The EU must diversify its energy supplies and consider stockpiling gas for times of crisis, the bloc's executive said today, presenting proposals to form a common EU energy policy.
Coming on the heels of a dispute between Russia and Ukraine that disrupted gas supplies to Europe early this year, the European Commission's plan aims to address concerns about import dependence, climate change and high oil prices.
"The energy challenges of the 21st century require a common EU response," Commission President Jose Manuel Barroso, standing against the backdrop of a giant light bulb, told a briefing.
"A common approach articulated with a common voice with our main partners will enable Europe to lead the search for energy solutions." The green paper proposed a new European energy regulator, revised rules for storing gas and oil stocks, an "action plan" on energy efficiency and a common external energy policy.
The Commission, which has limited authority over energy, hopes the proposals will spur solidarity among EU states, particularly when gas and oil supplies to one or more members are suddenly disrupted.
The green paper, which is not a legislative proposal, is to be discussed by EU leaders at a meeting on March 23rd and 24th. The paper included a call for a new energy pact with resource-rich Russia, which supplies 25 per cent of the EU's gas.
The Commission said roughly €1 trillion must be invested in Europe over the next 20 years to meet demand and update infrastructure.
Import dependency in the EU is forecast to rise to 70 per cent in the next 20-30 years from 50 per cent now if action is not taken, it said.
Mr Barroso urged European governments not to shield companies from takeovers on grounds of nationality.
The Commission 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 and Poland to stop blocking a banking merger already approved by Brussels.
"It's the birth pangs, the growing pains of the single market. That's what's going on and there are bound to be reactions," Barroso said of the backlash against cross-border consolidation.
The volume of mergers and acquisitions in the European energy sector in the first two months of 2006 nearly matched the figure for the whole of 2005, he noted.
EU efforts to encourage more competition in its energy sector have had limited results. Despite liberalisation over six years ago, huge former monopolies still dominate many markets, keeping prices high and making it hard for newcomers to gain a foothold.
The paper urged a debate on the use of nuclear power - key to energy independence in France but anathema in nations like Austria. Mr Barroso pushed for more low-carbon energy sources and said no subject should be taboo when expanding the bloc's mix.