A kilowatt hour of industrial power cost €0.199 on average across the EU in 2024. In China it cost €0.082, and in the United States €0.075. The mechanics of Europe’s new industrial policy start with that gap, and so do the grievances of the capitals in the east.
The Atlantic Council’s GeoEconomics Center, in the second part of a series on Central and Eastern Europe, argues that EU governments are quietly dropping familiar positions. Berlin is coming round to the need for protections across all sectors against Chinese overcapacity. Paris, it says, is holding back from an I-told-you-so on strategic autonomy, since that would feed suspicion that it only wants to help French firms. Warsaw, under the Tusk government, now openly backs the Carbon Border Adjustment Mechanism, a tool that can justify protection against countries with weaker emissions standards.
A mixed bag for the east
For the region these shifts matter, because they put its remaining manufacturing capacity back on the map, at least in speeches. The catch is that the measures planned for the months ahead probably will not answer a loud complaint from the east: that the mandatory decarbonisation targets in the European Green Deal did nothing but hurt competitiveness.
The numbers lend that complaint some weight. From 2019 to 2023, what industry paid for power climbed 137 percent in Poland and by 171 percent in Hungary. In the United States the rise was 21 percent. Labour costs are now far higher than in China, and higher too than in countries such as Morocco, which enjoy favourable EU trade deals and have drawn heavy Chinese investment.
Money is the other constraint. Eastern capitals borrow at higher rates than their western counterparts and have less fiscal room. Poland and Romania grow fast and depend less on German buyers, but their deficits are high and growing, which limits what they can spend on the infrastructure and subsidies that any reshoring trend would demand. Tariffs, taxes and subsidies all carry uncomfortable trade-offs, the analysis says, and none will be enough without private investment. Would global capital bet on European manufacturing without an economic security mandate setting a floor under the market?
The new rules
The Industrial Accelerator Act is still in the early stages of the legislative process. Its job is to give legal force to the Clean Industrial Deal of February 2025. That means a local-content test for public tenders and for subsidies, plus ways for screened foreign investors to commit to local jobs and technology transfer. The Atlantic Council expects it to be a boon for the stronger manufacturers in the bloc.
A separate critique from CEPA was less kind about the Clean Industrial Deal itself. It said the plan offered few tangible solutions to energy costs, that ArcelorMittal had delayed a €1.7 billion investment over regulatory uncertainty, and that electricity pricing in the EU still follows the swings of the gas market.
Sources
- Making the EU's new industrial rulebook work for Central Europe
- Europe's Green Dreams Turn into a Nightmare
