term well-being – and, indeed, to humanity’s survival – this ambition must be balanced with the imperative of delivering affordable, reliable, and robust energy supplies, not least to industrial sectors.
European industry forms the backbone of European competitiveness and has a vital role to play in European rearmament. For example, the German arms manufacturer Rheinmetall recently reached a market value of €23 billion ($24 billion), surpassing Volkswagen (€19 billion). The continued competitiveness of such military-equipment firms – and, more broadly, the re-industrialization on which European security depends – will be impossible without a significant increase in energy realism.
The European Commission’s Clean Industrial Deal aims to balance the twin imperatives of re-industrialization and decarbonization, including by promoting public and private investment in clean technologies and supporting energy-intensive industries, such as steel and chemicals, in the green transition. But the vision remains incomplete, not least because it neglects Europe’s fuel-manufacturing industry.
This “silent” sector, which supplies 97% of the energy for transport and 50% of the feedstock used by the chemical industry, is more than a relic of a fossil-fuel-powered past; it is a cornerstone of the European economy. Entire value chains rely on the stability and affordability it provides, which renewables will not match anytime soon.
And yet, the Clean Industrial Deal includes no strategy for the fuel industry’s development. Nor does it mention European fuel companies’ ongoing decarbonization initiatives, such as Repsol’s Ecoplant project, which will transform urban solid waste into renewable fuels and circular products. The company projects that, beyond creating hundreds of jobs, Ecoplant will reduce carbon dioxide emissions by 3.4 million tons over its first decade of operation.
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Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
In line with the Clean Industrial Deal’s pledge to “engage in a dialogue with industries to develop sectoral transition pathways,” the European Commission must take immediate steps to develop a transition pathway for fuel manufacturing. A well-designed strategy could unlock billions of euros in investment and advance key EU goals: decarbonizing transport and heavy industry, strengthening European industry’s global competitiveness, and bolstering Europe’s strategic autonomy by reducing its dependence on foreign producers.
Other energy-intensive sectors, too, should be reassessed and integrated into European decarbonization and re-industrialization strategies, not sidelined. This will require the EU to take a pragmatic approach and promote all energy sources that can contribute to a stable, affordable supply, including renewables, fossil fuels, nuclear energy, and hydrogen power.
Hydrogen power is particularly important for energy-intensive sectors which cannot be fully electrified. The RePowerEU plan, introduced in 2022, aims to produce ten million metric tons of renewable hydrogen (and import the same amount) by 2030. In order to achieve these goals, the EU must leverage its internal strengths. This means building on Germany’s existing production capacity: it produced 2.2 million metric tons of hydrogen in 2022, more than any other EU country. And it means taking advantage of Spain’s position between Europe and North Africa to establish it as a clean hydrogen hub, with connections to Algeria and Morocco.
The establishment of cross-border hydrogen corridors – within the EU and, ultimately, between the EU and other countries – will require EU-level action, buttressed by private-sector support. This must include the alignment of relevant regulations – that is, a true energy union.
Contrary to popular belief, the energy union is not part of the EU’s single market. It is subject to a fundamental contradiction: under the Treaty on the Functioning of the EU, “sustainability” falls under the EU’s mandate, but the security of energy supplies remains in the hands of the member states, each of which decides its own energy mix. By now, it should be clear that this is untenable. The only way EU member states can achieve true energy security (or its corollary, energy affordability) is together.
Of course, the EU has a lot on its plate – not least devising a cohesive vision for its global role at a time when the United States under Donald Trump’s second presidency is proving erratic, unreliable, and increasingly autocratic, and great-power politics are shaping international relations. Such a vision should include deepening relations with a wide range of non-Western countries – such as Brazil, India, Morocco, and the United Arab Emirates – that share its interest in preserving some semblance of a rules-based order.
But if the EU is to play such a leadership role – providing the kind of legal certainty that can help to counterbalance the transactional, capricious, and intemperate behavior we are seeing from the US – it must be united, confident, resilient, and competitive. This demands a pragmatic, industry-aligned strategy for transforming itself from a lucrative market for others to an innovative industrial powerhouse in its own right, and enhancing its strategic autonomy on rapidly shifting geopolitical terrain. To succeed, a robust energy union is essential.