Yet the competitiveness gap will continue to expand as Europe remains locked in a path of still-higher costs — unless there is a change in policy. And the first signs of a potential change of policy abruptly emerged in both Brussels and Berlin during Davos week. European policy makers, struggling with already high unemployment, have begun to visualize the further job loss that will result from shutting down European plants. They have also started to pay attention to the 2.1 million jobs in in the United States supported by the unconventional oil and gas revolution.
In Brussels, coinciding with the first day of Davos, the European Commission released a new policy paper on energy and climate. It reiterated the commitment to substantial growth in renewable electricity and a "low-carbon economy." But, for the first time, it put heavy emphasis on the price of such policies and called for a "more cost-efficient approach" to renewables. It warned of the mortal risk facing "industries that have high share of energy costs and which are exposed to international competition." It declared that policies have to promote "competitive" as well as "sustainable energy" — a juxtaposition that was not heard before. It even warned that "the rapid development of renewable energy sources now poses new challenges for the energy system."
Notably, the new policy statement went out of its way to observe that "the availability of shale gas in the USA has substantially lowered natural gas prices there as well as electricity generated from natural gas." Despite the fervent opposition to shale gas in some quarters in Europe, it pointedly included shale gas as among the domestic low-carbon energy sources that member countries can pursue.
This was all the more significant in that the commission is acknowledging the reality of the shale revolution and rejecting the view of Europe's anti-shale activists that America's shale gas abundance is only a "bubble," destined to soon disappear.
A similar message resounded at exactly the same time from Berlin. Sigmar Gabriel, the social democratic minister of economy and energy in Germany's coalition government, called for reform in Germany's Energiewende — or "energy turn" policy — which has heavily subsidized the rapid growth in renewable electricity. He warned that the "anarchy" in renewable energy and its costs in Germany had to be reined in: "The whole economic future of our country is riding on this," he said. "We have reached the limits of what we can ask of our economy."
Up until now, the Energiewende in its present form has been sacrosanct, supported not just by the Greens but all across the political spectrum. Gabriel — and Chancellor Angela Merkel — aim to maintain the commitment, but reduce subsidies, focus more on costs, and, as Gabriel said, "control the expansion of renewable energy."
(Read more: Why the US is a hot commodity right now: Yergin)
His comments reflect the recognition that, if the course remains unchanged, Germany could be facing what Gabriel called "a dramatic deindustrialization." And that would threaten Germany's prosperity, which hinges to a considerable degree on Germany's international competitiveness. Exports are responsible for over 50 percent of German GDP, compared to 27 percent for China, which is generally considered to be the workshop of the world.
Gabriel's comments stirred up criticism from environmentalists; indeed, they may seem strange words coming from the leader of the Social Democrats (the SPD). But the Social Democrats are very close to the trade unions, for which loss of competitiveness translates into loss of jobs.
And it is jobs, as much the specter of "deindustrialization," the disinvestment in industry, that is now making competitiveness a significant part of Europe's energy debates, especially on a continent where unemployment is so high. The risk of major job loss could well provide the political stimulus to moderate energy policies in order to narrow the trans-Atlantic gap that was so evident a theme this year at Davos.
— By Daniel Yergin
Daniel Yergin is vice chairman of IHS and a Pulitzer Prize-winning author. His latest book is "The Quest: Energy, Security, and the Remaking of the Modern World," which includes a section on the development of Europe's renewable policy and Germany's Energiewende. Follow him on Twitter @danielyergin.