A new Arthur D. Little (ADL) report released today outlines the vital role that energy companies can play in reducing the risk of deindustrialization within Europe by supporting the transition to a more competitive and sustainable industrial landscape.
The report, Deindustrialization Threat: How energy companies can retain industries in Europe explains the current challenges that energy-intensive industries, such as chemicals, metals, steel and automotive, face due to high energy costs, supply chain tensions, and increased regulations, as well as setting out how the energy sector can act as a catalyst for greater resilience.
Since 2022, manufacturing production has declined in many European countries, with recent plant closures announced in multiple sectors. Given that energy-intensive industries are responsible for around 9% of total industrial employment and that they have a high multiplier effect on other sectors, a shift in production from the region would have fundamental economic, social, and energy impacts across the continent.
Energy, and energy companies (generators, network operators and retailers) are central to European industrial competitiveness. Demonstrating the scale of the challenge, ADL calculates that European wholesale electricity prices were €79.6 per megawatt hour (MWh) in 2024, compared to €55.4 MWh in the United States and €60 MWh in China. The gap in wholesale gas prices is even greater, ranging from just €5.9 per MWh in the US, to €31.7 MWh in Europe.
The report outlines how energy companies must therefore go beyond energy provision to act as architects and lobbyists of a competitive industrial future, based on four key levers – innovative pricing models, operational efficiencies, technology innovation, and market design & regulation. By moving beyond their traditional roles they will safeguard their own futures, as well as that of their industrial customers.
Florence Carlot, Partner at Arthur D. Little, comments: “Europe’s industrial heartbeat faces unprecedented challenges due to high energy costs and fierce global competition. This trend has the potential to dramatically reshape the European manufacturing landscape and impact wider society. Successfully overcoming these issues requires all energy players to work together to enhance resilience, taking a proactive leadership position to build a sustainable future for European manufacturing.”
The full Viewpoint can be downloaded here
