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Green Suicide: Europe’s Industry Rapidly Losing Ground

Europe’s manufacturers are rapidly losing ground to US rivals because of soaring energy costs and the failure of the continent’s governments to be “rational” about nuclear power and shale gas, the head of one of the world’s biggest chemicals groups has warned.

In an interview with the Financial Times, Jean-Pierre Clamadieu, the new chief executive of Franco-Belgian Solvay, accused Germany, France and Belgium of acting in isolation on nuclear and gas policy and failing to come up with a coherent strategy to keep Europe’s companies competitive.

“There is very little European co-ordination,” he said, warning that energy costs should be ranked alongside the eurozone crisis as the most urgent problem confronting industry.

Natural gas in the US is three times cheaper than in Europe because of its decision to exploit shale gas through the environmentally-controversial process of “fracking” – the high-pressure injection of water and chemicals to free up trapped gas.

“The fact that energy is cheap in the US, and probably will be for a long time, is changing the game,” Mr Clamadieu said. “Electricity’s getting more and more expensive in Europe, and some of the decisions that have been announced regarding nuclear energy production will certainly move the price in the wrong direction. For industry this is really a concern.”

He added that US industry’s advantage on energy prices also meant “you can’t just close the book and say we’ll never look at whether Europe has shale gas”, despite vocal environmental opposition.

Solvay makes chemicals used in the fracking process, but concerns about the competitive impact of soaring power costs are shared by other heavy users of energy. BASF, the world’s biggest chemicals group, has also warned that shale gas is a “game changer for parts of the US industry”.

The chief executive of one of Europe’s largest power groups told the FT that the continent’s political leaders were paying “zero attention to competitiveness” when deciding energy policy.

Germany accelerated its withdrawal from atomic power following last year’s Fukushima nuclear disaster in Japan, while Belgium is considering phasing plants out sooner than expected. In France, the new Socialist president, François Hollande, has promised to cut reliance on nuclear energy from 75 per cent of electricity production to 50 per cent.

The issue of energy costs is acute in France because the country is desperately trying to improve its industrial competitiveness to make up ground lost to Germany.

“The debate on energy is a bit difficult to understand for someone who wants to have a rational approach,” Mr Clamadieu said. “It’s very difficult to replace nuclear produced electricity, which costs about €40 per megawatt hour, with a wind turbine put far away in the sea, which costs €200 per megawatt hour.”

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