Although textbook microeconomics shows why less energy-market fragmentation would be better for Europe as a whole, that does not mean it would be a good deal for countries producing low-carbon electricity at minimal marginal cost. In fact, if more integration creates free riders, the political backlash could be profound.
LONDON—Whatever happens with the US-Iran peace process and global energy prices, the strategic implications of this year’s supply disruptions are already clear. The crisis is further confirmation of the need to phase out fossil fuels, both to mitigate climate change and to strengthen energy security. But for Europe, which remains heavily dependent on imported energy, some less obvious implications may ultimately prove more consequential. To address the precipitous decline in its share of global GDP this century, Europe must lower its energy costs.
LONDON—Whatever happens with the US-Iran peace process and global energy prices, the strategic implications of this year’s supply disruptions are already clear. The crisis is further confirmation of the need to phase out fossil fuels, both to mitigate climate change and to strengthen energy security. But for Europe, which remains heavily dependent on imported energy, some less obvious implications may ultimately prove more consequential. To address the precipitous decline in its share of global GDP this century, Europe must lower its energy costs.