More of the same

The EU’s energy policy is still unconvincing By Derek Brower and Tom Nicholls, in Brussels The European Commission said today that it wants to create a single voice for European energy policy. But there was little in its new Energy Review to suggest that will happen soon. This is what we’ve heard from the Russians today The report was full of fine sentiments – such as how the EU can lead a “post-industrial revolution” to a low-carbon economy. But it was short on specifics, especially on how the EU would lessen its increasing dependence on energy imports. The Commission said it wants to get serious about climate change, calling for 30% reductions in greenhouse gas emissions from developing countries by 2020. And to show its commitment to the cause, Commission president José Manuel Barroso said the EU would cut emissions by 20% by 2020, rising to 30% if other countries join in. That’s laudable, however 20% would only be a fraction higher than cuts already proposed for the next 13 years. On the subject of liberalisation, many had hoped that Neelie Kroes, the Commissioner for Competition, would announce bold moves to stamp out market abuses in the EU’s horribly fragmented and uncompetitive energy markets, still often dominated by vertically integrated virtual monopolies. The Commission’s main recommendation for boosting competition is unbundling – breaking up vertically integrated companies. But it also offered another option for states that don’t like the sound of unbundling: allowing vertically integrated companies to retain ownership of network assets and receive a regulated return on them, but not to operate them. Kroes’ recommendations were greeted with some confusion, with many asking why the Commission had decided to give companies like RWE and E.On – considered to be two of the companies in the Commission’s sights – the option not to unbundle. Achieving climate-change targets, according to Andris Piebalgs, the EU’s energy commissioner, will depend on setting up a proper internal energy market, achieving improvements in energy efficiency of 20% by 2020 and increasing the use of low-carbon energy sources such as renewables. To that end, the EU has proposed to increase renewable energy in the EU’s overall mix from less than 7% today to 20% by 2020. Again, this is laudable – and ambitious. However, Commission officials ducked the question of whether more nuclear plants should be built – an important one over the next couple of decades, not least because many of the nuclear plants in operation today, supplying nearly a third of the continent’s power, will eventually need to be replaced with some form of generation. Even the most optimistic projections for renewables would not meet that gap. Meanwhile, where energy security was concerned, the Commission called for new LNG terminals, especially in countries that are heavily dependent on one supplier. But there was no detail on how the construction of terminals can be encouraged. Speaking about the show-down between Russia and Belarus earlier this week that had forced Poland and Germany to tap their strategic reserves, Barroso condemned Russia’s behaviour as “unacceptable”. “We have an addiction to energy,” he said. “And like any addiction, it is even worse when you depend on someone else.” The Energy Review, though, predicts that the addiction will get worse. By 2030, gas imports will account for 84% of Europe’s demand. And some 93% of the EU’s oil will come from foreign suppliers.