(BOE Report) – Top business leaders urged the European Union on Wednesday to act urgently to bring down energy prices, saying that was key for European industries to be able to compete with the United States and China.
The industries’ message is timed to land just before EU leaders gather in a Belgian castle on Thursday for an informal “retreat” to thrash out a plan for how Europe can compete economically with China and the U.S.
“Why is Europe so much behind compared to the rest of the world? It’s the energy situation,” Swiss specialty chemicals maker Clariant CEO Conrad Keijzer told Reuters as corporate leaders gathered for a meeting in the Belgian town of Antwerp.
Asked what his main message to EU leaders was, Jon Morrish, CEO for Europe of Heidelberg Materials, told Reuters: “Number one, on energy prices, that they must come down. They must take us seriously, and they must realize that that is really hampering Europe’s competitiveness.”
The loss of cheap Russian gas imports following Moscow’s 2022 full-scale invasion of Ukraine hiked bills for many energy-intensive industries. Congested power grids, national taxes and the EU’s CO2 emissions price also contribute to power prices – which for industries in Europe are more than double those in the United States and China.
The EU’s electricity system is designed so that the last power plant needed to meet total demand sets the power price. Often, that is a natural gas plant – leaving many consumers highly exposed to gas prices, which are significantly higher in Europe than in the U.S.
“The pricing structure for power is a big challenge,” said Morrish, adding that Heidelberg, the world’s largest cement maker, whose home market is Germany, was starting to move some investments out of Europe due to high energy prices.
ENERGY PRICES
Companies and some government leaders complain Europe has failed to address energy prices head-on, despite years of warnings from industry.
European Commission chief Ursula von der Leyen, who will also attend the Antwerp summit, said EU countries needed to better link up their power grids to ensure cheaper low-carbon energy can flow freely across the bloc.
“Prices remain too high and volatile. And we know why. It is because of lack of interconnection and grids and our reliance on fossil fuels,” she told the European Parliament on Wednesday.
The Commission proposed legal changes in December to slash deadlines on permits for grid projects, to try to speed up the modernisation of power networks.
It also recommended governments cut their national taxes on energy as a quick way to bring down bills. EU officials say that request has found little support among governments struggling to increase public funds for defence and other spending priorities.
(Reporting by Kate Abnett, additional reporting by Jan Strupczewski; Writing by Ingrid Melander, Editing by William Maclean)
