How should Europe respond to the energy shock?

SINCE Israel and the US launched their war on Iran in February, global energy prices have skyrocketed, with crude oil reaching nearly US$115 a barrel at the beginning of May.

While this shock has hit low-income countries the hardest, it also places significant strain on high-income Europe. But it presents an opportunity for Europe to reinvigorate its green transition – and European governments are failing to seize it.

By highlighting the risks associated with dependence on foreign oil and making fossil fuels less competitive vis-a-vis renewables, the current price shock makes the political and economic case for the green transition stronger than ever.