Europe Is Losing the Energy-Security Battle to China

Energy security is shifting from a focus on the availability of fossil fuels to the ability of a state to provide low-cost electricity at scale to support heavy industry. While geopolitical tensions in the Strait of Hormuz continue to impact global oil markets, China has established a strategic advantage over Europe by prioritizing the infrastructure and systems required for large-scale electrification.

According to analysis by Emmanuel Guerin, Europe has yet to fully grasp that modern security depends on electricity systems capable of delivering affordable power to sustain industrial competitiveness. This transition marks a departure from traditional energy security, which was historically defined by the secure transit of oil and gas.

China’s approach has focused on integrating renewables and enhancing grid capacity to drive down the costs of power for its manufacturing sector. This has created a gap in competitiveness that Europe is now attempting to close through a series of legislative frameworks and strategic reports.

A central component of this discussion is the Draghi report, which highlighted the productivity gap between the European Union and its global competitors. The report emphasized that the EU must secure cheaper energy to prevent the offshoring of its industrial base and to maintain its economic standing against the United States and China.

To address these vulnerabilities, the European Union has introduced several strategic initiatives designed to build autonomy in critical sectors:

• The Net-Zero Industry Act, which aims to scale up the domestic manufacturing of clean technologies.
• The Critical Raw Materials Act, focusing on diversifying the supply chains for minerals essential to the energy transition.
• The European Chips Act, intended to increase the EU’s share of global semiconductor production.

Further efforts to speed up the transition include AccelerateEU and the proposed Industrial Accelerator Act. These initiatives are intended to reduce the bureaucratic hurdles and permitting timelines that have slowed the deployment of renewable energy and the construction of new industrial facilities.

The shift toward electrification is not merely an environmental goal but a business necessity for heavy industry. Industries such as steel, chemicals, and automotive manufacturing require immense amounts of stable, low-cost power to remain viable. Without a system that can deliver this power at a scale comparable to China’s, European firms face increasing cost pressures.

The volatility of oil prices and the ongoing risks associated with the Strait of Hormuz serve as reminders of the fragility of the old energy paradigm. However, the long-term economic battle is being fought over the cost per kilowatt-hour and the efficiency of the electrical grid.

The European strategy now relies on the successful implementation of these various “Acts” to ensure that the transition to net-zero does not result in a loss of industrial capacity. The focus has moved toward creating a cohesive industrial policy that links energy production directly to industrial output.