Current electricity costs for industry in the EU are 2 to 3 times higher than in the US.

Is Europe still able to catch up with the competition?

That is why it is worth asking:

Is the Green Deal a realistic path to the future, or a luxury that we, as an industrial continent, simply cannot afford?

In this article:

• we will examine how the Green Deal affects energy costs and the competitiveness of European industry

• we will show which sectors suffer the most and why

• we will compare the EU’s approach to the practices in the US and China, as well as the other side of the coin

• we will present possible adaptation paths based on technology, not ideology

Estimated reading time: 10 minutes

What was the Green Deal supposed to be, and what has become of it by 2025?

The Green Deal, or more precisely the European Green Deal, was meant to be more than an economic strategy. It was intended as Europe’s response to the climate, economic and resource crisis. A global mega-project that would connect climate goals with reindustrialisation of the continent.

A new Declaration of Independence in energy, digital and technological terms. In its ideal form, the Green Deal was to create thousands of jobs, spark an investment boom in clean technologies and position Europe as a global leader in the race to climate neutrality.

Sounds great? On paper, absolutely. But paper can handle anything.

In practice, by 2025, the Green Deal increasingly resembles not a recovery plan, but a regulatory trap. Because transformation, although necessary, is costly.

And industry feels it the most. Especially the energy, steel, chemical and automotive sectors – those that operate on low margins, high volume and are extremely sensitive to energy costs.

Today, European industry pays 2 to 3 times more for electricity than its American competitors. For gas, even 4 to 5 times more. And this is not a temporary anomaly. It is the new normal, driven largely by the regulatory framework of the Green Deal.

And here comes the question that many politicians are still afraid to ask aloud: by following this path, is Europe actually increasing its competitiveness?

Or by ambitiously taking the lead in the climate race, is it leaving its own industry behind, exposing it to capital flight, plant closures and the import of "dirty" products from outside the EU?

Because this is already happening. But no one wants to talk about it publicly.

The Green Deal and energy costs. Who pays the price, and how much?

The Green Deal was supposed to be a modernisation boost. Today, it is increasingly becoming a stress test. For many companies, it is an equation with no good outcome. Costs are rising faster than the ability to absorb them, and global competitors are not waiting. The question European industry is asking today is no longer "if", but "how much longer can we hold on".

Energy prices that cannot be ignored

The average industrial electricity price in the European Union in 2024 was around 0.20 EUR per kilowatt-hour. In the United States, it ranged from 0.08 to 0.10 EUR, in China even less, often below 0.07 EUR. In Germany and Italy, prices reached 0.25 EUR, and sometimes more, especially in volatile spot markets. On top of that comes regulatory uncertainty.

Industry needs predictability, not a table of changing coefficients.

To all of this we must add the ETS system. In 2023, the cost of CO2 emission allowances reached 100 EUR per tonne. This mainly affected the steel, cement, smelting and chemical sectors. Starting in 2027, the ETS 2 system is expected to include additional sectors, including transport and construction. In practice, this means that not only large corporations, but also small and medium-sized manufacturing plants will need to factor in not only the cost of raw materials and energy, but also emissions and increasing administrative burdens.

European competitiveness on the defensive

Energy costs directly translate into a loss of competitiveness. For many companies, profit margins are becoming too thin to maintain production in Europe. Investments are vanishing, uncertainty is growing. In 2023, BASF announced a gradual reduction of its operations in Germany and relocation of some production to Asia and North America. ArcelorMittal suspended parts of its steel production, and Alcoa halted plans for aluminium plant expansion in Europe. The reason? High costs and a lack of clarity about the direction of climate policy.

Here lies a hard truth. Due to regulatory overreach, Europe is beginning to lose the industrial race. And not for technological reasons. We have the know-how, the talent, the innovation. But we do not have the cost structure that allows companies to compete globally.

The green paradox and the price of silence

Europe wants to be a leader in climate action. But if it does so at the expense of its own economy, there is a risk that emissions will simply be exported beyond EU borders. Production moves to countries that do not apply the same environmental standards. The result? Global emissions do not fall, while Europe pays an increasingly high price. Not for the transformation itself. But for the lack of balance.

That is why we need to ask out loud today: is the Green Deal in its current form a tool for growth, or rather an expensive luxury that only the biggest players can afford.

