War in Iran: from an energy shock, to an electrification one?

The issue of energy prices will be on the agenda of the European Council meeting on 19 and 20 March. Our latest policy brief examines the energy implications of the war in Iran for a Europe that remains heavily dependent on imported fossil fuels.

Three proposals are put forward to overcome the price shock and trigger a shift towards electrification:

• Adopt a European legal framework providing for a mandatory, temporary and conditional reduction in our oil consumption;

• Reaffirm the importance of the price signal sent by the European carbon market and ensure that the European Investment Bank lends money to Member States, to be repaid using future carbon revenues;

• Establish a task force responsible for monitoring raw material flows on a day-to-day basis and preparing a contingency plan for each technology (diversification of supplies, prioritisation of uses, protection of strategic value chains).