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North American manufacturers are set to remain heavily reliant on natural gas for power, while European manufacturers are set to become increasingly electrified
These diverging power pathways have their own benefits and risks, and stand to impact the competitiveness of the businesses that run on them.
Over time, the very viability of certain manufacturing bases could be at stake as two of the world’s largest economies opt to build out very different energy foundations for producers of components and finished goods and the jobs they create.
GEOLOGIC LOGIC
Geology is a major driver of the gas versus electric choice facing power system planners in both regions.
Both North America and Europe rely on natural gas for a substantial share of their energy needs, with gas accounting for 36% of North America’s and 24% of Europe’s total energy supplies in 2024, according to data from the Energy Institute.
However, due to its mammoth gas deposits, North America is not only self-sufficient in gas, but is also the world’s largest natural gas exporter, mainly in the form of liquefied natural gas.
Europe, on the other hand, has to import more than half of its gas, which leaves the region heavily reliant on other nations for supplies.
Europe’s heavy import dependence was well known for decades, but only became a decisive pain point following Russia’s invasion of Ukraine in 2022, which triggered sharp cuts to gas flows in the following months.
PRICE PAIN
Europe’s electricity and natural gas prices both stormed higher following the fallout from Russia’s invasion of Ukraine, sending ripples throughout its economy.
But the prices for electricity and natural gas rose by different degrees, and in turn have helped drive the energy policy decisions seen since.
In Germany – Europe’s largest economy and previously the top importer of Russian gas – electricity prices in 2025 have averaged around 50% more than the 2010 to 2020 average, according to Open Energy Tracker.
That upsurge in electricity costs has been deeply felt, and has resulted in steep jumps in household and business power bills, cuts to overall power use and nationwide pushes for greater energy efficiency.
However, the electricity price climb has been dwarfed by the rise in regional natural gas prices , which in 2025 have averaged over 90% more than the 2010 to 2020 average, according to LSEG.
This outsized jump in regional gas costs compared to electricity prices has cemented support around Europe’s electrification efforts, even though electricity costs remain far above previous averages.
In the United States, average electricity prices have climbed by much more than national natural gas prices in recent years, which has generated growing support for maintaining gas as the main pillar of commercial power networks.
So far in 2025, U.S. electricity prices have averaged around 40% more than the 2010 to 2020 average, data from the U.S. Energy Information Administration shows, while U.S. natural gas prices are around 12% more than the 2010 to 2020 average.
MANUFACTURING CHANGE
The diverging gas and electricity price trends are expected to accelerate the electrification drive among manufacturers in Europe while sustaining the gas-heavy dependence for power in North America, according to recent forecasts by consultants DNV.
Indeed, while European and North American manufacturers used nearly the same amount of electricity in 2024 – around 3,800 petajoules – by 2050 European manufacturers are seen using nearly 30% more electricity than their North American counterparts.
The share of manufacturers powered by electricity is also set to change notably by 2050.
In 2025, around 33% of European and 27% of North American manufacturers use electricity as their primary power source.
By 2050, 48% of European manufacturers are expected to be electrified, compared to only 34% in North America.
The flip-side of higher electricity use by European manufacturers will be a sharp drop in natural gas use by the continent’s factories.
Currently, around 28% of European manufacturers are powered by gas, but only 11% are expected to be gas-powered by 2050.
In North America, around 46% of current manufacturers are gas-powered, and that share is expected to hold flat through 2050.
FALLOUT
Manufacturers on either side of the Atlantic face risks from the projected shifts in power sources.
In North America, the projected continued rise in LNG exports looks set to boost competition for gas supplies with power generators and other industrial users, and could result in steadily climbing gas costs for businesses.
At the same time, greater deployment of energy supplies from renewables, nuclear reactors and other power sources could serve to drive down electricity costs, and give electricity-powered manufacturers a competitive edge.
In Europe, increasing reliance on regional electricity markets will expose manufacturers to bouts of price volatility and potential outages, especially in areas with outdated networks.
And given the need for extensive grid upgrades to enable further cuts to gas use, years of electricity rate rises likely lie ahead for all European electricity consumers, which will eat into manufacturer margins.
Ultimately, it may not be manufacturers but consumers who have the final say over whether Europe’s electrification drive or North America’s championing of gas will be the better strategy.
Given the low cost of shipments between the two regions, higher-cost producers will end up being undercut by lower-cost overseas rivals making similar products.
And most consumers will opt for the lower-priced version of similar items, regardless of what source of power was used to produce it.
The opinions expressed here are those of the author, a columnist for Reuters.
Reporting by Gavin Maguire; Editing by Jamie Freed
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(Reuters) – Manufacturers in North America and Europe are set to embark on starkly different power-source paths in the decades ahead, which could reshape the future prospects for goods producers on both sides of the Atlantic.
In North America, natural gas is primed to remain the main power source for factories and production lines thanks to the massive gas deposits across the region.
In Europe, an ongoing push to cut reliance on imported fossil fuels is set to shift most factories to run on electricity by mid-century.
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