Michael A. Mehling: Europe’s energy transition in a fracturing world

Europe enters the autumn of 2026 hemmed in on every side. A war on Iran has all but closed the Strait of Hormuz, lifting Brent above one hundred dollars and European gas to levels last seen in 2022. An El Niño forecast to become the strongest on record follows the hottest June western Europe has measured. Tariff conflict persists, the transatlantic rift widens, and energy security has returned to the top of the agenda just as electricity demand, driven by data centres and electrification, grows faster than it has in a generation. Scholars increasingly invoke the term polycrisis for such a confluence of challenges; rarely has the label fit so well. Amid these headwinds, Europe’s ambitious energy transition has come under mounting pressure.

Across the Atlantic, the second Trump administration has moved from passive disengagement to active antagonism of any climate action. Withdrawal from the Paris Agreement and the climate framework convention, rescission of the endangerment finding, rollback of sectoral decarbonization rules, and curtailment of clean energy tax credits have dismantled much of the domestic architecture. What distinguishes this retrenchment is the effort to export it: in the Turnberry trade framework, ratified in June with sunset and suspension clauses that betray how little trust remains, the EU’s Carbon Border Adjustment Mechanism (CBAM) and several sustainability rules figure as irritants to be softened, while fossil energy purchases from the U.S. serve as a condition for tariff relief.

Beijing presents a mirror image. China commands scale and, increasingly, the innovative frontier across virtually every advanced technology, from solar and batteries to robotics, artificial intelligence and semiconductors; mounting evidence suggests that its emissions have plateaued. Yet with an economy propelled by exports rather than domestic consumption, China’s overcapacity has sharpened competition with trade partners. Economic rivalry has become increasingly entangled with a broader geopolitical contest with Europe and North America, manifesting itself in export controls on rare earths and countermeasures against the extraterritorial reach of American and European rules. Climate change threatens all powers alike, yet the great powers have chosen contest over coordination.

Brussels, caught between these poles, holds its ambition on paper while ceding ground in practice. A ninety per cent target for 2040 entered into force in April; yet several Member States revolted against the European carbon price this spring, a decision to phase out new internal combustion engines by 2035 is being revisited, and rules on corporate sustainability reporting and due diligence, tropical deforestation, and carbon pricing of fuels have been diluted or delayed. More recently, the July proposal to review the emissions trading system would extend free allocation of allowances well into the next decade.

In this context, the Iran war has inverted the logic of energy dominance espoused by the Trump administration. Europe imports four fifths of its oil and two fifths of its gas by sea; with storage low as winter nears, it competes with Asia for every cargo. Hormuz has confirmed what the loss of Russian gas already taught: energy vulnerability lies in dependence on imported fossil fuels, whoever the supplier. Ironically, this crisis may prove costly even for the fossil-rich United States: gasoline above four dollars, approval ratings in the low thirties, and a midterm election on 3 November not only threaten the Republican majority in Congress, but have also strengthened the global case for renewables – overwhelmingly produced in China – as a means of strengthening energy security.

Demand for energy is rising as never before, yet the bottleneck has shifted from generating it to delivering it: three times the renewable electricity capacity needed for 2030 waits in European interconnection queues. Should the investment cycle behind data centres and artificial intelligence deflate, gas plants built on its forecasts will be stranded as surely as any coal mine; and El Niño may accomplish, through damage, what diplomacy has not, an outcome no one should wish to test. For Europe, the lesson is not that it should slow the transition, but that it must recast it around resilience, infrastructure and strategic autonomy. Grids, storage and domestic clean technology manufacturing have become as much instruments of economic and national security as of climate policy.

Europe should respond not by retreating but by adjusting its posture. It cannot wait for the former transatlantic alliance to return: more than twenty years of American engagement and withdrawal have settled into a political cycle that will keep defining U.S. foreign policy, all the more so in a world of ascending China. Nor can it deregulate its way to a solution by blunting the very instruments on which its climate ambition rests. An El Niño currently gathering strength may soon vindicate adherence to its decarbonisation targets; yet the case reaches beyond climate ambition: clean technology deployment, and the reforms needed to accelerate it, are justified by energy security, by freedom from fossil imports, and by the imperative of not replacing one dangerous dependency with another. Europe should therefore hold its course, supplying the transformative signal its industries require, recasting decarbonisation as a matter of geostrategic necessity, and attending more closely to the social costs of the transition.

None of this will be easy. But in a world where the great powers have chosen contest over coordination, the transition Europe is now tempted to slow down is the one ally it can count on – the ability to draw strength from what it can build at home: clean energy, resilient supply chains, and the capacity to innovate.