Energy said to be focus of new European Commission

June 15, 2005
Energy will be the main focus of the new European Commission, according to a recent memo from Energy Commissioner Andris Piebalgs.

Doris Leblond
OGJ correspondent

PARIS, June 15 -- Energy will be the main focus of the new European Commission, according to a recent memo from Energy Commissioner Andris Piebalgs.

"Energy is one of the key sectors of the European economy, vital to competitiveness, essential to meeting Europe's Kyoto [Treaty on Climate Change] obligations, and a major factor in terms of security," Piebalgs said.

Piebalgs, from Latvia, considers the next 5 years a "watershed period" for energy policy because he believes oil and gas prices will remain high, Europe must continue to support Kyoto efforts, China and India will continue to grow, and the EU will become increasingly dependent on external energy suppliers.

The commission began a 5-year term last November.

Six priorities
Piebalgs identified six priorities building on energy security efforts of the previous commission in 2000. They involve:

-- Increasing energy efficiency to reach an "achievable target" by 2010 to save 70 million tonnes/year of oil, saving 15 billion euros/year.

-- A reduction of about 140 million tonnes/year of carbon dioxide and a significant reduction in terms of external supply dependence compared to 2004—equivalent to about 4% of oil imports.

-- Achieving "a properly functioning" gas and electricity internal market.

-- To "do better" in promoting renewable resources of energy so as to reach the fixed objective of 12% of overall energy consumption by 2010. This priority includes promoting development of biofuels.

-- Strengthening nuclear safety and security while member countries are having second thoughts about the need for nuclear electricity.

-- Improving links between energy policies and environmental research policies, particularly in the areas of energy efficiency and renewables, clean coal technologies, and nuclear waste management.

The trends for the EU's energy imports "have not been reversed" since the Security of Supply Green Paper was published in 2000. Instead, Europe is expected by 2010 to become 90% dependent on oil imports, 70% on gas imports, and 100% on coal imports.

Energy diplomacy
"Energy diplomacy" is as central a priority for the new commission as it was for the former one. Piebalgs said the EU "needs to look at this again" and is planning a new Security of Supply Green Paper by yearend.

A "coherent package of measures needs to be continually developed and refined" to optimize energy supply and control demand, Piebalgs said. New forms of partnership with oil and gas-producing as well as transit countries have been developed and will be strengthened to establish what Piebalgs described as "close and constructive relationships."

Already, dialogue with members of the Organization of Petroleum Exporting Countries has improved. The recent agreement for a biannual meeting at the commissioner-ministerial level took form June 10 with a session in Brussels at which Nigerian Minister Edmund Daukoru promised "a gesture" toward "reasonable and stable oil prices through an increase of OPEC's current production."

Russian factor
By contrast, relations established since 2000 in the context of an "energy dialogue" between the EU and Russia have slipped.

The dialogue aims to ensure security of energy supply and demand, develop cooperation especially in energy saving, rationalize production and transportation infrastructures, develop interconnections, and facilitate investments.

In his memo, Piebalgs insisted that the "general investment climate in Russia must become more transparent, stable, and predictable" and revealed that four working groups of government and businessmen from Russia and the union will examine issues of investment, infrastructure, transmission, energy trade, and energy efficiency.

Russia supplies half of the gas, one quarter of the oil, and one third of the uranium that the EU imports.

Other players
Beside Russia, the EU had identified two other "priority cooperation areas" that the new commission will aim to improve and strengthen. One is the energy community in Southeast Europe, which includes Albania, Bosnia-Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Romania, Serbia-Montenegro, Turkey, and Kosovo. These nations are to form part of a future EU-integrated energy market.

The other is the Euro-Mediterranean partnership, launched in Barcelona in November 1995 and including Algeria, Morocco, Tunisia, Libya, Egypt, Israel, the Palestinian Authority, Jordan, Lebanon, Syria, Turkey, Cyprus, and Malta.

The EU imports 17% of its gas and 12% of its oil from southern Mediterranean countries. Cooperation involves boosting gas export capacities through pipeline construction and developing electric power links.

The EU is also pursuing structural cooperation with three "areas of complementary interest," including the northern dimension with EU countries bordering the Baltic Sea and all dependent on oil and gas imports; the Caspian Sea basin, set to be an important gas and oil supplier for the EU; and Ukraine, a major transit country for Russian gas exports.