Which sectors suffer the most, and what does it mean for people, not just statistics

The energy transition is not only about infrastructure, technologies and legislation. It is also the everyday life of hundreds of thousands of people: workers, engineers, line operators, shift supervisors, owners of family-run companies. Their lives are the first to change when a factory scales down production, when investments are frozen, when energy prices rise faster than the margin on a manufactured part.

And it is precisely in sectors like automotive, steel and aluminium that this pressure is felt the most.

Automotive: a concrete wall of regulations

Over the past two years, European carmakers have found themselves in a particularly difficult position. After years of investment in electromobility, they are now confronted with much stricter emissions standards. The limit for new internal combustion vehicles by 2030 is set at 55 grams of CO2 per kilometre. By comparison, the average emissions of new cars in the EU in 2023 was 95 grams. That means a reduction of more than 40 percent in just a few years. With current technologies, this can only mean one thing: a costly and accelerated shift to electrification, regardless of whether the market and infrastructure are ready.

For large companies, this is a strategic challenge. For smaller suppliers, it is often an existential threat. According to the European Association of Automotive Suppliers, as early as 2024 nearly 275 thousand jobs in the supply sector are at risk, mainly in companies with fewer than 250 employees. In countries such as Poland, the Czech Republic, Romania and Hungary, these companies are the backbone of local economies.

Steel and aluminium: the industrial foundation under pressure

Steel and aluminium production is inherently energy-intensive. Smelting and rolling processes require stable and affordable electricity and gas supplies. Unfortunately, in Europe, these two components have become the most volatile cost factors. For example, the cost of energy can account for up to 40 percent of the total cost of producing one tonne of aluminium. When energy prices double or triple within a year, the economics of the entire plant stop making sense.

It is no surprise that in the past two years we have seen more closures and reductions in production capacity. In 2023, primary aluminium production in Europe fell by 25 percent compared to 2018 levels. In the steel sector, cuts ranged from 10 to 15 percent depending on the country. These figures are not just statistics. They represent thousands of jobs disappearing from industrial regions. And we are talking about strategic industries, essential for infrastructure, defence and renewable technology development.

Execution, not vision. Where to look for a way out

No one in their right mind denies the need for a green transition. But vision is one thing. Execution is another. It is this gap that generates frustration in the industrial sector. Because companies want to change, invest, implement new solutions. But they need the right conditions: stable energy prices, access to financing, technical infrastructure and predictable regulation.

There are already signs of hope. Hybrid systems that combine local energy storage, photovoltaics and gas or biogas generators can stabilise production and reduce reliance on expensive wholesale markets. Initiatives are emerging to share energy between plants in industrial clusters. More and more companies are investing in their own renewable sources, as well as improving energy efficiency in their processes.

But that is not enough if the system-wide approach to energy policy does not change. What is needed is not abandoning climate goals, but recalibrating the pace and method of implementation. Through dialogue, not decree. With an understanding of both potential and constraints.

USA and China: pragmatism instead of declarations

The energy transition does not happen in a vacuum. While in Europe the Green Deal has been designed as a comprehensive strategy for the economy and the climate, in other parts of the world the priorities are distributed differently. Both the United States and China are pursuing their environmental goals, but they are doing so in a way that is subordinate to national interests and industrial stability. For them, ecology is a tool for building advantage, not a risk to industry. And that makes a difference.

USA: climate matters, but competitiveness comes first

In 2022, the Biden administration launched the Inflation Reduction Act, the largest package of support in history for a net-zero economy. This includes 369 billion dollars in grants, tax breaks and investment guarantees for the energy, electromobility and component manufacturing sectors. Importantly, this support was not tied to a CO2 pricing system. American companies do not pay additional taxes for emissions and are not subject to an ETS mechanism, yet they still invest in renewables, energy storage and charging infrastructure. Because it makes economic sense.

An example? In Texas, an industrial cluster was developed based on local solar sources and a large-scale battery installation to supply a factory producing electric vehicle components. The entire project was completed with the help of federal guarantees and preferential loans. That is what pragmatism looks like in practice.

China: scale, speed and full control

China's energy transformation strategy is based on three pillars: maximizing domestic production of renewable energy components, maintaining energy security in parallel, and full state support. In 2022, China installed over 300 gigawatts of new renewable capacity. For comparison, all of Poland reached 10 gigawatts in the same period. This reflects not only a difference in volume, but in cost. The larger the scale, the lower the unit cost. And that translates into export competitiveness.

Crucially, China is not shutting down its coal-fired power plants overnight. They retain them as a buffer for system stability. At the same time, they are developing their own supply chains for batteries, inverters and charging stations. They operate systematically, with a 20-year horizon. As a result, Chinese companies can now offer complete solutions to global markets faster and cheaper than their European counterparts.

Germany: between idea and reality

Germany, long a leader in energy transition in Europe, has found itself in a difficult position. After phasing out nuclear power and limiting gas imports from Russia, the country had to accelerate the development of renewables and grid infrastructure. At the same time, the industrial sector began to feel the impact of rising energy costs and difficulties maintaining production capacity. In 2023, several steel and aluminium plants were closed. More and more companies are openly discussing the need to relocate some operations to countries with lower operating costs.

German research institutes, such as Fraunhofer ISE, are warning that without strategic investment in new energy technologies and transmission networks, Germany may lose part of its industrial potential. At the same time, there is an ongoing debate about whether the current Energiewende model requires adjustment. Not in terms of abandoning goals, but in seeking a better balance between climate ambition and economic resilience.

Conclusion: collision between narrative and reality

Europe has created an ambitious, multi-layered model of transformation. But other market players have opted for simpler and more direct mechanisms. The result? While the EU leads in climate responsibility narratives, the US and China lead in execution. Fast, large-scale, and cost-effective.

It is not about Europe giving up on its goals. It is about aligning implementation with the real conditions of the industrial sector. Because competitiveness is shaped not by declarations, but by the ability to deliver on time, at the right cost, and with manageable risk.

When pace outstrips the system. Where pragmatism ends and risk begins

The US and China are often cited as examples of a more flexible approach to the energy transition. They focus on competitiveness, scale, and local production of components. But even there, tensions emerge – both figuratively and literally. Because no strategy, however pragmatic, can function without infrastructure.

China: more does not always mean better

In 2023, China reached a record-breaking pace in renewable energy development – installing more than 350 gigawatts of new wind and solar capacity. No other country has matched this speed. But along with it came a challenge previously discussed mainly in Europe: transmission bottlenecks and a lack of integration with the grid.

According to Bloomberg New Energy Finance, the level of curtailment – the situation where excess renewable energy cannot be absorbed by the grid – reached as high as 20 percent in some provinces. That means one in five kilowatt-hours of clean energy was wasted. Not because it was not produced, but because the system was not ready.

China is adjusting infrastructure quickly, but this example shows that technological advantage without a cohesive grid and storage can backfire on both climate and economic goals. Even the best intentions can fail if the rhythm of development is not in sync with the rhythm of the system.

USA: competitiveness collides with availability

In the United States, despite the enormous resources of the Inflation Reduction Act, barriers remain in the form of complex permitting procedures for transmission infrastructure and local opposition to new installations. In practice, this means many energy storage and large renewable projects are delayed by two or three years, not due to lack of funding, but due to procedural and technical bottlenecks.

Grid operators in California and Texas increasingly report issues with energy oversupply at midday and shortages in the evening. Without rapid development of load management systems and intelligent distribution, local blackouts become a real threat. The technology exists. The intentions are there. But the nervous system – the grid and operational infrastructure – is falling behind.

The lesson: adaptation is not a race, it is synchronization

Europe often compares itself to the US and China, citing their investment advantages and regulatory flexibility. But comparisons without context can be misleading. Because even in those countries where the pace is faster and support is stronger, there are serious challenges with integrating renewables, oversizing sources, and ensuring physical transmission capacity.

That is why, instead of copying other models one to one, it is worth observing their mistakes. And asking not only how fast they build, but how they ensure each investment works reliably and harmoniously within the system.

This is exactly where Europe, despite its costs and constraints, can still gain an advantage. Not through speed, but through coherence.

By designing the energy transition not for headlines, but for what actually works.

Adaptation without illusion. What can industry do to stay in the game

The energy transition requires courage, but above all it demands operational efficiency. In public debate, we too often hear two extremes – either admiration for the vision of a green future, or catastrophism in the style of "nothing can be done." The truth, as usual, lies in the middle. It is not ideology that determines who survives, but the ability to adapt quickly and reasonably. In terms of technology, cost and operations. This raises the essential question: what solutions can companies implement today to regain control over energy costs and operational stability?

Energy storage is not a trend, it is a safety buffer

One of the most important development directions is local energy storage. No longer just a supplementary option, but a fundamental buffer for production continuity. Energy storage allows companies to reduce their exposure to wholesale market price peaks, stabilise their consumption profile and integrate renewables without the risk of outages.

The most efficient systems are hybrid installations: a storage unit operating alongside a local photovoltaic farm and, if needed, a gas or biogas generator. These solutions make it possible to store energy when it is cheapest or generated from in-house sources, and use it during peak demand periods. The result? Monthly energy bills up to 30 percent lower in some consumption profiles.

Process optimisation. Not everything needs replacing, much can be improved

Not every company can afford to immediately invest in new energy sources. But practice shows that significant savings can be achieved through careful review of existing production processes. Motor upgrades, energy management systems, rebalancing production lines to run more evenly – these actions deliver measurable results within months, not years.

At one machine component factory in Austria, a simple rule was introduced: every production line must have its energy profile reviewed weekly. Based on this data, some cycles were rescheduled to night hours, start-up sequences were optimised, and heating in production halls was automated. Implementation cost: under 100 thousand euros. Annual savings: over 300 thousand euros.

Flexibility as the new competitive edge

In an environment of volatile prices and regulation, the ability to react quickly is becoming a strategic advantage. And it is not only about technology, but also about organisational culture. Companies that deploy consumption forecasting tools, manage energy contracts actively, and maintain contingency scenarios for energy crises are more resilient in turbulent conditions.

One German aluminium producer avoided shutting down its smelter in 2023 only because it had already implemented flexible contracts with the grid operator and its own real-time energy monitoring system. As a result, it could respond immediately to price alerts and adjust shift schedules without compromising product quality.

Industrial energy clusters. Cheaper and safer together

More and more companies are also exploring shared energy use models through industrial clusters. The idea is simple – several neighbouring industrial plants jointly invest in renewables, storage and control infrastructure. They benefit from scale, share costs and risks, and gain flexibility and independence from market fluctuations.

In Denmark, one such cluster has operated since 2021 near Esbjerg. Three companies from the chemical, food and logistics sectors built a shared solar park and storage system. Each of them reduced their annual energy costs by around 20 percent, and the return on investment was 4.5 years.

Adaptation is a process. It does not require perfection, only decision

There is no single path. There are different starting points, budgets and needs. But the common denominator is readiness to change. You do not have to be the biggest player in the market to build resilience. It is enough to start improving what is already within reach. In technology, in management, in mindset.

Because the energy transition is not about everything becoming green tomorrow. It is about doing something today, so we do not remain stuck where we are.

Industry today needs room for smart decisions

In today’s industrial world, where every energy decision affects real jobs, production capacity and competitive advantage, silence no longer means inaction.

Maturity does not need grand declarations. It needs effective decisions. The kind that create space for development without chaos. The kind that do not disturb peace, but build it – through technology, precision and trust in the people who know what they are doing.

The Green Deal, in its idea, was meant to be an opportunity.

And it still can be.

But only if, instead of political slogans, we give industry access to real tools.

If we start talking about the transition the way it actually happens on the factory floor, not in a brochure.

If we accept that competitiveness and responsibility can go hand in hand, as long as they are based on solid knowledge, cooperation and the courage to implement solutions step by step – not in an instantly perfect version.

If today you are at a point where you need to decide whether to invest, wait, or recalculate everything once again – you are not alone. We understand the reality of these decisions. How much the numbers matter, not just the declarations. How hard it is to keep pace with change and still stay responsible – to people, to processes, to infrastructure.

That is why we share knowledge. That is why we listen. That is why we are here – not to sell you ready-made products, but to build, together, solutions that actually work.

If you want to talk about infrastructure upgrades, energy storage or possible scenarios for your company, we are here to support you. Explore what we can offer you today.

And if you are looking for inspiration, implementation stories and a place for honest, pressure-free discussion – join our Energeks community on LinkedIn.

It is made for people who are not looking for quick answers, but for the right questions.

Thank you for your time and your engagement.

Sources:

DNV: ENERGY TRANSITION OUTLOOK 2024

Bloomberg – China’s Renewables Surge Leaves Europe Playing Catch-Up

INSTITUTE FOR ENERGY ECONOMICS AND FINANCIAL ANALYSIS: New paradigms of global solar supply chain