The European chemicals (CEFIC), aluminium (European Aluminium) and electricity industry (Eurelectric) co-organised an Antwerp Dialogue on the topic of industrial electrification and competitiveness that was joined by relevant stakeholders from industry, the power sector, NGOs, unions, and think-tanks.
Energy-intensive industries are a “vital part of the European economy and play a critical role in reducing the EU’s strategic dependencies” [1] while contributing directly and indirectly to a large share of the European economy through downstream activities. Developments in energy prices and costs “have had a strong impact”1 on their competitiveness. In addition, decarbonisation investments create additional costs for EU industry that need to be accounted for.
To address these challenges, participants express full support for a European Industrial Deal to complement the Green Deal and keep high quality jobs for European workers in Europe.
One year after the peak of the energy crisis, “the EU suffers from a major gap compared to its trade partners”1. The Antwerp Declaration in emphasizing the need for “clarity, predictability, and confidence in Europe and its industrial policy”1, in the energy space calls for urgent action including reducing energy prices and costs, removing barriers to timely infrastructure development, ensuring strong public funding. In the short term particularly the prices and costs of energy are simply too high to compete. “Electricity retail prices – specifically those for industrial sectors – are currently two to three times those in the US and China”1. Historically, retail electricity prices in the EU have been up to 80% higher than those in the US while moving around the same level as in China, impacting the business case, overall investment, and progressively cascading throughout the economy.
The extra-EU relocation, with subsequent loss of jobs and domestic resilience of the EU, has already started in certain Member States. Without dedicated industrial energy policies to redress high energy prices and costs, this trend is only set to increase. Against this background, we view an EU Action Plan for Affordable Energy Prices as an essential pillar of the up-coming Clean Industrial Deal.
In this context, participants discussed the root causes of the high energy prices and the costs faced by energy intensive industry across the EU vis a vis their international competitors, the potential effects of fully implementing the revised Electricity Market Design, and potential actions which could bring down the final cost of energy. Participants further addressed the urgent need to improve the EU’s industrial competitiveness and to accelerate direct and indirect industrial electrification, while at the same time contributing to the long-term goal of achieving a climate-neutral economy by 2050.
From that discussion emerged a set of policy recommendations that could be implemented in the short term and that have found broad consensus within the group. The discussion also addressed topics where stakeholders manifested diverging views. These included short-term solutions for industrial competitiveness, industrial exposure to wholesale price dynamics linked to fossil-fuels, and the adequacy of the revised market design in addressing such dynamics.
These recommendations are therefore not comprehensive, nor are they the panacea to the EU’s competitiveness issues.
Rather, they offer some practically oriented action points to the incoming European Commission work on industrial electrification and competitiveness – a starting point to a necessary discussion, rather than its conclusion.