High energy costs challenging EU’s competitiveness

This article is part of our special report Closing the gap, how to advance energy efficiency for EU competitiveness and climate goals.

In its latest appraisal of the EU’s national energy and climate plans (NECPs), the European Commission has highlighted a marked shift among member states towards bolstering industrial competitiveness as part of the bloc’s clean energy transition.

While the Commission welcomed the growing emphasis on supply chain resilience and workforce upskilling, it cautioned that many plans still fall short of delivering concrete, actionable targets, raising concerns over the pace and precision of implementation.

Speaking with Euractiv, MEP Niels Fuglsang (S&D) said one of the biggest challenges to the EU’s competitiveness is the high cost of energy for European industry.

“To me, energy efficiency measures are an absolute cornerstone of Europe’s aim to boost its competitiveness,” said Fuglsang, who was the rapporteur for the revision of the Energy Efficiency Directive (EED). He added that reducing the EU’s energy consumption, which is the core aim of the EED, will directly influence energy costs.

“As per the Draghi report on European competitiveness, energy prices, in particular gas, are much higher in Europe compared to US and China,” he said, noting that Europe reducing its energy consumption would drive down prices since less energy needs to be imported – instead, countries could rely more on renewables, the EU’s cheapest energy source,

Financial barriers hinder energy efficiency

In a new report on industrial energy efficiency, the Energy Efficiency Movement (EEM) detailed how financial barriers remain the most significant challenge to implementing energy efficiency improvements in industrial sectors.

The organisation found that companies struggle with uncertain returns on investment, volatile energy prices and limited access to external funding, among other barriers.

“Energy efficiency is a key foundation of a secure, affordable and sustainable energy future. But to unlock its full potential, governments must put the right policies and programs in place, and industry must treat efficiency as a core business strategy – not an afterthought,” International Energy Agency (IEA) energy efficiency head Brian Motherway said in the report.

“Without this alignment, we risk missing one of the fastest, most cost-effective tools to tackle greenhouse gas emissions and reduce costs for all.”

Other key concerns companies mentioned in the EEM report included adapting infrastructure due to a growing reliance on IT, data and software, a shortage of skilled workers, and regulatory compliance that demands time and money.

Energy Solutions network re-launched

Fuglsang also told Euractiv that this spring he re-launched the Energy Solutions network. He’ll be chairing it along with his vice-chairpersons MEPs Anna Stürghk and Seán Kelly.

“We chose to re-launch Energy Solutions because we share the analysis that cross-political and cross-industry cooperation is key to ensure ambitious energy and climate policies, this mandate. Strong forces in the European Parliament are working against the green agenda, so we believe building bridges across the political system is increasingly important to move the green agenda forward,” said Fuglsang, adding that Energy Commissioner Jørgensen attended their first meeting along with MEPs from different groups.

“Going forward, we are planning to host further network meetings with high-level speakers discussing solutions on important and energy and climate files on the agenda,” Fuglsang added.

Asked about what he’ll be focusing on over the coming months, he highlighted the topic of waste heat as an untapped energy source, referring to a whitepaper by Danish engineering group Danfoss that showed that the amount of excess heat in the EU corresponds to the EU’s total energy demand for heat and hot water in both residential and service sector buildings (such as hospitals, restaurants, and offices).

Excess heat, which comes as a byproduct of many industrial and commercial processes, can be reused to supply factories with heat and warm water or be reused by neighbouring homes and industries.

“With the expected boom in energy use by datacentres, we will need to ensure our datacentres are energy efficient,” Fuglsang said. “I’m looking forward to reading the coming Commission report on energy efficiency in datacentres to see the current state of play.”

[ Edited by Brian Maguire | Euractiv's Advocacy Lab ]