Energy Costs in Europe and Manufacturing

European manufacturing is in crisis. Take one example. Germany’s manufacturing suffered €52bn in net export losses for the six-year period from 2008 to 2013. This is why some 137 of Germany’s industrial leaders have signed a document demanding an end to current energy policies in Germany and to align the EU’s climate change policies with a strategy for industrial growth and energy management, since climate policies have a direct impact on energy prices.

Energy prices in Europe are about double those in the US. Governments in the Czech Republic, Poland, and Germany are all green-lighting the expansion of coal mines and Britain is committed to a rapid adoption of shale gas. These developments represent an attempt by Governments to stave off energy cost rises, which have already cost over four million manufacturing jobs since 2008 across Europe. Relative to other players in the global manufacturing export business, Europe’s share of global markets has dropped 10% in this same time period. Germany’s exports would have been €15bn higher last year if its industry had not paid a premium for electricity compared with international competitors.

Energy costs have risen as solar and wind power have been expanding. In part, this is because the cost of Government sponsorship of these energy sectors is being funded directly by consumers, the largest of whom are manufacturing firms. It is also in part because climate change policies penalize manufacturing more than some other sectors, such as tourism and services.  Going “green” costs jobs. Indeed, several studies show that the net job loss resulting from green policies is higher than the “green job gains”.

Until energy policies, climate change policies and industrial strategy are aligned, we will see continued dislocations in manufacturing – especially in Europe.



By Stephen Murgatroyd -