By Samuel Furfari. He was a Senior Official in the European Commission in the field of energy for 36 years.
This is a summary of a longer article: link to pdf
Mario Draghi presented his report on the competitiveness of the EU, commissioned by the European Commission. Although it was completed before the European elections, it was not published at the time, which could have influenced the outcome of the elections, as it laments the loss of competitiveness of the EU due to its political choices. The former ECB president writes bluntly: “For the first time since the Cold War, we really have to worry about our survival.” This report sets out the many reasons why the EU’s competitiveness is at a significant disadvantage to the rest of the world.
In particular, Draghi points to legislative inflation, listing no less than 13,000 pieces of legislation since 2019, many of which are simply unenforceable. During my holiday, I met a person who works in a German family business with 60,000 employees, producing very small essential components for industry, whose role is to inform the management whether it is more advantageous to pay a fine than to comply with certain European regulations on sustainable development, which are so difficult to comply with that they have a negative impact on production costs.
However, Draghi’s main concerns revolve around the lack of competitiveness resulting from high energy prices: “EU companies still face electricity prices 2 to 3 times higher than in the United States and natural gas prices 4 to 5 times higher.”
Although my latest book is subtitled ‘The Organised Destruction of the EU’s Competitiveness’, as he also complains, I disagree with many of this great banker’s proposals on energy policy, or rather I deplore the absence of certain policies. Draghi also falls into the trap of non-energy specialists by focusing on electricity generation and neglecting the most important need, namely the thermal use of energy and the geopolitics of energy. Moreover, the most important source of energy in terms of volume, cost, need and geopolitics is completely neglected, as the word oil is used only once in this report. Like the European institutions, it predicts the EU’s energy future with renewables without ever mentioning the word ‘intermittency’, which shows that it is unaware of or obfuscates the crippling handicap of popular renewables. He mentions the word ‘nuclear’ five times, but each time in the context of ‘renewables’. Pretending to ignore the strong revival of nuclear policy in the EU and the world will only exacerbate the loss of competitiveness, he rightly deplores.
This clarity about the dramatic situation in which the EU finds itself should alert the new European Commissioners and MEPs and encourage them to make drastic changes to energy policy. Although he does not draw the consequences for change, these three sentences from Draghi are particularly significant: “If Europe cannot become more productive, we will be forced to choose. We will not be able to become a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage at the same time. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions. […] We have reached the point where, if we do not act, we will have to compromise our well-being, our environment or our freedom.”
Freedom, that precious treasure wrested from the clutches of oppression at incalculable cost, must remain the beacon of the EU. Some environmentalists have proposed restricting freedom in order to force a reduction in CO₂ emissions, which is pointless and unattainable. It would be a moral mistake to abandon prosperity when we know that purchasing power and energy prices no longer allow many Europeans a satisfactory quality of life or even health care.
Draghi’s third option remains, ‘compromising our environment’, but this term is not well chosen. In order not to compromise our well-being, we must, of course, avoid pollution and thus protect the environment. What Draghi means here is climate policy, which he stings several times in his report (‘we cannot become a beacon of climate responsibility’).
The former Italian prime minister timidly admits that we are not going to abandon natural gas any time soon. But he should have added that the rest of the world – especially the BRICS countries, which he does not mention at all – will continue to increase their consumption of all fossil fuels in order to further increase their prosperity and competitiveness, while the EU will stagnate because we refuse to use abundant and cheap energy. As the last three COPs show, the world has already abandoned the illusion of reducing global CO₂ emissions, while for the EU this remains the central policy and therefore there will be no recovery of our competitiveness.
The situation is so serious that it is regrettable that Draghi did not follow his logic to the end.
What’s more, as a good Keynesian banker, Mario Draghi recommends spending 700 to 800 billion euros a year to stimulate the economy. Wasting public money is what the EU has been doing for years, while destroying its competitiveness. Ursula von der Leyen will be happy to get reinforcements to keep on throwing money around, but this will not reduce the global emissions of CO₂ and it will not reverse the dramatic situation that Mario Draghi is denouncing.
Samuel Furfari is a chemical engineer with a PhD in applied sciences. He was a Senior Official in the European Commission in the field of energy for 36 years. He has been teaching geopolitics and energy policy since 2003. He is the author of 16 books on energy and sustainable development.