Mario Draghi: Europe must deepen its energy market reform

Dr. Mario Draghi, recently awarded the Princess of Asturias Prize and former President of the Council of Ministers of Italy and the European Central Bank, was the central figure in a special edition of Energy Prospectives, the high-level series of events by Fundación Naturgy and IESE Business School focused on the economic, regulatory, and technological conditions shaping the future of the energy sector.

This event marked the first anniversary of the Draghi Report’s release and served to assess the progress made, the implementation of its recommendations, and Europe’s current standing compared to other global powers.

The Draghi Report laid out an ambitious roadmap to strengthen Europe’s competitiveness and autonomy in sustainability and energy. A year after its publication, the continent is in an even more vulnerable position, with only 11.2% of the 383 recommendations fully put into action.

In this context, the former Italian Prime Minister stated that Europe is facing a more complex situation than a year ago due to its dependence on raw materials and technology. He also emphasized the growing importance of geopolitics, security, and supply chain resilience. Among the most urgent priorities stemming from his recommendations, Draghi highlighted the need for necessary reforms, increased investment, and confronting current regulations to strengthen Europe internally.

Since the report’s release, the international landscape has changed significantly. The United States, China, and even Japan are implementing industrial policies more swiftly and effectively than Europe. Draghi noted that while the report was initially criticized for its stance on industrial policy protectionism, this criticism has lost strength as more global powers adopt such policies. He pointed out that both the U.S. and China apply industrial policies, albeit with different models. Additionally, he stressed the need to reverse the imbalance in private R&D investment in Europe and align it with the U.S. model, where public investment is minimal and the private sector plays a dominant role.

When discussing the role of SMEs in Europe—which account for 70% of total employment—and how governments can help them become more competitive, Draghi emphasized that this is a crucial issue due to the very structure of European industry. He noted that while preparing the report, it became clear that although financing was available, the major obstacle for small and medium-sized European entrepreneurs was scalability. This highlights that Europe is not creating the right conditions for local companies to scale up.

On another front, energy remains one of Europe’s major challenges. European companies face higher gas and electricity prices than, for example, the United States, which directly impacts industrial competitiveness. To address this situation, Draghi called for an urgent reform to make energy costs in Europe more competitive. For the former ECB President, it is essential that Europe deepens its energy market reform, as the energy trilemma and its priorities have shifted—now, both the origin and the price of energy are equally important. In Europe, infrastructure permits can take up to nine years to be approved, mainly due to highly fragmented governance. The report proposes linking prices to long-term contracts, renegotiating contracts for difference, streamlining permitting processes, and making common public financing the norm for projects of European interest—reducing bottlenecks and improving costs and security, and to support technological neutrality.

Finally, as also highlighted in his report, Draghi stressed the urgency of greater European coordination in the management of public goods, such as grid infrastructure. He acknowledged the efforts of the private sector, which is already advancing and exploring ways to achieve the goals. However, he emphasized that the greatest effort must come from the public sector, which needs to simplify regulations and legislation. He pointed out the need for a common framework and suggested that the private sector should help shift public opinion by using its platform to advocate for regulatory reform.

To conclude, Mario Draghi reflected on how Europe can achieve the desired success over the next decade, looking ahead to 2035. For Draghi, the solution lies in accelerating growth while simultaneously decarbonizing. The ultimate goal is a continent that is energy-independent, competitive, and high-growth—this being the core of the report: decarbonization and competitiveness, with decarbonization understood as the lever to strengthen competitiveness.

At the beginning of the event, Francisco Reynés, Executive Chairman of Naturgy, remarked: “These sessions have far exceeded our initial expectations, and today’s event confirms that twice over—both in the success of the series and in the presence of Dr. Draghi.” Reynés stated that Draghi’s strength of ideas and precision in diagnosis are hard to match, as is his commitment to Europe. “We are especially interested in his proposals on energy and economics, and how they can be translated into concrete solutions. Ultimately, we aim to bring science and thought closer to the reality of business and the economy, which should be aligned with society’s needs,” he concluded.

In this new session of Energy Prospectives, Franz Heukamp, Dean of IESE, stated: “Today we will discuss a crucial topic: energy. We are fortunate to welcome Mario Draghi, whose ‘whatever it takes’ exemplified decisive leadership at the right moment, and whose report has set milestones that have helped Europe improve compared to the past.” Heukamp concluded by emphasizing that energy plays a vital role in people’s lives and that “we must ensure its supply is stable and affordable, within a predictable regulatory environment.”

Energy Prospectives: High-Level Conversations

Energy Prospectives, organized by Fundación Naturgy and IESE Business School, is a series of high-level conversations that bring together nationally and internationally recognized figures for their expertise, vision, and knowledge of the energy sector, along with business leaders, regulators, executives, and academics.