New study shows that Europe’s energy price gap will worsen without urgent action

4 July 2024 - A new, in-depth study published today by BusinessEurope, developed with economic consultancy Compass Lexecon, shows that a more competitive energy and climate transition is still possible but only if swift action is taken by EU legislators during the next EU cycle.

BusinessEurope Director General Markus J. Beyrer said: “High energy prices continue to seriously hamper the global competitiveness of European companies and industrial output. Securing energy at competitive prices will be central to preserving Europe’s industrial base.

The study shows that even in the case of a managed transition, with more supportive EU energy policies, energy costs in Europe would be at least 50% higher than in the US, China and India by 2050. This will put European companies at a serious competitive disadvantage with these key competitors, which is why we need urgent action at EU level to bridge this gap so that Europe can achieve climate neutrality by 2050 without deindustrialising.

Firstly, we need to decisively tackle the carbon cost differential and energy competitiveness gap. We are also calling for a massive deployment of all necessary energy sources and infrastructure. This will not only enhance the security of Europe’s energy systems but will also help reduce the overall cost of the transition. For example, our study finds that when renewables are developed in the least costly locations and the roadblocks to their development are lifted, wholesale power prices could be reduced by almost 40%.”

Based on the findings of the study, BusinessEurope has developed concrete proposals across the following areas:  

• Massively increasing the deployment and integration of all renewable and low-carbon energy sources, and the necessary infrastructure; 
• Closing the investment gap;
• Securing the hydrogen value chain;  
• Continuing to speed up and streamline permitting procedures;
• Tackling the carbon cost differential and ensuring effective implementation of CBAM;  
• Introducing measures to close the energy competitiveness gap; and,
• Fostering industrial decarbonisation through effective demand-side measures.

The full study and BusinessEurope’s policy recommendations can be read here.