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Eu eyes common energy policy { February 2006 } Original Source Link: (May no longer be active)
http://www.upi.com/Energy/view.php?StoryID=20060302-010250-9562rhttp://www.upi.com/Energy/view.php?StoryID=20060302-010250-9562r
3/3/2006 10:03:00 AM -0500
Analysis: Eyeing a common EU energy policy
By HANNAH K. STRANGE
UPI U.K. Correspondent
LONDON, March 2 (UPI) -- The European Union's plans for a common energy policy to ensure future security following the suspension of Russian gas supplies to Ukraine in early January is under threat by increasing state protectionism of domestic energy markets.
Concerns over rising energy demands and security of supply have been fueled by conflict and political instability in supplier nations. The EU's vulnerability was thrown into sharp relief by the decision of Russian gas giant Gazprom to cut off supplies to Ukraine in January during a battle - later resolved -- over prices. Within hours of the cut, several other European countries, including Austria, France, Germany, Hungary, Italy, Poland and Slovakia, began reporting pressure drops of as much as 30 percent in their pipelines.
Speaking at London think-tank Chatham House in February, former Ukrainian Prime Minister Yulia Tymoshenko said Russia was using gas as a "post-Soviet neo-imperialist weapon." Moscow's unilateral decision to increase the price of gas to Ukraine was "nothing less than energy terrorism," she said.
The crisis prompted Europe to consider how to reduce its dependence on gas from one source. Around 20 percent of the EU's gas comes from Russia, with around 80 percent of that coming through pipelines crossing Ukraine. The European Commission, which is the EU executive, forecasts that as Europe's own fuel resources run out, that dependence will increase, with general energy consumption from foreign sources rising from 50 to 70 percent by 2030.
Austrian Chancellor Wolfgang Schuessel, speaking as his country assumed the presidency of the European Union in January, said the EU needed to promote investment in energy and "look for a long-term solution."
"It's a question of reducing our dependence on one supplier and another question of diversification of supplies," he told the European Parliament in Strasbourg, France.
The issue is likely to be high on the agenda at the EU summit in June.
British Prime Minister Tony Blair has urged closer cooperation among EU member states and greater liberalization of the bloc's energy market.
Speaking alongside German Chancellor Angela Merkel in Berlin in February, Blair said member states should also discuss interconnection between different parts of the energy grid within Europe, and research and development into different types of energy, such as renewables.
"Europe and energy is a major factor in how we are going to be able to make ourselves competitive in the time to come," he said. "And I think it makes perfect sense for Europe to try and develop a common energy policy together and then, of course, you have got the liberalization of the energy market."
Former Polish Prime Minister Jerzy Buzek, a member of the European Parliamentary Committee on Industry, Research and Energy, said last week Europe could be energy-sufficient in 10 to 15 years if it embarked on a coordinated program of investment in alternative fuels to oil and gas.
In a lecture at the London School of Economics, he argued Europe could power itself on a mix of nuclear power, renewables and fuel from clean-coal technologies.
The EU also had to do everything in its power to prevent Gazprom from gaining control of all pipelines into Europe, he said. There was only one gateway free from Gazprom control into Europe today, he said: Ukraine, which had its own gas and oil pipelines. Because of January's deal between Ukraine and Russia, it was possible these pipelines would in the future be under Gazprom ownership.
"It's a monopoly, and we don't like monopolies in a free and open market," he said. "We are not against Gazprom for political reasons but it's a monopoly, and if they close one tank somewhere near the Kremlin then Austria, Hungary, parts of Germany, the Czech Republic will have shortages of gas immediately."
Buzek argued that Europe should bypass Russia and open the gateway through the Caspian Sea and the Black Sea to Ukraine and the European Union. He added, however, that importance must be given to energy efficiency.
"We have to change our policy completely. We need a common energy policy for the European Union, and to decide at the level of the European Union about our security, environmental protection and cost," he said.
The EC is to publish a green paper on the future of EU energy policy next Wednesday outlining the need for a common vision. It is also expected to warn that recent attempts by European states to protect their own energy industries threaten that goal, and by extension, the bloc's energy security.
Heavyweight energy companies are locked in an intense battle to acquire firms, which has mergers in a bid to fend off interest. Some member states have been criticized for apparently interfering on a political level in such deals, particularly the planned merger between France's state-owned Gaz de France and Suez.
A spokesman for Britain's Department of Trade and Industry told United Press International the government was "frustrated" by the failure of other member states to liberalize their energy markets, which had, in part, been to blame for problems with gas supply and soaring prices in Britain this winter.
"It also means that consumers across the EU aren't benefiting from competitive prices," he added.
Earlier, European Commission President Jose Manuel Barroso cautioned against a move toward economic nationalism, telling reporters Wednesday: "We cannot deal with globalization if we have 25 mini-markets."
"We are not going to be able to meet ... the challenges that we currently face if we take a nationalist approach," he said. "... It is being united that gives us strength, not divided."
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