How Europe’s clean energy transition is shielding its economy from global energy shocks

Iran’s stranglehold on the Strait of Hormuz, through which roughly 20% of the world’s oil and liquified natural gas (LNG) supplies flow, has shaken energy markets and threatened to put a break on economic growth worldwide.

The European economy was badly shaken by the last energy crisis in 2022, when Russia’s invasion of Ukraine sent oil and gas prices soaring. EU countries responded by ploughing hundreds of billions of euros into clean energy investments, hoping to protect themselves from future shocks. How successful has the clean energy transition been? Has Europe freed itself from volatile fossil fuels markets?

The answer is complex. The transition is protecting European households and industries to a certain degree. Europe has invested considerably in renewable energies such as wind and solar power since the 2022 energy crisis. Those renewables provided about half of Europe’s electricity in 2024 and 2025.

But the EU economy is still exposed to oil prices – particularly in the transport sector – and it became reliant on LNG when Russian gas supplies dried up during the 2022 shock. Natural gas is a major source of heating, and Europe now needs to replenish its LNG supplies after a relatively cold winter – at prices that could be 70% higher if the conflict continues.

“Price volatility is the tax we pay for importing fuels. The real question is not whether the war disrupts supply, but how long it keeps prices high,” says Fotios Kalantzis, a senior economist at the European Investment Bank who specialises in climate and the energy transition. “The only long-term solution is to invest in clean infrastructure and shift spending away from fossil fuels.”

Here is the story of Europe’s progress in switching to clean energy, the current challenges and the way forwards, told through five charts from the EIB Investment Report 2025/2026 (Chapter 6: Securing Europe’s green and competitive future).