EU takes first step towards common energy policy

BRUSSELS, Mar 8: The European Union takes its first step towards a common energy policy today (Mar 8, 2006), aiming to speak with one voice to foreign suppliers while forging a competitive gas and electricity market within the bloc.

The executive European Commission will present a paper calling for a coordinated approach to energy, including better integration of gas and electricity grids, a new energy pact with Russia, a policy on gas stocks, and coherence in external energy relations.

But the goal of unity in the energy sector already faces challenges from squabbling among members such as France, Spain, Italy and Germany over proposed mergers in the utility sector.

The Commission's paper urges the 25-member bloc to diversify energy supplies and transit routes, reduce demand, boost energy efficiency, and develop renewable energy sources.

''Secure and affordable supplies can no longer be taken for granted,'' Energy Commissioner Andris Piebalgs said in the text of a speech late yesterday.

''Increased import dependence, higher energy prices and environmental constraints are issues of the utmost importance to all member states and therefore a European response is logical.'' In a move likely to fuel controversy, the paper advocates a broad debate on the use of nuclear power -- anathema in some EU nations such as Austria but key to energy independence in states like France.

Tension over gas supplies and the rise in oil prices to more than a barrel have made energy an important political issue in many countries in and outside Europe.

A pricing dispute between Russia and Ukraine briefly disrupted supplies to the EU earlier this year, highlighting the bloc's vulnerability to foreign providers of oil and gas.

Strict commitments under the Kyoto Protocol to reduce emissions of gases that cause climate change, and projections of greater dependence on imported oil and gas in future, are also driving the EU's desire to create a policy that meets its energy needs while fulfilling environmental goals.

The Commission will propose legislation based on feedback from the European Parliament and EU leaders, who will discuss the paper at a summit on March 23-24.

At present, several member states are arguing over a number of mergers in the utility sector.

The EU executive has asked France to explain a government engineered merger of Gaz de France and Suez, which is contested by potential Italian bidder Enel.

It also wants Spain to explain legal moves that may hamper a bid for Endesa by Germany's E.ON.

At the same time, the Commission is mulling antitrust probes of energy companies suspected of anti-competitive behaviour in monopolising pipelines and supply networks.

The EU executive believes an open, competitive gas and electricity market is crucial to the EU's energy future.

REUTERS