The recent energy crisis has revealed significant weaknesses in the EU's energy supply and drastically increased energy costs for European companies. The high energy costs have had a particularly detrimental effect on energy-intensive industries, reducing their global competitiveness and production levels in Europe. The reasons for the loss of European competitiveness can be traced back to various factors. The European Union has pursued a comprehensive regulatory regime until recently. In the coming years, at least 108 laws and Green Deal initiatives will have to be implemented at national level. "Above all, this means more obligations and regulations for European companies, while international competitors will find lower energy costs and less bureaucracy. The European Green Deal has turned out to be an anti-growth deal," said Christoph Neumayer, Secretary General of the Federation of Austrian Industries (IV) on the occasion of today's publication of the study.
Against this backdrop, Compass Lexecon was commissioned by BusinessEurope to analyze various scenarios on the energy market up to 2050 and their impact on European competitiveness. The results paint a dramatic picture for the European location and the future of the manufacturing sector in Europe.
Europe is facing energy prices that are two to three times as high in international comparison
Now is the time for a rethink, as a massive loss of competitiveness is looming. The analysis shows that in various scenarios, energy prices in Europe will in some cases be far above the level of international competitors such as China, the USA or India by 2050. Without rapid countermeasures, European industry faces energy prices that are two to three times higher than those of its international competitors. Even with comprehensive measures, European companies could spend around 50-100 percent more on energy than American or Chinese industrial companies. "This makes production in Europe economically unattractive compared to other locations. The deindustrialization of Europe continues to gather pace," says Neumayer.
Rapid countermeasures for more growth & competitiveness
Europe and Austria must create the framework conditions for more growth, competitiveness and innovation. A decisive lever is the massive expansion of renewable energies and their infrastructure. To achieve this, however, counteracting restrictions such as long approval procedures and insufficient investment must be tackled. Climate-neutral hydrogen in particular can become a central energy source for industrial processes. This requires fundamental political openness for all types of climate-neutral hydrogen (blue & turquoise H2). The course for this must be set now at European level, otherwise a cost-efficient ramp-up will be made impossible. Furthermore, thorough monitoring of CBAM implementation is crucial to ensure that carbon leakage is prevented. If CBAM proves ineffective, the timetable for phasing out free allowances must be reconsidered early enough to ensure effective protection against carbon leakage until other suitable instruments are found. "Dogmatically sticking to targets without addressing the real geostrategic developments and economic risks would be a big mistake. We need a new strategy for more growth, competition and innovation in Europe," demands Neumayer.
The study presented today can be found here: Energy and climate change: How to strengthen the EU's competitiveness - Reboot Europe.