The new European plan to lower energy prices is an absolute necessity for the reindustrialization of Europe

On February 26, the European Commission presented its action plan for affordable energy, integrated into the Pact for a Clean Industry. Fortunately, because time is of the essence:

In 2024, European industry paid twice as much for electricity as American companies and 50% more than its Chinese competitors. 47 million Europeans were unable to heat their homes properly due to the price of gas and electricity.

Therefore, reducing the cost of energy is both a necessity to save Europe's industrial base and to combat the energy inflation affecting citizens.

What does the European Union propose?

Energy savings estimated at €45 billion by 2025, €130 billion by 2030, and up to €260 billion per year by 2040. To achieve this, the European Commission proposes:

1 - Reduce energy costs by addressing the three components of the energy bill: network and system costs, taxes, and supply costs. The EU aims to encourage countries to forego revenues collected on energy, such as Germany, which levies €20 per megawatt-hour (MWh) while the absolute minimum tax rate in the EU is €1 per MWh.

2 - Complete the Energy Union with, in addition to consolidated cross-border exchanges, the mobilization of private capital to continue the digitization of the energy system.

3 - Attract investments in clean and resilient energy infrastructures. The action plan aims to establish a tripartite contract between energy producers, the public sector, and industry to ensure affordable energy. Reducing the time required to issue permits for renewable energies and energy infrastructures is one of the EU's top priorities.

4 - Improve crisis management for energy to prevent future network tensions. The Commission will revise the EU's security framework to better address new threats, including cyberattacks, sabotage of essential infrastructures, and risks related to import dependence.

In addition to these measures, what is particularly interesting is the Commission's desire to develop electrical flexibility through new tariff structures designed to encourage energy use when it is most available and cheapest, and to modernize this system with the development of electricity storage capacities and the clarification of state aid for non-fossil flexibility regimes.

At Empower Europe, we believe that this plan should be accompanied by a modification of gas storage objectives, as proposed by Poland. Without this, in the short term, energy inflation will continue to weigh on households and industries.