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Photographer: Nathan Laine\/Bloomberg <\/p>\n Photographer: Nathan Laine\/Bloomberg <\/p>\n
(Bloomberg) — Underneath the glass and wrought iron ceiling of Antwerp\u2019s stock exchange last month, French President Emmanuel Macron addressed a hall full of executives from heavy industries. He wasted no time in diving into the issue everyone cared most about: Europe\u2019s perennially high energy prices.<\/p>\n
It is, he said bluntly, \u201ca weakness.\u201d<\/p>\n
Most Read from Bloomberg<\/p>\n
Even before the war in Iran pushed up oil and gas prices and disrupted supplies of key fossil fuels across the globe, energy was a major concern in Europe, where power prices are far higher than in the US and China. Plants have been shut down as costs made them uneconomical, there have been repeated complaints from corporate giants like BASF SE and industries such as steelmaking, and politicians have fretted about how their economic ambitions for the region risk being undone by the problem.<\/p>\n
The fallout from Middle East conflict is upping the pressure to act. This week, gas prices in Europe rose to the highest in three years. The spike probably added at least \u20ac1.3 billion ($1.5 billion) to the continent\u2019s energy costs, according to calculations by Strategic Perspectives, a climate think tank.<\/p>\n
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Though levels are well shy of the peak seen after Russia\u2019s full-scale invasion of Ukraine, the latest moves come amid an increasing drumbeat of calls to cut prices.<\/p>\n
\u201cThis is really happening at the wrong time \u2014 we are very exposed to the global energy market, both in terms of prices and in terms of volume,\u201d said Anne-Sophie Corbeau, research scholar at the Center on Global Energy Policy in Paris. \u201cIndustry is going to be thinking, \u2018oh no, not another crisis.\u2019 There aren\u2019t any magical solutions.\u201d<\/p>\n
It\u2019s fueling a frantic rush for action. Proposals have ranged from scrapping taxes to ditching costly climate policies, yet critics say that jeopardizes Europe\u2019s ability lower energy costs in the longer term by building out renewables.<\/p>\n
In Brussels, the scale of the concern is clear. At one meeting this week, senior EU officials warned member states that the Iran war shows that solving energy is \u201cexistential\u201d for the bloc, according to a person familiar with the matter.<\/p>\n
Leaders are set to hold a summit on March 19, when they will direct the European Commission to propose ways to cut prices and help industries.<\/p>\n
One look at the decisions being made in corporate offices bears out the worries. The squeeze from energy costs is reshaping the industrial landscape, pushing companies to slow investment, shelve decarbonization projects and shift capacity elsewhere.<\/p>\n
Versalis, the chemicals unit of Eni, is closing plants, highlighting how energy-intensive industries are reassessing whether Europe remains a competitive place to operate.<\/p>\n
BASF Chief Executive Markus Kamieth has said that Europe \u201cis losing industrial capacity at a speed we have never seen before.\u201d<\/p>\n
Energy Needs<\/p>\n
The EU finds itself at a critical juncture. Not only is it fighting to save industries, boost competitiveness and keep up with the AI revolution \u2014 which will require power-hungry data centers \u2014 it\u2019s also trying to boost its defense capabilities.<\/p>\n
To meet those objectives, it will require vast amounts of energy in the coming years. Right now, it\u2019s far from clear whether it will have enough, and at a cheap enough price.<\/p>\n
BloombergNEF sees a 57% rise in final power demand by the end of the decade from 2024 levels, with the bulk of that being from EVs, followed by data centers. The European Commission\u2019s projections are of a similar scale, and AI\u2019s thirst for power means those analyses could soon be out of date.<\/p>\n
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After the Russian energy crisis of 2022, what\u2019s happening now is a stark reminder that Europe can\u2019t afford to relax when it comes to the cost \u2013 and availability – of energy.<\/p>\n
Europe has largely turned to seaborne liquefied natural gas to replace Russian supplies, leaving it exposed to international gas markets. Both costs and competition for fuel has increased after a major Qatari LNG facility was targeted in an Iranian drone attack.<\/p>\n
\u201cIt\u2019s not so much the disruption of supply that creates problems,\u201d Dan J\u00f8rgensen, the EU\u2019s energy commissioner, told Bloomberg Television on Friday. \u201cThe big problem is the effects on the global markets. And of course, those effects on the global markets also hit consumers in Europe.\u201d<\/p>\n
Military Needs<\/p>\n
Just a few days after the Macron addressed the Antwerp Industry Summit, world leaders, military chiefs and business leaders gathered for the Munich Security Conference. Amid the now-familiar calls to boost defense spending, it was the topic of energy that lingered in many of the conversations.<\/p>\n
The European Parliament has noted that the defense industry is \u201cincreasingly energy intensive.\u201d It cites the need to manufacture equipment like missiles and armored vehicles, and power the systems and networks that underpin modern warfare, such as drones and cyber systems.<\/p>\n
\u201cWe are moving towards electrification in the armed forces, which is happening with drones, hybridization of fleets \u2014 we need to ensure that the electricity grids can handle 20,000 NATO troops showing up in a day,\u201d said James Appathurai, NATO\u2019s top advisor on cyber and hybrid defenses. \u00a0\u201cAnd right now the grids aren\u2019t even able to handle the permitted production facilities that are being built, let alone this kind of surge capability.\u201d<\/p>\n
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The squeeze from energy prices is far from a new issue. In a high-profile 2024 report on European competitiveness, former ECB President Mario Draghi noted the negative impact on the economy.<\/p>\n
They are an \u201cobstacle to growth\u201d and \u201caffect corporate investment sentiment much more than in other major economies,\u201d his report said.<\/p>\n
The problem is that much of the EU strategy relies on rapidly scaling up renewables, banking on the negligible operating costs of exploiting wind and solar power.<\/p>\n
Some industry analysts say Europe\u2019s green ambitions are far fetched, especially given the expected electricity needs of data centers and the computational power needed for AI services.<\/p>\n
\u201cIf we\u2019ve had problems with our electricity and our energy system today, the scale of that will increase massively with the full-scale production of AI in the European Union,\u201d Ebba Busch, Sweden\u2019s energy minister, said last month. \u201cIf we don\u2019t get this right, there will be an A and B team when it comes to artificial intelligence.\u201d<\/p>\n
In the search for a quick fix, some now want to put the brakes on the climate transition. Italy\u2019s government has called on the EU to suspend its Emissions Trading System, which puts a price on each metric ton of CO2 into the atmosphere.<\/p>\n
\u201cThere\u2019s been a massive wave of fossil fuel nostalgia in Brussels,\u201d said Thomas Pellerin-Carlin, a Socialist lawmaker in the European Parliament. \u201cThe only way for us to achieve energy security is to get out of fossil fuels. We need to understand it\u2019s the road to serfdom, otherwise.\u201d<\/p>\n
–With assistance from William Wilkes and Eamon Akil Farhat.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Photographer: Nathan Laine\/Bloomberg (Bloomberg) — Underneath the glass and wrought iron ceiling of Antwerp\u2019s stock exchange last month,…\n","protected":false},"author":2,"featured_media":328829,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[1877,114,99,4414,63,8074,4419,162432,85,46,162433],"class_list":["post-328828","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bloomberg","tag-business","tag-emmanuel-macron","tag-energy-prices","tag-europe","tag-european-commission","tag-fossil-fuels","tag-heavy-industries","tag-il","tag-israel","tag-power-prices"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/328828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=328828"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/328828\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/328829"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=328828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=328828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=328828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}