Competitiveness of the European Energy-Intensive Industries

Competitiveness of the European Energy-Intensive Industries

The Brussels-based European Round Table for Industry this week published two new reports by the Boston Consulting Group that lay out the state of play and articulate the challenges in Europe’s energy transition.

As the countdown continues to the European elections and appointment of the next European Commission later this year, the European Round Table for Industry (ERT) releases two reports focusing on the state of Europe’s energy transition.

The announcement of the Antwerp Declaration in February, reiterated European industry’s commitment to the Green Deal’s climate goals while paving the way for a stronger business case in Europe. These new ERT reports, developed in partnership with the Boston Consulting Group (BCG) detail the many obstacles to overcome to make Europe sustainable, without further compromising its resilience and competitiveness.

Part 1: Can energy-intensive industry still thrive in Europe?

The first report, entitled “Competitiveness of the European Energy-Intensive Industries”, takes stock of the intense competitive pressure on European energy-intensive industries (EIIs), compared to their competitors elsewhere.

This publication lays bare Europe’s loss of competitiveness through energy transition, reflected in data, such as the loss of 66% of aluminium production in the EU and its recent reversal from being a chemicals exporter to a net importer. The risk of further deindustrialisation is evident in the shift of foreign direct investment (FDI) towards other regions. It also explores the reasons behind higher energy and decarbonisation costs, barriers to affordable renewable energy access and the importance of deploying future technologies.

Companies led by ERT Members are proposing regulatory changes and asking policymakers to rethink Europe’s policy pathways to achieve its climate targets:

• Ensure the availability and affordability of low-carbon energy and Carbon Capture, Utilisation and Storage (CCUS);
• Increase financial attractiveness of decarbonisation;
• Create a level playing field vs international competition.

The report is available here.

Part 2: The Infrastructure Imperative

With the imperative of industrial decarbonisation, the surge in demand for renewable energy has put enormous strain on existing infrastructure. The energy mix at play in the system has also shifted, so massive investments are needed in both national and cross-border infrastructure for power grids, hydrogen and CO₂.

The second report, “Strengthening Europe’s Energy Infrastructure”, details the pain points and infrastructure investments still needed to deliver one of the core pillars of the Green Deal: abundant availability of competitively priced renewable energy across the EU.

To achieve this decisive and fundamental transformation, the investment gap requires collaborative effort between public and private capital: €0.8 trillion needed by 2030, scaling to €2.5 trillion by 2050.

Expanding grids is as much, or even more, a global challenge as it is an EU-wide challenge. The EU is in a privileged situation, as it has one of the largest interconnected grids in the world, but also an underdeveloped Single Market for energy; these ambitions need further support through regulatory actions.

Companies led by ERT Members are proposing regulatory changes and asking policymakers to rethink Europe’s policy pathways to achieve its climate targets:

• Ensure the availability and affordability of low-carbon energy and Carbon Capture, Utilisation and Storage (CCUS);
• Increase financial attractiveness of decarbonisation;
• Create a level playing field vs international competition.

Europe’s ambition for a greener future calls for a decisive evolution of its energy infrastructure. With regard to the development and rollout of next generation energy infrastructure, the Members of ERT recommend:

• Fast-track energy infrastructure development
• Facilitate more cross-border cooperation via transnational PPAs
• Address any market reform with a preliminary impact assessment study
• Incentivise both on- and off-shore interconnector planning
• Encourage harmonisation of technical standards for more interconnection
• Ensure strategic locations for demand centres for hydrogen and CO2
• Accelerate permitting.

The second report is available here. (first published here)