EU what for want of a better expression we will call POLICY

European Commission President José Manuel Barroso will unveil , "An Energy Policy for Europe." on Jan. 10, 2007. the result of intensive discussion and analysis by ,”a small group of experts” in EC headquarters in Brussels. This is apparently talked of by EC insiders in their natural style of hyperbole as, “ the dawn of a new industrial revolution." German industry probably will see it as the sunset of their domestic industry. Viewed from here it is difficult to determine whether it's authors heads are ;

1. In the sand
2. In the clouds
3. Up their arse

Der Spiegel (EU Energy Plan Calls for Radical Emissions Reductions By Frank Dohmen ) claims to have access to a 25 page “Confidential” draft which is said to address 3 principal areas of concern ;

1. To establish ambitious climate protection goals in terms of reductions in so called greenhouse gases - a 35 percent reduction in CO2 emissions in the EU by 2035, and 50 percent by 2050.

2. To promote renewables (solar, wind and biomass ) as part of an EU wide energy security strategy – with renewables supplying 20% of electrical energy by 2020 . Biofuels to be equivalent to 10% of usage of fuel oils (by the same date?)

3. To promoting competition in energy markets by separating energy producers from distributors and transmission utilities, and encouraging a greater level of open market access to energy suppliers.

4. A more permissive view of what is seen as environmentally friendly nuclear power to generate electricity.

It is assumed that this will form a framework (if not a blueprint) for final ratification at the summit meeting of European heads of state in March 2007 - 50 years since the signing of the Treaty of Rome.. Under the rotating Presidency this will be presided over by Angela Merkel the German Chancellor – she starts the job next week having chosen the curious leitmotif to characterise her job as "succeeding together" (?).

Ms Merkel will need skills of a high order to arrive at a consensus on the basis of this naive and simplistic dpocument, evidently prepared by economists with blinkers. Whilst Foreign Minister Steinmeier has recently talked of used the term “selbstbewusste Bescheidenheit” (self-confident modesty) to characterize German foreign policy (explaining the modest achievements of the German troops used by NATO in Lebanon and N.Afghanistan no doubt) this which hardly suggests any change from Klaus Kinkel’s “Kultur der Zurueckhaltung” (culture of restraint) government’s foreign policy.

In selling this mild pabulum Chancellor / President Merkel will find the strongest criticism from within her own country – which has set it’s face decidedly against nuclear power, and even more firmly against reality - as has Tony Blair and his long (and lengthening ) line of Energy Ministers - who promises us yet another Energy review in the Spring - or some time soon.

Apparently Neelie Kroes, the European Commissioner for Competition has has been busy for months gathering evidence of the questionable competitive practices of Europe's energy giants to confirm her view that , major utility companies like Germany's RWE and E.on and Sweden's Vattenfall will be required to sell off their electricity and natural gas networks.

This clear separation between power production and power transport through the networks is a typical bureaucratic reflexive response which provides zero benefits and will add costs for the consumer rather than reduce them by allegedly stimulating competition – viz power prices in the UK where there is a very distinctive separation which has resulted in domestic and commercial prices almost double in 2 years in step. A function of global price rises of oil, gas and coal rather than internal costs. cf : International cost comparison chart of gas from WAPO

Naturally the established and massively powerful coal based utilities in Germany have already been active in lobbying Merkel’s office. Apparently The Commission sees that the currently nationally based networks create border bottlenecks as utilities have kept power and gas lines undersized, effectively preventing foreign competitors from gaining access to domestic markets.

An EU regulatory agency with extensive powers would monitor the new system, ensuring that energy prices are based on supply and demand and national governments are prevented from intervening.

This supra - nationalistic meddling is anathema to the German power giants who have already been protesting against Brussels' plans in Phase 2 of the Emissions Trading Scheme (ETS) for German industry to cut annual CO2 emissions by 12 million tons to 453 Mn tons for the 2008/12 period from the proposed 465 Mn tons.

On top of this the EC sees the EU should assume a "global leadership role in climate protection" and in the "development and use of efficient energy technologies." More bluntly this involves a 35 % reduction in CO2 emissions over 1990 levels by 2035 and a 50 % reduction by 2050…. And that means massive costs to the producers which trickles down as higher prices to the consumer and industrial user – with huge implications on global competitiveness.

It appears that nobody has noticed that the Emissions Trading Policy (ETS) has collapsed with a unit trading at it's lowest ever of just above Euros 6. The cost / utility of wind energy are now becoming evenb more apparent with experience of usage.

At a meeting of European heads of state two weeks ago, Spiegel claims Chancellor Merkel indicated that she is unwilling to accept the EU energy concept in its entirety. These are delicate issues, Merkel said, which revolve around the "tough representation of interests -- also for Germany."

Meanwhile we learn that Putin / Medvedev / Gazprom’s theft of over half the Sakhalin project involved more hidden costs (US$3.6Bn.) to Shell and their Japanese partners. The stand off between Russia and Belarus over gas supplies / prices is also focussing (as if it were needed) the alarming dependence of Europe, now and forever, on Russian Gas and oil and it’s fickle and undiplomatic owners.

For the record Ukraine has now agreed for Gazprom gas supplies @ US$135 per 1,000 cubic meters (US$3.82 per cubic foot)for 2007. Georgia will pay US$235 per 1,000 cubic metres (US$8.07 per cubic foot) and Gazprom are now asking Belarus to pay US$105 per 1,000 cubic meters (US$2.97 per cubic foot) a rise of 123% on last year – and Gazprom wants the internal distribution pipelines.

(On the New York Mercantile Exchange today gas closed down @ US$6.113 per million British thermal units = approximately 1 cubic foot. It has been as high as US$15 – typically the hub price quoted above is 50% of the cost to the domestic user.) (See table for mid 2005 comparable gas prices worldwide from WAPO - click to see enlarged version)

Europe has more to worry about, over sources and global energy costs than the niceties of internal transfer costs and squeamishness about nuclear energy.

If you want to understand what the Russkis are up to listen to this.

UPDATE SATURDAY 30/12

The Daily Torygraph 30/12/06 "Fears of high gas prices in Britain this winter have returned after a "second gas war" broke out between energy-rich Russia and one of its neighbours in eastern "Europe.

A spokesman for the Department of Trade and Industry said: "We would not expect to it to have any impact on the UK's supplies but we can't anticipate prices."

There are people children who couldn't anticipate the problems we face now, several years ago....so if gas prices rise - warm yourself with the thought that the DOT (Dep of Energy ?) couldn't anticipate the rise in prices.

The New York Times today has a brief but telling OP ed piece

Obstacles in Turkey’s Path

"Turkey is also becoming an important hub for transporting oil and gas to Europe from Russia and Central Asia, making it crucial to Europe’s energy security."