Call For EU To Boost Energy Security

LONDON, UK -- Western Europe's growing dependence on Russia and other energy suppliers means the European Union will have to use aid and trade policies to bolster its energy security, a long-awaited report has concluded.

A green paper by the European Commission, a draft of which has been seen by the Financial Times, says the EU will have to put energy security at the heart of its relationship with the outside world and strive to avoid greater dependence.

The report, requested by EU leaders last year, has been extensively revised since Russia shocked much of Europe by cutting off gas passing through Ukraine at the start of the year. "The recent events have been a wake-up call," said Benita Ferrero-Waldner, external relations commissioner.

Last week she discussed energy security with both Sergei Lavrov, Russian foreign minister, and governments in the Caucusus. She added: "We have to use all our instruments . . . to bring internal and external policy together to bring about a safe, affordable and sustainable energy supply for our citizens and industry. This is not about choosing one partner rather than another; it's about maintaining diversity of energy supply."

Last week, Neelie Kroes, EU competition commissioner, said she would step up action to rid the EU electricity and gas market of "real market distortions", but the report reveals other initiatives to safeguard the sector.

The draft says the European Investment Bank, an EU institution with a total lending portfolio of €47.4bn (£32.4bn), should focus more on projects that boost the EU's energy security by improving infrastructure. It adds that the EU needs to "make better use of trade policy tools" through the World Trade Organisation's dispute settlement system and give greater emphasis to energy in the EU's "neighbourhood" agreements with nearby countries.

Many Commission officials say the EU missed an opportunity in 2004 when it asked for only minor reforms to Russia's gas sector in return for backing the country's bid to join the WTO. Russia, Norway and Algeria meet half of the EU's gas needs and dependence is set to increase. The report says investments of €600bn will be needed over the next 20 years to meet future EU energy demand. It is scheduled to be issued next month.

Andris Piebalgs, energy commissioner, added the Commission was ready to take a number of EU governments to court next month for failing fully to implement EU legislation to open up the sector and increase its efficiency.

Source: Financial Times