The plant of the American company Alcoa in San Cribao (Galicia) was shut down for two years, since 2022, due to the escalation of electricity prices. Until last April, the critical point of the negotiation for its survival was the guarantee of cheap energy. A few months earlier, Aldel, the only producer of primary aluminum in the Netherlands, suspended the few operations it still had due to the cost of energy. Both cases reflect a reality that is not new but is doubly concerning in a scenario of trade war. The electricity bill for the industry is accelerating the loss of weight of the European Union against the United States and China, two blocs that have also deployed a strategy of global energy dominance.
It worries Brussels, the European Central Bank, the governments of the Twenty-Seven, and their companies. In 2024, electricity prices for the most electricity-intensive industries in the EU were much lower than in 2022 and slightly lower than in 2023, but still 65% higher than in 2019. They were also twice as expensive as in the United States and 50% higher than in China. The diagnosis of the International Energy Agency (IEA), the energy arm of the OECD, is clear: "High electricity prices continue to undermine the competitiveness of European industry."
From the Basque municipality of Amurrio, Tubos Reunidos suffers from this firsthand. Antón Pipaón, their Corporate Director of Business Development and Sustainability, analyzes for EL MUNDO this energy gap that, he assures, is not only suffered in comparison to their counterparts in low-cost countries. "Spanish steel companies pay 50% more for electricity than French companies, which are greatly favored by a special tariff supported by nuclear energy." The company is also gas-intensive, paying "four times more in Basque factories than in our Texas factory." Pipaón states that of the four pillars the sector needs - talent, technology, a solid supply chain, and competitive energy - Spain has all except the last one: "We are still far away."
The Aragon-based Solutex, one of the world leaders in the fatty acids business, has offices in Canada, the US, India, and South Korea, but the more than 4,000 tons of product it transforms annually come from its Zaragoza factory. "We compete with global players, and when we analyze other major blocs, we pay up to three times more for energy," says its president, Antonio Moreno. "There is a lot of competition, and everything matters. Energy is just a part of the pie, but it is important because European companies already bear higher regulatory and labor costs, something we fully agree with," he emphasizes.
The showdown between Washington and Brussels forces a look at the US. "The structural price gap is compounded by the high European tax burden and volatility that discourage new investments and jeopardize existing ones," says Carlos Reinoso, president of the Alliance for the Competitiveness of the Spanish Industry, which includes nine associations representing 67% of Spain's industrial exports. Electricity has become a silent tariff that weighs down the Old Continent and accelerates a trend that began 20 years ago when the GDP of the United States began to outpace that of the EU. Today, the gap is 44%.
"The Draghi Report clearly identified energy costs as one of the main disadvantages of European industry compared to its competitors in the US and China, at a critical moment when the global economic order is being reconfigured," recalls Jorge Fernández, coordinator of the Energy and Environment area at Orkestra-Basque Institute of Competitiveness. "Restrictions on certain strategic materials and a strong commitment to energy autonomy, based on renewables and other technologies still in development, have increased production and system maintenance costs, affecting the competitiveness of European industry against regions with more flexible regulations," diagnoses Carlos Tallón, Principal Associate of Public Law and Regulated Sectors at Deloitte Legal.
In Germany, the 6,000 workers at the Georgsmarienhütte steelworks already work at night and on weekends when electricity is cheaper. A recent survey by the German Chambers of Industry and Commerce (DIHK) of more than 3,000 companies has concluded that 37% are considering reducing production or relocating abroad due to high energy costs, compared to 16% in 2022, during the electricity shock due to the war in Ukraine. The percentage jumps to 45% in electro-intensive sectors. "High energy costs generate risks of relocation, making the economic viability of energy-intensive industries more difficult and delaying or preventing investments," Fernández confirms.
"The high energy cost, exacerbated by taxes and charges unrelated to supply, is seriously weakening Europe's position against global competitors," concludes a recent PwC report, reflecting that over 40% of the industrial electricity bill in Europe corresponds to taxes and fees, compared to less than 10% in the United States. The gap widens, translating into European companies paying between two and three times more for electricity than their American competitors. In the case of gas, the difference can be up to five times more.
"European plans aim to reduce taxes and levies, and eliminate non-supply-related concepts from the bill," Tallón recalls, clarifying that reducing the tax burden on energy "does not at all imply giving up on the energy transition but ensuring that the objectives are achieved without sacrificing investment and economic development."
The problem does not have an easy solution, as much of this cost gap is due to Europe not having oil or gas while the US does. This is analyzed by Gonzalo Escribano, Energy Director at the Elcano Royal Institute, who explains that importing fossil fuels, on which Europe remains heavily dependent, from as far away as across the Atlantic, increases the bill. Regarding China, he attributes its lower prices to "the combination of a highly planned energy market with a model that raises serious doubts about the use of energy as a form of subsidy to its companies."
"Europe may not have gas or oil, but it has good cards to compete," Escribano believes. He points to Spanish wind and solar power - "solar energy is the cheapest in history" - and French nuclear power. "Abandoning decarbonization would be suicide for Europe," emphasizes the expert, who doubts that the solution lies in tax cuts. He urges not to respond to Trump with Trumpism or repeat past mistakes: "There are blocs that have an energy dominance strategy, and Europe cannot allow itself to be dominated. Cheap Russian gas has been one of the most expensive decisions for the EU; it has cost Germany alone three years of technical recession and between 200,000 and 300,000 million euros in aid."
The electricity bill is dominating the closed-door meetings that both the Government and the Popular Party are holding these days with major industry players to assess the tariff projectile and the scope of the retaliations. Up to three industrial associations agree that the energy price is "vital" now that Donald Trump has pushed the global economy into a phase of fierce protectionism and trade war that will be settled to the cent. They ask the Government to combine direct aid with structural measures that address the factors weighing down competitiveness once and for all.