Horizon: Geopolitics Drives Industrial Policy
Signals and Insights | 25 April 2026. Geopolitics now drives EU industrial policy, system insights and recommended reads
In this edition: Signal of the week; on the radar; system insights; what I am reading; and one last thing.
Signal of the Week
EU to Shield Households and Industry from the Fossil Fuel Price Surge
Who says lightning never strikes twice? In fact, lightning seems to prefer to strike the same place twice. For the second time in less than five years, Europeans have been struck again by a bolt from the blue and are yet again paying the price of Europe’s dependency on imported fossil fuels.
This week, the European Commission proposed “new actions to protect Europeans from the fossil energy crisis,” combining short‑term relief for households and industry with a push toward clean energy independence and reduced exposure to volatile fossil fuel markets.
At last month’s EU Council meeting, EU heads of government requested “a toolbox of targeted temporary measures to address the recent spikes in the prices of imported fossil fuels arising from the crisis in the Middle East”. The measures were also a topic of discussion at the Informal European Council in Cyprus this week.
Key Details:
Impact: The EU says it has spent an additional €24 billion on energy imports due to higher prices since the outbreak of hostilities in the Middle East, without an increase in energy supply.
Immediate relief: The Commission has proposed to adopt a State Aid Temporary Framework, intended to provide additional flexibility for national governments, including emergency measures to support the most exposed economic sectors. It will also coordinate with member states on refilling of underground gas storage, use of flexibilities in filling rules, and any exceptional releases of oil stocks.
Strategic shift: The measures seek to accelerate a pathway towards homegrown clean energy independence, away from volatile fossil fuel markets, aligning with the broader Green Deal Industrial Plan and clean‑tech push.
Industrial dimension: In the coming months, the EU Commission is also expected to present an ambitious Electrification Action Plan to remove barriers to the electrification of the industrial, transport and building sectors. It also intends to present a legislative proposal to ensure, among others, that electricity is taxed less than fossil fuels.
Investment boost: The Commission has committed to assisting Member States to make maximum use of available EU funding and will also organise a Clean Energy Investment Summit to accelerate private financing.
Regulatory pipeline: The EU is also consulting on revisions to its sustainable-finance framework and on post-2030 energy rules, including the taxonomy, renewable energy, and energy-efficiency regimes, which will further shape capital allocation and compliance costs.
Sources: EU Commission EU Commission+1 Cyprus Presidency of the EU
On the Radar
It was reported this week that the European Commission also intends to launch a fertiliser strategy on 19 May in response to war-driven supply shocks. This is in the context of rising global prices for key inputs, such as urea, which have surged 55% since February.
Key details:
Fertilisers are a key input for EU food security.
Rising fertiliser and other farm-input costs tend to pass through into higher food prices and compress margins for European food processors and retailers.
The EU aims to boost domestic fertiliser production capacity in a move towards stronger resilience to global market volatility.
The strategy includes potential regulatory changes and decarbonisation goals.
The move complements broader EU energy security interventions.
It reflects a wider trend of strategic autonomy and diversification in critical supply chains.
It’s a proactive move as EU farmers are reportedly not currently facing a fertiliser shortage.
Source: Reuters
System Insights
EU energy and industrial policy: The EU’s latest actions to mitigate the fossil fuel crisis sit within a broader shift toward an activist industrial policy, consisting of the Green Deal Industrial Plan, clean‑energy transition funding, and sustainable finance reforms. It signals that EU policymakers see the fossil fuel shock as both a social risk and a threat to competitiveness, and that they are willing to intervene.
Europe is trying to find opportunity in a crisis and turn vulnerability (energy dependence, climate exposure) into a competitive advantage (clean‑tech manufacturing, efficient energy use, resilient supply chains). For European businesses in particular, this means more subsidies and support but also more conditionality, reporting, and regulatory complexity.
This, together with the expected fertiliser strategy, is the latest example of a systemic shift from market-led globalisation to state-managed resilience, where the state (in this case, the collective member states of the EU) is a key economic actor in advancing industrial policy.
This is not just an EU story. Europe’s response is unfolding alongside the U.S. model of subsidised industrial renewal and China’s state-directed industrial-tech push, so in today’s international political economy, it is increasingly the case that markets are no longer the sole allocators of capital.
In such an environment, policy is becoming more interventionist, sector-specific, and strategic. That suggests that regulatory risk becomes as important as market risk.
We should expect more expansion of subsidies, localisation mandates, strategic sectors and a blurring of public and private investment decisions. Businesses must align with policy priorities to access capital and support. Meanwhile, equity investors should track who will be the beneficiaries of such policies.
What I am Reading
Doom Loop. The book I am currently reading with my early-morning coffee these days is Eswar Prasad’s Doom Loop. This is exactly the kind of book that resonates with the intentions of this newsletter. It argues that economic conditions, domestic politics, and geopolitical rivalries have become so deeply intertwined that they now feed destructively off one another. The result is a doom loop in which the forces we once relied upon to underpin stability are instead driving fragmentation and disorder. The Doom Loop – Eswar S. Prasad
Havel’s Greengrocer. Robert Lightizer, writing in Foreign Affairs from an American perspective, argues that Canadian PM Mark Carney, casting himself as Havel’s greengrocer at the World Economic Forum this year, got it the wrong way around. Instead, it was Trump who called foul on the prevailing economic order a decade ago. The era of hyper‑globalisation hollowed out the U.S. economy while enriching surplus countries, and in Lightizer’s view, Donald Trump’s trade agenda marks the first serious correction to this imbalance. It is a coherent articulation of a more protectionist U.S. trade order that Europeans should not ignore. Bob Lighthizer: The New Trade Order
Dollar Status. David Lubin at Chatham House argues that the conflict in Iran does not seem to have undermined the dollar’s international standing. However, this may be because the US, as the top producer of oil, gas and armaments, is economically insulated from the fallout. Dollar dominance is surviving the Iran war – just about | Chatham House – International Affairs Think Tank
One Last Thing
China’s Humanoid Robot Beats Human Half‑Marathon World‑Record Time
This week, an autonomous humanoid robot from Chinese tech company Honor completed a robot half-marathon race in Beijing in 50 minutes and 26 seconds, faster than the human world record. The race, where 40% of the robots navigated the course autonomously, while the others were remotely controlled, showcased advances in AI‑driven autonomy, energy efficiency, and mechanical design.
The event signals a new frontier for robotics, with potential applications in logistics, manufacturing, and elderly care, and underscores China’s rapid progress in AI and robotics, a sector now central to US‑China strategic competition.
Politically and economically, this event is a symbol of a shifting productivity frontier where China is increasingly the theatre where the most visible, high‑stakes experiments in bipedal embodied AI are being staged. Europe has made some advances in the area of AI, but it must decide whether to treat this as a wake‑up call for its industrial, AI, and robotics policy, and for its broader project of strategic autonomy in the context of US‑China technological rivalry.
For tech sceptics, it also raises questions about the ethical and economic implications of human‑like robots, and what that could mean for the workforce and society more broadly. AP News China Xinhua News on X
As always, thoughts shared here are intended for discussion and knowledge only, not financial, investment, or legal advice. Always chat with your advisors first.