September 05, 2008

IEA advises the EU to unite on energy matters

EU capitals should create a united front in order to beef up their position vis-a-vis major energy suppliers such as Russia, the International Energy Agency (IEA) suggested on Thursday (4 September).
"Many EU member states prefer to maintain their bilateral relationships with supplier countries, which may affect the strength of the EU to act as a single entity," IEA chief Nobuo Tanaka said, labelling the current fragmented approach "perhaps the weakest policy area".

"In the long run, it means they [EU states] will lose out," Mr Tanaka stressed.
Russia supplies the 27-nation bloc with a third of its oil and 40 percent of its natural gas - a dependence expected to rise significantly in the future.
The Baltic states, Finland and Slovakia are the most dependent on Russia's gas, while Denmark, Ireland, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the UK form the least reliant group.
According to the Paris-based body - acting as energy policy advisor - the EU should "better co-ordinate" its external relations so it can use its full weight when talking to Russia.
It has also backed the idea of diversifying the union's supplies.

Calls to reduce the EU's dependency on Russia have gained more ground in the face of recent events in the South Caucasus.
In August, Moscow launched a military incursion into Georgia in response to its attack on the rebel-held town of Tskhinvali in South Ossetia - the conflict that has, among other things, raised worries about the security of energy supplies crossing Georgia.
The International Energy Agency echoed a union's own political message resulting from the EU leaders's summit on EU-Russia ties earlier this week (1 September).
"Recent events illustrate the need for Europe to intensify its efforts with regard to the security of energy supplies," the summit conclusions stated, inviting EU institutions to examine ways to diversify energy sources and supply routes.
Brussels makes case for Nabucco pipeline
EU energy commissioner Andris Piebalgs, for his part, reiterated on Thursday (4 September) his support for the Nabucco energy corridor, a pipeline designed to lessen the bloc's dependency on Russian gas.
"Our objective of diversifying our sources and routes is even more important after the events in Georgia," Latvia's commissioner said and called for "more political engagement to remove all obstacles" to bringing Caspian energy resources to the European market.
The Nabucco project is to connect Turkey with Austria, via Bulgaria, Romania and Hungary, with its capacity amounting to 31 billion cubic metres of natural gas per year. The EU hopes construction will begin in 2010 - despite uncertainty over how to feed the pipeline sufficiently.
Further liberalisation needed
In its first review of EU energy policies, the International Energy Agency has backed the controversial idea of splitting energy companies' production and supply wings - known as ownership unbundling - in order to boost competition and bring down prices.
"We are concerned about the resistance against what we think is the right proposal by the [European] commission for full ownership unbundling," the IEA head said, calling on the EU's executive body to stick to its guns.
Earlier this year, EU governments adopted a softer line on liberalisation of the union's gas and electricity sector, meaning that European energy giants will not be forced to sell their transmission networks.
The European Parliament also rejected the forced break-up of gas companies, but supported it in electricity sector.
The 27-nation EU received an undoubtedly positive evaluation when it came to its green goals to boost renewable energy and lower CO2 emissions. But more should be done to introduce trading of green energy within the bloc before 2020.
[source: EUObserver]
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