The possibility of European industry facing persistently higher energy costs compared to the US and other global and regional players as the energy transition proceeds could become a bigger threat  than the energy crisis itself, according to a study on EU competitiveness conducted by Brussels-based think tank Bruegel.

The study, presented yesterday to the EU’s 27 finance ministers during a Eurogroup meeting, gives rise to a range of issues, from taxation and regulated tariffs to competition between big and small countries, while also making note of considerable energy quantities required to develop green technologies.

The first and main question raised by the study enquires whether the recovery of energy-transition costs should continue to be made through electricity tariffs or via general tax policies of EU member states.

A second question considers whether the tax distribution balance between households and industry should be altered. The study also explores the need for a tax redistribution between energy-intensive and non energy-intensive enterprises.

It also notes that, in the context of the single market, energy-consumption increases by large countries come at the expense of countries with smaller energy needs.

A fifth main point raised by the Bruegel study questions whether it makes sense to invest in renewable energy technologies such as solar panels, for example, when the production of polysilicon, a key component in the production of solar panels, requires extremely large amounts of energy.

According to the study, the anticipated prevalence of renewables will lead to a decrease in electricity prices but part of the decline will be offset by cost increases concerning a range of tariffs, fees and various policies.