Europe’s comparatively high energy costs are increasingly a source of concern for its industry, which fears a loss of competitiveness, particularly in energy-intensive sectors. “The exodus has started in the chemical, automotive and steel industries. If Europe doesn’t change course, that process will accelerate and at some point not be reversible.”
When BMW, the German carmaker, was considering where to build an energy-intensive plant to manufacture carbon fibre for its forthcoming i3 urban electric vehicle, it did not pause long before selecting Moses Lake, Washington.
The $100m plant – operated with joint venture partner SGL Group – relies on hydroelectric power produced by dams on the nearby Columbia river. They generate electricity that costs just 3 dollar cents per kWh.
The equivalent electricity in Germany, where the lightweight carbon fibre is shipped to for processing and construction, would cost six times as much.
Last year gas prices in the US were about four times lower than in Europe and electricity prices were about 50 per cent lower.
Critics say two factors are driving the divergence: the US shale gas revolution, which has lowered natural gas prices for US industry, and, more controversially, European climate and energy policies, including emissions trading and renewable energy subsidies.
About 58 per cent of business leaders surveyed in a recent Accenture study are pessimistic that European industry will in three years’ time remain cost-competitive from an energy standpoint compared with rivals such as US, China or Russia….
Wolfgang Eder, chief executive of Voestalpine, the Austrian steel company, sees the threat to Europe’s competitiveness in much starker terms.
“The exodus has started in the chemical, automotive and steel industries. If Europe doesn’t change course, that process will accelerate and at some point not be reversible,” he said.