High energy costs hamper EU industry - Commission

Wed Sep 25, 2013 6:00am EDT

* EU industry share of GDP sliding as U.S. re-industrialises

* Energy commissioner seeks 'industrial compact', industry summit

* Industrial growth needs to be green, high-tech

By Barbara Lewis

BRUSSELS, Sept 25 (Reuters) - EU nations will be left far behind the United States unless they address high energy costs that are worsening the continent's industrial decline, the European Commission said on Wednesday.

To tackle the issue the Commission, the EU executive, is preparing a policy document for later this year followed by an EU summit in February 2014 focused on industry, EU sources said.

Industry Commissioner Antonio Tajani said part of the answer is an industrial compact "to address high energy prices, difficult access to credit, a drop in investments, lack of skills and red tape".

He drew a comparison with the fiscal compact signed in March 2012 by 25 EU leaders with a view to forcing euro zone countries to keep their budgets in surplus or balanced.

Economic output generated by EU industry has fallen to 15.1 percent of GDP from 15.5 percent last year, short of the 20 percent informal goal the European Union should aim for by 2020, the Commission said in a report on industrial competitiveness.

The United States, meanwhile, has been re-industrialising with the help of a cheap-energy boom following the exploitation of shale gas.

Some industry, especially the chemical sector for which gas is a feedstock as well as an energy source, has been relocating to the United States to take advantage of it.

The Commission has said natural gas prices in the European Union are roughly four times higher than in the United States. The gap could narrow, especially if the United States exports more, but that is complicated in terms of domestic politics.

EU CHALLENGES

EU leaders held a summit to focus on energy earlier this year when they acknowledged it would be hard for the European Union to match the U.S. shale gas revolution because of different geology, land ownership and environmental concerns.

EU leaders have instead emphasised resource efficiency, although the bloc as a whole has failed to meet energy-savings goals.

It is also trying to enforce new targets on fuel efficiency for cars, a move that could reduce consumer energy bills.

But Europe's leading economy, Germany, says much of its wealth and jobs is based on its premium manufacturers, such as Daimler and BMW , whose fuel consumption and carbon emissions are at the higher end of the EU vehicle fleet.

And it has been blocking implementation plans for a 2020 vehicle efficiency goal.

Environmentalists say enforcing the 2020 target that would cap fuel consumption and limit carbon emissions to 95 grams per kilometre is essential to competitive advantage.

The Commission report also says industrial development should be clean and high-tech.

To try to increase the tiny role played by electric and fuel cell vehicles, the Commission is planning a new green vehicles initiative with an anticipated budget of 700 million euros ($944 million) from the beginning of 2014.

French President Francois Hollande earlier this month laid out a 10-year roadmap to revive French industry by promoting new technologies to drive job creation.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.