This is the first instalment of our series “Resilience by Design” where we unpack how a systems transformation approach to policymaking can strengthen European resilience in a complex and volatile environment.
Europe has been here before. A geopolitical shock sends energy prices surging, governments scramble to protect households and businesses, and structural reforms are delayed. The recent war in the Middle East is the latest iteration of this cycle, amplifying Europe’s structural fragilities and, in turn, reinforcing and accelerating the pattern itself.
This goes beyond the costs to Europe’s stressed balance sheets, with the 2022 energy crisis costing over 2.5% of GDP or roughly €758 billion in emergency support alone. The real damage lies in the compounding expenditures that are rarely considered in annual budget discussions: investment decisions deferred because of price uncertainty, industrial competitiveness quietly eroded, political attention permanently consumed by the last crisis rather than the next transition. The volatility itself is one of the most significant costs Europe bears, one that can be avoided.
The public debate about the energy transition has largely been fought on the terrain of price. For years, the central question was whether renewables could ever be cheap enough to compete with fossil fuels. But in focusing on it, most commentary has missed the more important shift: what the last decade of investment has demonstrated is not just that clean energy is cheaper, but that it behaves differently.
Fossil fuel systems are structurally fragile. They are centralised, globally traded, and geopolitically entangled. When a crisis erupts in a producing region, the shock travels in various iterations through price, into household bills, input costs, inflation, monetary policy, and fiscal space, amplifying uncertainty years after the event. Renewable systems work on different logic, where operational costs are low, insulated from most external factors, and organised modularly. This acts as a stabiliser in times of crisis as shown in the relatively smaller swings in electricity prices in Spain today, freeing up financial and political capital to focus on addressing more structural challenges.
This is not a marginal improvement on the old system. It is a move to a system that operates under fundamentally different dynamics and one that holds valuable lessons for Europe as a whole.
It is important to note that renewables were not always price competitive, initially there was no investment case. What changed was a positive feedback loop between visionary policymakers providing long term incentives, an ecosystem of researchers, innovators and entrepreneurs, and providers of patient capital.
The result, over decades, is the more resilient energy system Europe is beginning to benefit from today. It remains incomplete, with only a quarter of all final energy consumed in the EU from renewable resources. But the proof of concept is real, and it was for a large part made in Europe.
The costs of volatility are set to only grow. Emergency energy subsidies, food security interventions, chip subsidies, rising defence budgets: these are not separate line items. They are symptoms of the same underlying fragility, and together they represent an enormous ongoing expenditure that builds nothing durable. The question is therefore whether Europe spends this subsidising past fragility or building future resilience.
The energy transition has shown that the upfront investment, however daunting it appears, is manageable, provided that policymakers offer the forward guidance and stable frameworks that give businesses and investors the confidence to act. The barrier to transition is rarely the cost of the transition itself, it is the cost of uncertainty. This is what makes long-term investment unattractive and locks fragile systems in place long after better alternatives exist.
By lacking energy reserves, critical minerals and dominant technology platforms, Europe is structurally exposed in a new geopolitical landscape. Growth will not compensate for structural vulnerability. We must address vulnerability as such.
What is needed now is the same thing that was needed in the early days of the energy transition: the political decision to create the conditions, and the patience and capital to let the pathways emerge. In the months ahead, the Systems Transformation Hub will work through what this looks like in practice. Through roundtables, capacity-building programmes and publications we will bring together the policymakers, scientists, and practitioners who will have to make the transition real.
The covered domains range from land use, water, materials, democratic governance, finance, labour markets, knowledge and innovation ecosystems, cities, and more. This will build on the discussions at our annual event “Resist and Reboot: Shaping Europe’s future”, our Recommendations for the incoming Commission report, and the work of our respective members. Although it seems impossible to address them all simultaneously, the opposite is likely the case. Changing each of these systems individually provides synergies and opportunities for the others to shift as well.
The energy transition did not happen because someone had all the answers. It happened because enough people understood what was at stake and decided to act. That moment has arrived again, not just for energy, but for every system Europe depends on. The question is not whether transformation is possible. We know it is. The question is whether Europe will choose to design it, or wait to be forced into it.