EU Summit: How did the Consiglio Europeo respond to the crisis in the Middle East?

Translated by Gaia Baraldi

Geopolitical instability has once again struck at the foundations of the European economic system. While four years ago, the Russian Federation's invasion of Ukraine triggered the emergency, today the deterioration of the balance of power and the escalation of tensions in the Middle East exposes the European Union to a new and dangerous energy squeeze.

Since 28 February, when the conflict between Iran, the United States and Israel began, the markets have been extremely volatile. The Commission President stated that, in just a few days, the price of European gas had exceeded €50/MWh, doubling compared to pre-war levels, while crude oil rose by 27%. Von der Leyen also added that, in just ten days, this generalised rise had cost the EU around €3 billion extra in fossil fuel imports.

Faced with this scenario, European leaders met in Brussels on 19–20 March to outline a strategy capable of balancing short-term emergencies with the long-term climate transition. The Consiglio Europeo acted in line with the “Citizens’ Energy Package” Communication, presented by the Commission on 10 March. The primary objective is to protect the most vulnerable segments of the population: Dan Jørgensen — Commissioner for Energy — confirmed that approximately one in ten European citizens is unable to adequately heat or cool their homes, while over 30 million people struggle to pay their bills.

To mitigate the impact of price increases, European leaders have asked member states to use temporary fiscal instruments: since taxes and levies account for an average of 25% of the final price of electricity, the Commission and Council support targeted cuts in these items, along with state aid that does not undermine incentives for investment in renewables. Furthermore, an extremely important flexibility measure concerns storage: the Commission has invited member states to lower their fill targets from 90% to 80% for next winter, thus reducing demand at current gas prices.

European stability is further weakened by the (de facto) closure of the Strait of Hormuz—a crucial passage through which over 20% of the world's oil and liquefied natural gas (LNG) transit. During the Summit, heads of state and government condemned the attacks on energy infrastructure and called for the immediate strengthening of the EUNAVFOR Aspides and Atalanta naval missions to restore freedom of navigation. At the same time, the need to accelerate energy diversification has intensified: while dependence on Russia has been reduced thanks to new supplies from Norway, the United States, and Kazakhstan, the Iranian crisis requires new strategies. Italy, in particular, is looking to North Africa: in recent days, Prime Minister Giorgia Meloni flew to Algeria to negotiate an increase in pipeline gas supplies, to replace LNG shipments from Qatar, the transit of which has been hampered by the blockade of the Strait.

One of the most hotly debated issues was theEmissions Trading Scheme (ETS). Despite calls from Italy, Poland and Hungary, the Council decided not to suspend the scheme, reaffirming it as a key instrument of European transition policies. However, the Commission has been asked to submit a proposal to revise the ETS by July in order to reduce its volatility. The ETS Investment Booster has also been launched — a €30 billion fund dedicated to industrial decarbonisation and financed by the sale of 400 million ETS allowances, designed as a shield against rising operating costs and the risk of relocation.

The Council conclusions highlight that the concept of "energy transition" no longer refers solely to a climate response, but above all to a direction for strategic autonomy. According to a recent study by Zero Carbon Analytics, between 2022 and 2025, wind and solar development saved the EU approximately €58 billion in fossil fuel imports. Furthermore, for the first time, nuclear—and in particular, Small Modular Reactors (SMRs)—was explicitly cited as a domestic energy source capable of ensuring stable prices. To support this vision, European leaders have asked the Commission to draw up an ambitious package on energy networks by 2026, with the aim of strengthening interconnections at national and trans-European level and contributing to a more robust and integrated energy market.

The Iranian crisis has served as a "stress test,"once again highlighting the structural problems that characterize the European model. The EU debate has emphasized the need to shift from a short-term emergency management approach to a long-term structural approach: the Union must acquire the capacity to convert energy into a true strategic advantage. Therefore, the success of the "One Europe, One Market" plan—relaunched at the European Summit—will depend on the ability to integrate these structural measures by 2027.

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