* Like Japan, Europe must rely on innovation, energy thrift
* EU leaders to discuss energy costs in March
* Academics reject industry claims on energy costs
By Barbara Lewis
BRUSSELS, Feb 6 Energy prices have an overstated
impact on the competitiveness of Europe's businesses, economic
analysis published on Thursday said, countering arguments from
industry that big fuel bills put them at a disadvantage to U.S.
Research by French, German and British economists said while
low energy prices can be an advantage, they are only a small
factor in overall competitiveness. As a result, Europe's future
depended more on technological innovation as it would never have
the energy resources that have cut fuel bills in the United
European leaders will discuss the bloc's contested energy
policy and its impact on industry when they meet in March.
"Europe cannot compete in the global economy based on cheap
resources. Like Japan in the 1980s, it must compete on
innovation and efficiency," Michael Grubb, Chair of Energy and
Climate Policy at Cambridge University, said.
He is also a board member at Climate Strategies, which
carried out the report with the German Institute for Economic
Research, the Institute for Sustainable Development and
International Relations in France and Britain's Grantham
Research Institute on Climate Change and the Environment.
The European Commission, the EU executive, in January
outlined 2030 energy policy goals as part of continued efforts
to lower climate-warming carbon emissions.
It also said it would continue to provide support for the
industries, such as the aluminium and cement sectors, that are
most exposed to high energy prices.
However, subsidies to shelter industry in Europe's biggest
economy, Germany, are in focus as the European Commission has
begun to investigate whether they are fair.
Thursday's report found that for 92 percent of Germany's
industry, energy accounts for a very small share of total costs
- on average, only 1.6 percent of revenue.
The Commission's own research has also downplayed the impact
of energy costs in Europe, which are between three and four
times as much for gas and around twice as much for electricity
as in the United States.
EU Energy Commissioner Guenther Oettinger, who comes from
Germany's industrial heartland, said, however, that such a
difference in price was a threat.
"For many of them (energy-intensive industries), it will be
leave or perish if that continues," he said earlier this week.
Eurofer, which represents the steel industry in Europe, said
EU climate and energy policies were forcing out industry.
"It's collective industrial suicide," Eurofer director
general Gordon Moffat told Reuters.
(Additional reporting by Maytaal Angel in London, editing by