EU plans green energy 'industrial revolution'

10 January 2007 - The European Commission has unveiled a new energy strategy, calling on member states to cut emissions of greenhouse gases by at least 20 per cent by 2020.

EC President Jose Manuel Barroso said there must be a common European response to climate change.

New policies were needed to face a new reality - to make European's energy supplies more secure, he said.

The urgency of the change was stressed by Russia's oil row with Belarus which hit EU states Germany and Poland.

The EU's civil service wants more investment in renewable energy, arguing that the old fuels have a political as well as clear environmental cost.

"We need new policies to face a new reality - policies which maintain Europe's competitiveness, protect our environment and make our energy supplies more secure," said Mr Barroso.

"Europe must lead the world into a new, or maybe one should say, post-industrial revolution, the development of a low-carbon economy."

The report demands that at least 20 per cent of energy comes from renewables by 2020.

Without such investment and energy efficiency measures, the report predicts that EU energy imports will rise from 50 per cent of consumption to 65 per cent by 2030, requiring increased reliance on potentially unpredictable sources.

While the report remains neutral on the issue of nuclear power, it does warn that any significant reduction - as planned by some EU states - will make the other objective of cutting greenhouse gas harder.

The report is also due to include measures to open up the EU's energy market, enabling the bloc's 500m citizens to buy their gas or electricity from anywhere in Europe.

Analysts anticipate these are likely to cause some controversy.

The package of measures will have to be approved by European governments before it can come into force.

In recent years the EU has been the most powerful political voice urging targets on reducing greenhouse gas emissions beyond the current Kyoto period, which expires in 2012.

But at the latest UN climate meeting its attempts to get new targets debated met with failure. The commission is now likely to urge that all developed countries across the world adopt a goal of cuts in the order of 30 per cent by 2020.

Critics say that demand is unfair because people in India and China pollute a fraction as much as individuals as those in the West.

The EU's principle tool for achieving cuts within the union itself would be an enhanced Emissions Trading Scheme (EU ETS).

But that only affects businesses, leaving emissions from road transport and domestic heat and power unaffected.

A voluntary agreement under which car manufacturers promised to increase the efficiency of their products has not produced the results which the commission wanted, and it may now propose a mandatory regime.

On the business side, the Commission is likely to propose an enhanced "unbundling" of energy supply across the continent in a bid to increase competition.

In the last three years it has raided the offices of energy firms it believed were operating uncompetitively, and warned 17 member states for failing to implement competition legislation; but it is poised now to go further.

New measures could also include breaking up the ownership of energy businesses to avoid conflicts of interest.

It may propose that companies generating electricity and distributing it would not be permitted to have owners in common; gas production companies would be divorced from pipeline operators.

Ministers are likely to debate the Commission's proposals in March.

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