Friday, February 4, 2011

E.U. Leaders Seek Common Energy Negotiations

BRUSSELS — Leaders of the European Union agreed on Friday to give unprecedented leeway to the bloc’s executive agency to take part in negotiating contracts with energy exporters like Russia in an effort to improve security of supplies and safeguard investment.

There is “a need for better coordination” among E.U. countries and for more coherence in “relations with key producer, transit and consumer countries,” the leaders said in a statement at the close of a one-day summit meeting in Brussels.

The meeting was originally dedicated entirely to energy issues and to bolstering innovation. But that focus was overshadowed by the continuing sovereign debt crisis in the euro zone and developments in Egypt.

Negotiations over energy supply and prices are now left to individual member states. But energy deals are a concern for the entire European Union, which has 27 members and imports more than half of its energy, with about 40 percent of its natural gas coming from Russia.

Dealing more effectively with Russia became a priority after a dispute between Ukraine and Russia blocked gas supplies to a number of E.U. countries during the depths of winter two years ago.

Last year, the E.U. authorities struggled to ensure that an agreement between Poland and Russia on a natural gas pipeline between Siberia and Germany that is partly owned by the Russian state-controlled company Gazprom would give other gas operators access to the Polish section of the pipeline.

There are also tensions between the European Union and Russia over an E.U.-backed pipeline called Nabucco that would start delivering gas by around 2015 from the Caspian Sea region, bypassing Russia and Ukraine.

Russia has backed a separate project called South Stream, which would take Russian natural gas under the Black Sea to Europe.

Under the agreement reached Friday, the E.U. energy commissioner, Günther Oettinger, is expected to present a formal proposal in June giving the European Commission, the E.U.’s executive arm, the power to help member states reach contracts with Russia and other governments if the deals are significant enough to affect the bloc’s energy security.

Mr. Oettinger’s mandate would also extend to other sources of energy, like electricity from renewable sources. That would give European companies investing in solar projects in countries like Morocco and Tunisia added security because the commission could impose trade sanctions on those countries if there were any attempt to confiscate facilities in the event of political instability.

Giving the commission a role in such negotiations would also allow it to make sure such agreements mandate common standards for technologies of the future, so that electricity from solar farms outside the bloc can easily be integrated into a European grid.

That could increase the willingness of banks and utilities to invest in a project called Desertec, which would harvest the sun’s energy using a method known as concentrating solar power, or C.S.P., from the vast North African desert and deliver it as electricity, via high-voltage transmission lines, to markets in Europe.

But Mr. Oettinger’s proposal will probably face tough scrutiny by E.U. governments that are wary of giving more power to the bloc’s central authority. The British government was already concerned about “competence creep,” said a British diplomat who spoke on the condition of anonymity, as is customary at E.U. summit meetings.

European leaders also agreed to back an earlier appeal by Mr. Oettinger to direct E.U. funds to Europe’s electricity grids and pipelines, in part to encourage private investment in the sector. The moves are part of an effort to enhance energy security and help integrate renewable sources of power into the bloc’s future energy mix.

Last year, Mr. Oettinger called on E.U. nations and industry to spend up to €1 trillion, or $1.36 trillion, over the next 10 years on energy, with around €200 billion of that dedicated to infrastructure for transmission systems.

Marlene Holzner, a spokeswoman for Mr. Oettinger, said he was likely to offer a list of infrastructure projects and suggestions to pay for them in June. Those could include E.U.-backed loan guarantees, to make it less expensive for companies to raise capital, and E.U.-backed bonds.

Source: http://www.nytimes.com

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