EU must invest to compete with cheaper energy: Enel

Fragmented green targets were 'danger' for industry: Enel CEO

If Europe is to remain competitive in the face of cheaper energy sources then it must invest in new technology, the chief executive of Italy's largest power company told CNBC.

"If we don't invest in new technologies and improvements it will be difficult to match the competition of emerging markets and America these days," Fulvio Conti, chief executive of Enel said on Tuesday.

His comments came as Europe attempts to solve the growing conundrum of rising energy prices hitting consumers and regional utility companies struggling to increase revenues – particularly in the face of cheaper sources of energy such as shale gas from the U.S.

(Read more: US shale revolution leaving Europe in the cold)

"We have to recognize that we have less of those natural resources available and it is extremely difficult in a place as crowded as Europe to find the vast land of the Midwest where you can extract shale gas freely," Conti remarked.

West Burton coal fired power station in Nottinghamshire, UK
Photofusion | Universal Images Group | Getty Images

(Read more: A US-style fracking revolution for the UK?)

"We need to cover that, we need to increase our efficiency and improve technology to reduce the costs of energy generation while fostering a new world approach to fighting climate change," he added.

In the midst of such headwinds, Europe has set itself some of the toughest targets to cut greenhouse gas emissions in the world.

(Read more: Energy leaders warn of blackouts across Europe)

Last week, the European Commission announced that by 2030 it hoped to reduce carbon emissions in Europe by 40 percent, compared with 1990 levels, and to produce 27 percent of its energy from renewable sources.

The announcement came after protracted negotiations between the Commission and member-states, some of whom (including the U.K.) were unhappy about the onerous renewable energy target.

Conti said the Commission's target was ambitious but still achievable. He warned, however, that the complexity of regulating energy policy across the 28-nation EU bloc could become even more problematic.

"This is a potential danger for the industry," he said. "But it was even more dangerous to keep the situation as it was, where we had many different targets and individual policies in member-states, and the wrong incentives [on emission reduction], which created the highest-ever energy price for the consumer and the lowest-ever margins for the utilities in that sector."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt.