‘The Future of European Competitiveness’, known as the Draghi Report and published in September 2024, outline the challenges and opportunities facing Europe’s energy sector – among others – emphasising the impact of energy policy, on the continent’s long-term competitiveness (putting the focus on energy security and pricing) and, outlining how Europe can achieve sustainable economic growth while meeting environmental goals and ensuring that vulnerable industries and populations are supported during the energy transition.
Energy Security
- Diversification of Energy Sources: To reduce dependency on imported fossil fuels, especially after the energy crisis caused by the war in Ukraine, the report advocates for diversifying energy imports and building partnerships with stable global suppliers.
- Boosting Domestic Energy Production: Strengthening Europe’s energy security requires expanding renewables, as a distributed energy resource and self- consumption that, accompanied with storage, will also drive to a successful home electrification.
Energy Affordability and Competitiveness
- Reducing Energy Costs: High energy costs threaten Europe’s industrial competitiveness. The report calls for measures to lower prices by improving market efficiency and enhancing grid infrastructure across Europe.
- Supporting Industry: Energy-intensive sectors, such as manufacturing and chemicals, face higher energy costs than global competitors. Targeted support, including subsidies and tax incentives, is recommended to help industries transition to cleaner energy without losing their competitive edge.
Accelerating the Green Transition
- Investment in Renewables along with Grid modernisation and storage: To meet climate targets and maintain competitiveness, Europe needs to increase investment in renewable energy infrastructure, grid infrastructure but also on flexibility which is crucial for balancing the intermittent energy supply.
- Improving Energy Efficiency: Reducing energy consumption, costs, and emissions requires improving efficiency in buildings, industrial processes, and energy-saving technologies.
Innovation and Technology Development
- Hydrogen and Emerging Technologies: The report highlights hydrogen’s potential to replace fossil fuels in heavy industry and transportation, calling for European leadership in this area. It also stresses innovation in carbon capture, storage, and advanced nuclear energy.
- Digitalization of Energy: The adoption of digital technologies, including smart grids and AI-driven energy management systems, is essential for optimizing energy use and better integrating renewable energy sources.
A fair Energy Transition
- Social Equity: The energy transition must be inclusive, ensuring that workers and communities impacted by the shift away from fossil fuels are supported through training, green job creation, and social safety nets.
- Preventing Energy Poverty: Keeping energy affordable for all, especially vulnerable populations, is a priority. The report calls for policies to prevent energy poverty, including home energy efficiency improvements and subsidies for low-income households.
Geopolitical Aspects of Energy
- Strategic Autonomy: Reducing Europe’s dependence on energy imports from politically unstable regions is essential. The report emphasizes the need to diversify supply sources and invest in domestic energy production to withstand external disruptions.
- Enhanced European Energy Cooperation: Strengthening energy security requires deeper cooperation between EU member states, including harmonized energy policies, shared infrastructure, and coordinated regulatory frameworks.
Regulatory and Policy Recommendations
- Stable Regulation: The report stresses the importance of predictable, long-term regulations to attract investment in renewable energy. It also recommends streamlining the permitting process to speed up infrastructure development.
- Carbon Pricing: Strengthening carbon pricing mechanisms, such as the EU Emissions Trading System (ETS), is seen as crucial for driving decarbonization. Revenues from carbon pricing should be reinvested in clean energy and industrial modernization.
