The energy transition awaits a governance revolution

The European Union, in a context marked by economic and geopolitical tensions, is called upon to make energy a pillar of its strategic autonomy. Speeding up renewables and grids is essential to meet environmental commitments, but also to respond to the productivity gap with the United States and reduce dependence on fossil fuels, which exposes the EU to supply shocks and geopolitical blackmail. Less fossil energy means lower costs and less dependence on imports, with positive effects on productivity and economic security. It is not just an environmental choice, but a lever of sovereignty and strategic autonomy.

In this challenge, energy policy cannot be separated from the new industrial policy called for by the Draghi Report. It is not enough to leave it to the markets: structural transformation must be facilitated by reconverting and shortening supply chains, eliminating bottlenecks in strategic sectors, shifting resources to high value-added activities and developing active labour policies.

These issues are dealt with in the sixth Public Investment in Europe Report (More with More: Investing in the Energy Transition. 2025 European Public Investment Outlook), edited by us, which highlights how the EU continues to move in random order and, above all, the insufficiency and discontinuity of investments, both public and private. Member states start from different energy mixes, defend often divergent interests, the result of specific industrial histories and unequal endowments of resources. Consequently - as we read in the first part of the Report - the decarbonisation of France, Germany, Italia and Spain is proceeding everywhere, but with strong differences in industrial policies, regulatory frameworks and incentives. What emerges is the difficulty of building a truly common energy policy.

The EU must hold together tense objectives: decarbonising, reviving an industry put under pressure by the green transition and competition from the US and China, ensuring security of supply in an unstable geopolitical context, and mitigating the distributional impact of industrial restructuring. The second part of the report links energy transition to industrial competitiveness, network infrastructure, access to critical materials and innovation. In a situation of tighter budget constraints and new spending priorities (defence) and without a fair distribution of costs and benefits, public support for the transition risks weakening. The message of the report's chapters, written by authors from numerous institutions, is clear: without strong European coordination and stable public investment, the transition risks slowing down just when it should accelerate, and becoming a brake on growth.

The European institutions do not seem equipped to support a real common energy and industrial policy. After the parenthesis of Next Generation EU, the return to 'frugal' positions and the limits of the new Multiannual Financial Framework make a European response unlikely. The necessary investments will fall on national budgets, which are constrained by the Stability Pact. That is why we propose an 'extended golden rule' that would exclude investments from the 3% deficit limit. The logic would not be very different from the recent decision to exempt defence spending from the limits of the pact. But unlike this, it would be institutionalised: Council and Parliament would periodically agree on priority areas in which to increase the stock of capital, tangible and intangible, and countries would be able to finance these priorities through debt.