Fatih Birol, executive director of the International Energy Agency (IEA), has sounded the alarm on Europe’s critical situation regarding energy prices. During a speech at the French Electricity Union (UFE) conference on December 10, 2024, he highlighted the direct impact of these costs on European industry and the competitiveness of the continent.
Energy : Record prices that weaken the economy and industry
In December 2024, natural gas prices in Europe stabilize around €42.51/MWh, after a peak at €45.65/MWh at the start of the month. These levels remain well above those observed in the United States, where costs are five times lower. At the same time, electricity prices in Europe hover around €72.33/MWh, again well above the prices in other regions, such as China.
These gaps, recalls Faith Birol, have serious consequences for the industry. “ The price of natural gas in Europe is five times higher than that of the United States and the price of electricity in Europe is three times higher than in China he said, highlighting the scale of the challenge for manufacturing companies.
Europe’s three mistakes: uproblematic energy dependence
The causes of this situation find their origin in historical strategic choices. Fatih Birol did not hesitate to criticize Europe’s excessive dependence on Russian gas, a lack of interest in nuclear energy, and the abandonment of investments in solar power. “ Europe has made three strategic errors “, he said, pointing out the structural vulnerabilities that are holding back the continent today.
This dependence, combined with geopolitical tensions, makes Europe particularly exposed to fluctuations in global markets, as seen after the start of the war in Ukraine and subsequent political decisions, including sanctions against Russia. If gas prices appear to be stabilizing at the end of 2024, forecasts for 2025 indicate that they could resume an upward trend and reach €70/MWh, further exacerbating the pressure on businesses.
An urgent industrial and energy response
For Fatih Birol, Europe must act or risk missing the boat and no longer being able to catch up. “ European industry enters a decisive period “, he declared, emphasizing the need to adopt an ambitious industrial and energy strategy. In particular, he called for massive investments in renewable technologies and energy production infrastructure. “ Europe must urgently address these issues and develop a new master plan for the industry “, he added.
While some countries like France manage to stabilize prices thanks to strong nuclear production – even exporting 83 TWh of electricity over the first eleven months of 2024 – the entire European Union still has to make up a significant gap in the energy transition. Fatih Birol also spoke of the importance of a strong trade policy to protect key industries in the face of fierce international competition.
