Gas zeer belangrijk in toekomstige EU-energievoorziening (en)

EUOBSERVER / BRUSSELS - The importance of gas for keeping the lights on in the EU's five biggest economies will grow in the next 15 to 25 years, raising the stakes for EU-Russia relations and breaking taboos on nuclear power, analyst Ernst & Young predicts.

Electricity from gas is set to climb from 25 percent to 40 percent of UK capacity by 2020, from 17 to 25 percent in Germany and from 27 percent to 45 percent in Italy, the London-based consultancy says in its 7 June "European Generation Mix" report.

Gas power is to shoot up from less than 1 percent to 17 percent by 2030 in France and from 14 percent to over 29 percent by 2011 in Spain, with Germany, Italy and Spain becoming increasingly reliant on non-EU gas imports, especially from Russia.

Moscow's Gazprom already feeds 25 percent of the EU's gas hunger and controls one third of world gas reserves with CEO Alexei Miller using Amsterdam's 6 June world gas fair to restate intentions to buy into the UK electricity market.

"We are considering strategic partnerships on the British market and we are also considering buying assets in Britain," he stated, unveiling a deal with Dutch company Gasunie set to see Gazprom take shares in a 2007 pipeline from Balgzand in the Netherlands to Bacton, UK.

"Nobody wants to be dependent on Russia," Ernst & Young global utilities director Ben van Gils told EUobserver the same day, with Gazprom getting itself a dirty name in EU diplomatic circles as a political arm of the Kremlin during January's dispute with Ukraine.

Beautiful ladies

But politics aside, the buzz around the fortress-like Gazprom stand at the Amsterdam fair testified to the energy industry's belief in the future rise of the state-owned Russian giant.

"I'm sitting in front of the Gazprom stand. It has lots of beautiful ladies, of course, and what looks like over 100 people just milling around outside hoping to be invited up for a coffee with Mr Miller," Mr Van Gils said. "Everyone wants to do business with them. Everyone is on their knees to do business with them."

A great deal of EU negotiating energy is currently directed at Russia's ratification of the transit protocol of the 1990s' Energy Charter Treaty, paving the way to EU imports of cheap Central Asian gas using Gazprom's pipelines.

Moscow is moving toward ratification, Mr Van Gils believes, but he warned the move could be a political fig leaf designed to hide the depth of EU-Russian disagreement over access to Caspian basin gas.

"It might allow EU politicians to say, look, we are coming closer together. But will it lead to full and extensive implementation on transit? Let's face it, it's questionable."

In this context, the Ernst & Young report backs the European Commission's push for a strong foreign policy dimension in the EU's emerging new energy policy.

"Energy policy...cannot be confined to ministries of energy," Ernst & Young states. "Foreign affairs ministries also need to be involved in negotiating international agreements on climate change and maintaining dialogue with energy-producing countries."

Nuclear wind

Member states' efforts to diversify the energy mix could also see the big EU five embracing more nuclear power despite public distaste. France and the UK have already announced new capacity, with Germany, Italy and Spain going the same way.

Germany's plan to phase out all but one nuclear power plant by 2020 is facing "political uncertainty" the report states, while the Spanish energy and tourism ministries are discussing new plants after 2008 general elections and Italy is likely to invest in nuclear energy abroad.

New wind and water projects will also feature in the EU's energy future, but the report highlights snags, such as Spain's drought-related hydroelectric power shortage in 2005 and the unlikelihood of Paris hitting goals of 21 percent renewable energy by 2010 even if it builds 6,000 new wind turbines.

"Despite the universal agreement that something must be done [on EU energy security], there is less specific agreement on what that 'something' must be," the report goes on, stressing that the EU will have to dig deeper into its pockets to fund research into new technology and energy reserve capacity in future.

"Short term EU budgetary demands are likely to reduce the R&D funding for energy far below what is needed," the paper warns. "Security depends fundamentally on a reserve of over-investment. The question therefore essentially becomes - who pays for reserve margin and how?"