ThinkTankWeekly

The Strait of Hormuz energy crisis shows the EU’s carbon pricing is the right approach

Chatham House | 2026-04-27 | energy

Topics: Climate, Europe, Indo-Pacific, Middle East, Russia, Ukraine, Energy

Visit original source

ThinkTankWeekly provides a curated entry and summary only. Full text and PDF remain on the publisher's website.

English Summary

The energy crisis stemming from the Strait of Hormuz demonstrates the profound vulnerability of relying on volatile fossil fuel imports. The analysis argues that the EU's existing carbon pricing mechanism, the Emissions Trading Scheme (ETS), is the essential long-term solution, as it has proven effective in driving decarbonization and reducing emissions while generating revenue for clean energy investments. Policymakers must therefore strengthen the ETS and prioritize coordinated joint procurement of resources to mitigate geopolitical shocks. Ad-hoc national subsidies, conversely, risk undermining the 'polluter pays principle' and fragmenting the European market.

中文摘要

源自霍爾木茲海峽的能源危機,凸顯了過度依賴波動化石燃料進口的深層脆弱性。本分析認為,歐盟現有的碳定價機制——排放交易體系(ETS),是長期解決方案的關鍵,因為它已被證明能有效推動去碳化和減少排放量,同時為清潔能源投資創造了收入。因此,政策制定者必須加強ETS,並優先實施資源的協調性聯合採購,以緩解地緣政治衝擊。相反地,臨時性的國家補貼有損「污染者付費原則」,並可能導致歐洲市場碎片化。

Related Entries

  1. 1.
    2026-07-13 | china_indopacific | 2026-W29 | Topics: China, Europe, Indo-Pacific, Middle East, NATO, Nuclear, Russia, Taiwan, Trade, Ukraine, United States

    The China-Russia partnership is a highly consequential geopolitical alignment driven by a shared goal of countering U.S. hegemony and reshaping the international order into a multipolar system. While not a formal alliance, this relationship is strengthened by Russia's increasing economic reliance on China following Western sanctions, which allows Beijing to leverage its influence. Policymakers should note that while the partnership projects deep solidarity (as seen in high-level summits), it remains complex and limited by mutual mistrust and competing strategic interests. This enduring alignment poses a significant challenge to U.S. interests and requires continued diplomatic vigilance.

    Read at Brookings

  2. 2.
    2026-07-13 | defense | 2026-W29 | Topics: Europe, Indo-Pacific, Middle East, NATO, Nuclear, Russia

    The Chatham House analysis concludes that the UK's Defence Investment Plan (DIP) will be viewed by NATO allies as a mixed bag, primarily due to its failure to commit to higher GDP spending targets. However, the plan signals critical strategic improvements by emphasizing novel technologies—such as autonomous systems and digital infrastructure—and enhancing readiness. Crucially, the DIP adopts an international focus through major collaborative programs (e.g., AUKUS, GCAP) and establishes a new National Armaments Director Group (NADG). This structural shift toward flexible, portfolio-based collaboration is strategically valuable for NATO allies seeking reliable partners as US conventional forces reduce their European presence.

    Read at Chatham House

  3. 3.
    2026-07-13 | defense | 2026-W29 | Topics: China, Europe, Indo-Pacific, Middle East, NATO, Russia, Ukraine, United States

    The article argues that the U.S., through recent policy signals—such as questioning NATO's value or sympathizing with great-power territorial claims—is inadvertently adopting the core tenets of non-alignment, prioritizing transactional national interests over binding alliances. Historically, while non-alignment allowed developing nations to gain benefits without commitment, the analysis notes that this approach lacks the deep trust and shared obligations necessary for robust security structures. The implication is critical: by undermining established alliances, the U.S. risks losing its greatest strategic asset—the network of mutual commitments—as allies actively seek alternative bilateral or regional defense pacts.

    Read at CFR

  4. 4.
    2026-07-13 | energy | 2026-W29 | Topics: Climate, Trade, United States

    The CSIS analysis finds that the U.S. grid's regulatory framework for connecting large loads is severely fragmented and unprepared for the massive electricity demands posed by AI data centers. FERC has mandated significant reforms across six regional operators, requiring them to modernize interconnection studies, prevent cost-shifting, and establish clear tariffs for co-located generation. Evidence shows that most operators fall far short of these new standards, necessitating complex, multi-year policy adjustments rather than simple compliance. Policymakers must coordinate federal regulation (FERC) with state utilities to accelerate grid modernization, ensuring energy affordability while maintaining technological competitiveness.

    Read at CSIS

  5. 5.
    2026-07-13 | diplomacy | 2026-W29 | Topics: Europe, Middle East, NATO, Russia, Trade, Ukraine, United States

    The article argues that while Ukraine's deep strikes and Russia's mounting economic instability create a window for peace talks, President Putin remains committed to maximalist demands and may escalate conflict through increased air assaults. Key evidence supporting this tension includes the strain on Russian energy infrastructure versus Moscow's refusal to negotiate in good faith, preferring instead to expand its claims. Consequently, the immediate strategic implication is that Washington must lead intensive diplomacy—a 'shuttle diplomacy'—to establish a framework agreement centered on a ceasefire along current lines and defining long-term European security arrangements.

    Read at CFR