Despite Draghi, Europe’s energy price crisis has gone nowhere

European companies are still paying vastly more for energy than they would in the U.S. or China, a new analysis has found, a year after a landmark report warned inaction would condemn the continent to economic stagnation.

The findings come on the anniversary of the publication of a report by former European Central Bank chief Mario Draghi, which found the EU was lagging behind rivals as a result of expensive power and gas, hampering firms’ competitiveness internationally.

According to the new findings from the influential Center for the Study of Democracy think tank, set to be unveiled Tuesday in Washington, European countries have become more exposed to energy price shocks, with indicators surging more than fivefold in the past three years.

“A year after Draghi called for stronger EU energy markets, our data shows affordability risks remain high, with retail prices still 40–70 percent above pre-crisis levels in much of Central and Eastern Europe,” said Martin Vladimirov, one of the report’s authors.

Affordability is now by far the greatest threat to the EU’s energy resilience, outstripping the uncertainty created by Russia’s weaponizing of energy flows, by the climate transition and by system reliability.

“It affects not only citizens’ trust, but also the capacity of businesses to compete globally,” the Center for the Study of Democracy assessment cautions.

“For Europe to succeed in the next phase of its energy transition, it must ensure that clean energy is not only available, but accessible and economically viable for all.”

Vulnerabilities in one domain also risk spilling over into others, adding to the major and often historical divides that already exist between EU countries, the report cautions.

If the bloc fails to address the gulf between countries’ energy security, it threatens to entrench regional inequality and undermine its economic sovereignty and climate goals, it warns.

In his report last September, Draghi wrote that “EU companies still face electricity prices that are 2-3 times those in the US. Natural gas prices paid are 4-5 times higher. This price gap is primarily driven by Europe’s lack of natural resources, but also by fundamental issues with our common energy market.”

One key recommendation was a massive program of state and private investment in aging power grids, which experts warn are inefficient and a key source of extra costs. His inquiry called for €584 billion in additional funds for electricity infrastructure by 2030, and up to €2.29 trillion by 2050.

It is unclear how much of that funding will be made available, but EU energy chief Dan Jørgensen has been tasked with planning an overhaul of Europe’s grids, to be presented later this year.

However, one source of reassurance for officials will be the declining levels of exposure to geopolitical risk after efforts to diversify away from Russian oil and gas. Jørgensen has presided over the introduction of a new plan to phase out imports from the country by 2028, with new suppliers ramping up production to meet demand.