The Role of Electrification in Boosting Industrial Competitiveness in Europe

In a recent report commissioned by Eurelectric, it has been elucidated that electrification plays a pivotal role in revitalizing the industrial competitiveness of Europe while also curtailing reliance on fossil fuels. This shift not only promises significant economic benefits but also aligns with global trends towards sustainability. The study underlines that electric solutions can already outpace fossil fuel counterparts in certain sectors, and that by 2030, electrifying energy-intensive operations could also become cost-competitive.

Current Context of Fossil Fuel Dependence

Europe’s heavy dependence on imported fossil fuels has increasingly undermined its competitiveness, exposing industries to external volatility and rising electricity prices. The financial ramifications have been severe, costing Europe a staggering €350 billion in 2024 alone, a figure that soared to €600 billion in 2022. Such burdens are unsustainable if Europe aims to retain its competitive edge in the global market.

The Potential of Electrification

Electrification is vital for restoring Europe’s competitive advantages. A tailored approach to electrification is crucial, especially considering the diverse needs of different industrial sectors. The recent study compares the total costs associated with electric technologies against those reliant on fossil fuels across three distinct industries, aiming to bridge the competitiveness gap by 2030.

For industrial processes operating below 500° C, like battery cell manufacturing, electric solutions, including heat pumps, have already proven to be more cost-effective than fossil fuel-based technologies. Furthermore, electrification can lead to lower overall energy consumption and bolster competitiveness in energy-intensive industries such as powdered milk production. However, some of the most energy-intensive sectors, like ethylene production, still require technological advances to make electric options financially viable.

The Importance of Strategic Investments

Kristian Ruby, Secretary General of Eurelectric, emphasized the necessity of electrifying European industries to foster economic opportunities, lower emissions, and establish Europe as a global innovation leader. Achieving this goal demands specific industrial strategies that address the unique requirements of each sector.

To enhance industrial competitiveness through electrification, financial support is essential to alleviate investment and operational costs. Moreover, long-term contracts and the expansion of carbon contracts for difference (CCfD) will be instrumental in stabilizing the feasibility of projects and shielding them from the price volatility of carbon dioxide and fossil fuels. Leveraging flexibility and modernizing network infrastructures are also critical to facilitate this transition.

Conclusion

In summary, the electrification of European industries represents a transformative opportunity to regenerate competitiveness while simultaneously pushing the boundaries of innovation and sustainability. By focusing on tailored approaches and through supportive policies, Europe can position itself at the forefront of the global industrial landscape. As the continent embarks on this journey, the call for coordinated strategies, investment, and innovation has never been more urgent.