EU seeks drastic cut in oil use

The European Union should massively increase the amount of renewable energy it uses, the EU's energy chief said, suggesting a binding target for 20 % of all its energy to come from low-carbon, home-grown sources such as wind and solar energy.
EU Energy Commissioner Andris Piebalgs said the EU should aim to draw 10 % of vehicle fuel from biofuels such as ethanol, trying to bite into growing demand for imported oil. The EU's focus on renewable energy aims to answer two problems by weaning the region off imports and cutting greenhouse gas emissions.

However, EU Commission President Jose Manuel Barroso said the EU's executive arm remained "agnostic" on nuclear power, saying it was a decision for each EU nation.
"It's not up to us to tell the member states whether in their energy mix they should have more or less nuclear or none at all," he said. "What is important is to make progress toward an economy that is less dependent on carbon."
Piebalgs acknowledged that nuclear was Europe's biggest source of low-carbon power.

The European Commission is calling for "a step change" to double the use of renewable power. The region is on track to generate 10 % of its energy from renewables by 2010, less than a 12 % target it set itself.
It will suggest legally binding targets for renewable energy but will allow each EU country to decide what kind of power it wants to use. Each will have to show exactly how they plan to meet specific goals for electricity, heating, cooling and transport. It said biofuels were more expensive than other forms of renewable energy now available but were "the only way to significantly reduce oil dependence."

Germany cautious on EU energy plans
Germany reacted cautiously to the latest proposals by the European Commission to diversify EU energy sources, slash carbon emissions by 20 % and enforce rules for fuel competition. The German government said it was in favour of the EU's objectives -- even if it was not yet sure about how to achieve them -- whilekey players in the energy sector condemned the proposals.
German Economy Minister Michael Glos told: "We are in favour of the objectives but we are not yet in agreement in the German parliament about how to achieve them.”
“Economic growth will not help us if our environment is at risk but we need to achieve these objectives in a way which does not impinge on our competitiveness," Glos said.

Nevertheless, key players in the German energy sector expressed scepticism about Brussels' proposals. Three different federations -- the BEE federation for renewable sources of energy, the BWE association for wind power and the BWS solar power body -- described the EU proposals as "meagre" and "lacking in ambition".
"The EU Commission hasn't the courage to lay down binding and clearly defined regulations," complained the head of BEE, Milan Nitzschke, in a joint statement issued by all three federations. "We're currently seeing just how fatal the EU's dependence is on, say, energy supplies from Russia. If onceagain, no clear strategy is drawn up to expand renewable sources of energy, that will mercilessly spotlight the shortcomings of European energy policy," Nitzschke said.

The BEE, BWE and BSW associations urged the government, which this year holds the six-month revolving presidency of the EU, to push for an ambitious goal of making renewable energy sources account for 25 % of all energy production by 2020, instead of the 20 % targeted by Brussels. The federations also called for sector-specific targets -- so that at least 35 % of electricity should be produced from renewable sources by 2020, 25 % of heat and 20 % of fuels.
"Only in this way can the EU's greenhouse gas emissions and the block's dramatic dependence on oil and gas imports be reduced," 1 report said. The current non-binding targets "give members states and energy suppliers too much room to do nothing for climate protection or security of supply," Nitzschke complained.

The gas industry federation BGW was angered by Brussels' proposals to compel big energy companies to unbundle their supply and generation businesses from their network operations. The Commission was "fundamentally questioning the companies' rights to ownership of their networks," BGW said, describing the move as "expropriation".
BGW president Michael Feist, warned that there was a danger, if companies felt their networks would be expropriated by the state, that companies would not invest sufficiently in those networks.
"That will lead to a deterioration of the quality of supply," Feist argued.

The German networks regulator, Bundesnetzagentur, also rejected the idea of separating the networks from the utilities.
"We should examine whether the current rules to spin off the networks into legally independent units are not sufficient in themselves," Bundesnetzagentur boss Matthias Kurth told. Strict access rules and a functioning supervisory body could ensure that fair network access could still be guaranteed without forcing companies to give up assets, Kurth argued. He said that with 900 different electricity network operators in Germany and 700 gas network operators, the EU's proposals were not practicable.

A spokesman for the German government described the EU's proposals as "a good basis for preparing the March summit (of heads of state and government chiefs) and for a discussion of energy policy." The spokesman noted some "very positive aspects", such as the intention to make energy use more efficient and to develop renewable sources of energy.
For his part, economy minister Glos said: "The Commission is now talking about unbundling of ownership and we need to verify first whether this is compatible with the constitution." Germany would not "take any hasty steps," Glos said.
When pressed on the issue of unbundling, Glos replied: "We are willing to consider issues that we would have rejected six months ago."

France voices objections to parts of EU energy plan
France voiced objection to key parts of a new EU energy plan calling for an end to controlled fuel prices and the separation of energy production activities from distribution networks.
"We have two points of disagreement with the (European Union) commission, which are the possible eventual abolition of controlled prices and the question of separating asset ownership by integrated operators," an official source at the industry ministry told. To correct the situation, EU regulators would step up scrutiny of future energy sector mergers and state subsidies while staying on the look-out for evidence of collusion in the market.

The commission determined that competition was in particular stifled by big energy groups with supply, generation and network activities that reduced potential competitors' access to critical market information. Such companies could in addition restrict access to key transmission and distribution networks as well as storage sites, fragmenting the market, especially at the cross-border level.
Because of their integrated structure, big energy concerns sometimes held off making investments in infrastructure to benefit other branches of the group.

One idea the commission has floated to increase competition is to force integrated energy companies to separate their distribution networks from their supply and generation businesses.
Francos Loos, France's junior industry minister, was later to send a letter to EU Energy Commissioner Andris Piebalgs outlining the French position.