European renewable energy investment should increase because the continent’s dependence on imported fossil fuels has become a direct risk for prices, security and economic stability, European Central Bank President Christine Lagarde said in Frankfurt on Tuesday.
Speaking at an ECB conference on climate, nature and monetary policy, Lagarde argued that the latest surge in energy prices linked to the war in Iran should be treated as a warning for Europe. Her message was not only environmental. It was also economic: a continent that imports a large share of its energy remains exposed to external shocks, geopolitical crises and inflationary pressure.
Why renewable energy investment matters for prices
Lagarde said Europe imports roughly 60 percent of its energy, almost all of it in the form of fossil fuels. In her view, this makes the current model “clearly unsustainable” because price shocks abroad can quickly become higher costs for households, companies and public budgets inside Europe.
The ECB president framed renewable energy as one of the clearest ways to reduce the trade-offs between three goals that often compete in European energy policy: security, affordability and sustainability. When fossil fuel prices rise, countries that rely heavily on imported oil and gas are more vulnerable. Countries with a higher share of non-fossil electricity can be better protected from sudden increases in gas prices.
That point is particularly important for the ECB. Energy prices affect inflation, and inflation affects interest rates, purchasing power and investment decisions. Although the ECB does not decide energy policy, it monitors climate and energy risks because they can influence the wider economy and the central bank’s ability to keep inflation close to its target.
Lagarde warns that the green transition has lost momentum
Lagarde also warned that the green transition has lost momentum. One reason, she said, is that climate change has increasingly become a partisan issue, even though its economic effects do not follow political divisions.
This is a significant part of her argument. The ECB is not calling for renewables only as a long-term climate objective, but as part of Europe’s short- and medium-term economic resilience. In this reading, delaying investment in clean energy infrastructure leaves Europe more exposed to the next external shock, whether it comes from war, supply disruption or volatile commodity markets.
Her remarks come as the European Union is trying to reduce its fossil fuel dependency through REPowerEU and newer energy security initiatives. The European Commission, the EU executive, has presented energy diversification, clean production and lower fossil fuel imports as central pillars of Europe’s response to the energy crisis that followed Russia’s full-scale invasion of Ukraine.
Europe still depends on fossil fuel imports
Recent EU data show why the issue remains politically sensitive. Eurostat has estimated the EU’s energy import dependency at 57 percent, meaning that nearly three fifths of the energy consumed in the bloc is covered by net imports. In 2024, the EU’s energy imports were still dominated by fossil fuels: petroleum products accounted for about two thirds of imports, followed by natural gas.
At the same time, renewables are already central to Europe’s electricity system. In 2025, 47.3 percent of electricity generated in the EU came from renewable sources, according to Eurostat. That figure shows progress, but it also highlights the difference between electricity and the wider energy mix. Europe has moved faster in power generation than in sectors such as transport, heating and parts of industry, where oil and gas remain harder to replace.
The EU’s 2030 target is to reach at least 42.5 percent renewable energy in the overall energy mix, with an aspiration to reach 45 percent. Meeting that objective will require more than building wind farms and solar parks. It also means faster permitting, stronger grids, storage capacity, industrial investment and better coordination between member states.
A Nordic angle on Europe’s energy security debate
The Nordic region sits at the centre of this debate in different ways. Norway, although not an EU member state, has become one of Europe’s most important energy suppliers. In 2025, it was the largest partner for EU imports of natural gas in gaseous form and petroleum oils, according to Eurostat. That gives Norway a central role in Europe’s short-term energy security.
Sweden, by contrast, is among the EU countries with the lowest energy import dependency, helped by a power mix with a large share of non-fossil electricity. Denmark has built much of its energy identity around wind power and offshore development, while Finland has combined renewables, nuclear energy and security-driven diversification after the rupture with Russian energy supplies.
These differences matter because Europe’s transition is not moving at one speed. Some countries have the infrastructure, geography and industrial base to move faster. Others remain more dependent on imported fossil fuels or face political resistance to new renewable projects and grid expansion.
What happens next for Europe’s renewable energy push
Lagarde’s intervention adds central-bank weight to a debate usually led by governments, the European Commission and energy companies. It suggests that renewable energy investment in Europe is increasingly seen as a macroeconomic issue, not only as climate policy.
The next question is whether European governments can turn that argument into faster deployment. The EU already has targets, strategies and investment plans. The harder part is implementation: building grids, approving projects, mobilising private capital and maintaining public support at a time when energy costs remain politically sensitive.
For Europe, the message is clear. The green transition is no longer only about reducing emissions by 2050. It is also about limiting the economic damage caused by the next energy shock. In that sense, renewables have become part of the continent’s security policy.
