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Europe risks ‘de-industrialisation’ if energy price imbalance with US continues

Europe risks “de-industrialisation” if it does not address the stark difference in energy prices between itself and the US.

That is the warning from Walter Boltz, executive director of Energie-Control Austria and vice-chairman of Europe’s Agency for the Co-operation of Energy Regulators (ACER).

The US has seen a dramatic shift in prices following the success for extracting shale gas.Walter Boltz

Boltz (pictured) said: “Energy prices are crucial for a region’s or country’s competitiveness. In the United States the gas price is just a third of the European gas price.

“If Europe wants to avoid de-industrialisation, something needs to be doneࢀ¦ otherwise we will increasingly see how energy intensive industries prefer to invest in the US rather than in Europe.”

Boltz highlighted three key challenges to Europe’s energy markets: “How can back-up thermal plants be economically viable; how can we ensure intermittent power supplies complement security of supply; and how can we foster competition in retail markets to reflect the improvements we have seen in wholesale markets?”

He noted that many of the emerging problems require cross-sector solutions.à‚ “So far, we have seen gas and electricity players acting as if in separate, largely isolated boxes ” for example transmission system operators.à‚ 

“This mindset will have to change.à‚ Market participants will also have to bear in mind that there is no guarantee for CO2 prices to continue at the low levels we currently observe ” several member states are not satisfied and consider carbon floor taxes to be ineffective.”

Boltz also said that renewable energy support systems “have taken competition-free bites out of the market, and the traded part of the market is shrinking”.à‚ 

“This is endangering our achievement of the original goals of market liberalisation and an integrated European electricity market.à‚ 

“The market framework has to be designed to ensure a level playing field for conventional and renewable energy.à‚ In doing so, not only negative externalities like CO2 output but also negative effects such as the non-availability of capacities must be borne in mind.”

Boltz was speaking ahead of his appearance next month at the EMART Energy conference in Berlin. https://emart-energy.com/

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