ECB’s Lagarde: Europe Must Unlock Investment to Build Renewables-Based Energy System

21 October 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Tuesday said that Europe must accelerate investment in renewables to secure affordable, sustainable and reliable energy and strengthen its long-term competitiveness.

Speaking at Norges Bank’s Climate Conference in Oslo, Lagarde said that Europe’s reliance on imported fossil fuels had proved unsustainable and that only a rapid shift to locally produced clean energy could deliver on all three policy goals of security, sustainability and affordability.

She said the energy crisis triggered by Russia’s war in Ukraine had shown the cost of dependence on gas imports and that surging prices had fed into record euro area inflation, forcing the ECB to implement its fastest monetary tightening cycle.

Lagarde noted that electricity prices in the EU remained about two and a half times higher than in the United States and gas prices nearly four times higher, weakening Europe’s competitive position.

She said that renewables offered a path to reverse that trend if policymakers acted decisively to remove investment bottlenecks. “The faster policymakers can create an environment in which such investment can flourish, the easier and less costly the transition will be,” she said.

The shift to renewables, Lagarde said, required large-scale investment in generation capacity, grids and storage, estimated by the European Commission at nearly €150 billion annually. Without faster progress, Europe would remain exposed to volatile fossil fuel prices and rising system costs.

She said deeper integration of Europe’s energy markets and faster permitting procedures were needed to reduce costs and encourage cross-border investment. “Deeper energy market integration … would let countries share surplus electricity, smooth fluctuations from intermittent sources and use generation and grid capacity more efficiently,” she said.

Lagarde said the green transition would also depend on creating the right environment for financing, with much of the €1.2 trillion annual investment needed expected to come from the private sector. She urged further progress on capital markets union to channel Europe’s savings into productive green investment.

“Investors will not step forward if the green transition is clouded by uncertainty,” she said. Credibility depended on following through with climate commitments and maintaining stable carbon prices, she added.

Lagarde said that renewables could ultimately lower energy prices, noting that research suggested electricity prices could fall by more than a quarter by 2030 if Europe met its wind and solar targets.

She closed by calling for determination to complete the transition. “Europe must now decide,” she said. “Either we remain with an unsustainable and expensive status quo, or we create an environment that can unlock the investment needed for sustainable, secure and affordable energy.”