EU Energy Taxes Worsening Industry Woes, Power CEO Says

Governments searching for ways to aid Europe's struggling industries should address the continent's high energy taxes, which are eroding competitiveness, the head of Europe's electricity lobby told Reuters, as reported by Kate Abnett and Julia Payne.

EU industries currently pay electricity prices 2-3 times higher than those in the US.

The European Union (EU) is preparing a package of measures to support faltering industries, expected early next year, as manufacturing giants from automakers to steel firms warn of potential plant closures and thousands of job losses.

Leonhard Birnbaum, President of industry group Eurelectric, stated that the challenges facing Europe’s energy-intensive industries are numerous, including a more fragmented market than China and limited access to credit.

However, Birnbaum emphasized that policymakers seeking to provide swift relief should “remove” costs unrelated to the industry’s structure from energy prices.

“We appreciate that states always need more money, but if you really want to electrify, then you can't have, for example, an over-proportional tax burden on electricity compared to the tax burden on gas,” Birnbaum, who is also the CEO of German utility E.ON, told Reuters in an interview.

Words

“If we are serious about cost competitiveness, electrification, and decarbonization, then we need to act on this,” he added.

EU industries currently pay electricity prices 2-3 times higher than those in the US. Taxes accounted for an average of 23% of the retail electricity price paid by Europe’s energy-intensive firms in 2023, according to an analysis by the think tank Bruegel.