Energy prices in the European Union will remain high even under the best-case net-zero scenario, warns the bloc’s business association, BusinessEurope.
A study by the association indicates that electricity prices in the EU would be at least 50% higher than in the United States and China by 2050, even in an ideal scenario. If the transition to net zero is delayed beyond 2050, BusinessEurope estimates that electricity costs in the EU could soar to three times those in China or the United States, according to a Bloomberg report citing the study.
BusinessEurope attributes the price surge to demand growth and what Bloomberg refers to as “inherent disadvantages.”
“This will put European companies at a serious competitive disadvantage with these key competitors, which is why we need urgent action at EU level,” Markus Beyrer, director general of BusinessEurope, told Bloomberg. “Securing energy at competitive prices will be central to preserving Europe’s industrial base.”
The “inherent disadvantages” stem from a lack of affordable energy to power industries and fuel economic growth. Unlike the U.S., Europe relies heavily on energy imports. The risks of this dependence became clear in 2022 when the EU’s sanctions on Russia for its invasion of Ukraine led to reduced gas flows from Russia as retaliation.
Despite 24 sanction packages approved by Brussels, Europe continues to import Russian natural gas—and oil, indirectly. In May, Russia even overtook the United States as the biggest gas exporter to the EU.
While the energy transition promises affordable and reliable energy, skeptics argue that meeting both conditions with wind and solar, even with battery support, is physically impossible.