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Energy efficiency maintains EU competitiveness in face of rising energy prices

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Despite the widening gap in energy costs between Europe and its leading trading partners, the superior energy efficiency of European industry has allowed Europe to maintain its lead in the export of energy intensive products, according to a report on energy prices released by the Commission today[1]. The report also highlights that despite industry being eager to blame climate policies for high European energy prices, these costs in fact make up a small proportion of energy bills. For example, renewable energy subsidies added just 6% to average EU household electricity price and 8% to the industrial price (excluding the benefit of exemptions).[2]

Ingrid Holmes, Associate Director at E3G said today,

“These figures put to bed two of the biggest myths currently being peddled by Business Europe: that EU climate policies are the cause of the large differential in energy prices between the EU and US and that EU industry has become uncompetitive as a result. The €545 billion spent on energy imports in 2012 dwarfs the €46 billion spent on renewable energy subsidies and seriously endangers future European competitiveness and energy security through increasing exposure to ever rising fossil fuel prices.”

Indeed, the Commission report highlights that

“the continued rise in EU wholesale gas prices despite the slump in gas demand and the lower gas spot prices vividly depicts the kind of vulnerability the EU is exposed to due to its high import dependency.”

The coke, refined petrol, chemicals, non-metallic mineral, metals, rubber and plastics sectors are identified as being most vulnerable to energy price shocks. This vulnerability will not be improved through rolling back the climate and energy policies that have successfully put the EU on the path to reducing its reliance on fossil fuel imports through increasing energy efficiency and developing indigenous renewable sources of energy – renewable energy alone having reduced fossil fuel imports by €30 billion.

Ingrid Holmes went on to say,

“The Commission’s analysis shows that prioritising energy efficiency is the best way to protect energy intensive industry from energy price rises. We are at a loss to understand why the Commission has failed to reflect this in its accompanying ‘Communication on Energy Prices and Costs in Europe’. Low ambition on energy efficiency will erode rather than build upon the great success of European industry in decoupling profits from energy prices.”

Contact

Ingrid Holmes – 00 44 (0) 7825 829592 / ingrid.holmes@e3g.org

Notes

  1. The report, Commission Staff Working Document ‘Energy Economic Developments in Europe’ can be found here http://ec.europa.eu/economy_finance/publications/european_economy/2014/energy-economic-developments-in-europe_en.htm
  2. The Commission Communication on ‘Energy Prices and Costs in Europe’ can be found at http://ec.europa.eu/energy/index_en.htm

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