March 21 (Bloomberg) -- The annexation of Crimea by Russia pushed European Union plans to cut reliance on natural-gas imports from Russia’s OAO Gazprom to the forefront as the bloc held a first debate on 2030 energy and climate policies.
EU leaders today asked the European Commission, the bloc’s executive, to within three months determine ways to diversify energy sources away from Russia -- the main supplier of gas and oil to Europe through Ukrainian pipelines. Leaders of the 28-nation EU delayed a decision on carbon-reduction targets until October at the two-day summit in Brussels.
“We are serious about reducing our energy dependency,” EU President Herman Van Rompuy told reporters today. “Europe was first built as a community for coal and steel; 64 years later and in new circumstances it’s clear we need to be moving towards an energy union.”
Russian President Vladimir Putin signed legislation today completing the process to annex Ukraine’s Black Sea peninsula of Crimea. Putin ignored expanded U.S. and EU sanctions targeting his inner circle. Also today, EU leaders signed political chapters of an association accord with Ukraine, intensifying the worst confrontation between the West and Russia since the Cold War ended more than two decades ago.
“It’s essential for all of us to speak in one single voice, in order not to give anyone, including Russia,” the chance “to use energy as a new nuclear weapon,” Interim Ukrainian Prime Minister Arseniy Yatsenyuk told reporters in Brussels after the signing ceremony.
The EU’s energy dependency rate is set to rise to 80 percent by 2035 from the current 60 percent, according to the International Energy Agency. Gas from Russia accounted for almost 32 percent and oil for about 35 percent of EU imports in 2010, according to EU data.
In addition to requesting a European Commission road map within 90 days on how to cut Russian gas imports, EU leaders urged member states to speed up integration of electricity and gas markets in order to help reduce costs. Energy prices in some regions of Europe are double those in the U.S., where shale-gas production has brought the world’s biggest economy toward energy independence.
EU chiefs showed “a clear determination” to diversify supplies, complete the common energy market and improve interconnections, European Commission President Jose Barroso said. Special attention in this matter will be given to the Iberian Peninsula and the Mediterranean area, he said.
Europe’s oil and gas import bills rose to more than 400 billion euros ($552 billion) in 2012, representing about 3.1 percent of the region’s gross domestic product, according to EU data. That compares to about 180 billion euros on average in 1990-2011.
Prime ministers and presidents also mandated the commission to examine ways to boost Europe’s bargaining power vis-a-vis suppliers, Poland’s Prime Minister Donald Tusk told reporters today. He raised the matter during a meeting with German Chancellor Angela Merkel last week.
U.K. Prime Minister David Cameron is seeking a 25-year plan to improve the EU energy security. Options for the bloc to diversify its energy sources include gas imports from the U.S. and development of the so-called southern corridor for gas from the Caspian region and Iraq, and increased cooperation with Norway and North Africa, the U.K. said in a document for the summit.
EU leaders also called for coordination of energy and climate policies to ensure security of supply, affordable prices and industrial competitiveness. The commission proposed in January accelerating emission-reductions to 40 percent by 2030 compared with the 2020 goal of cutting greenhouse gases by 20 percent from 1990 levels.
The planned climate framework has divided governments and businesses. A group of 13 member states including the U.K. and Germany called earlier this month for a swift decision to adopt an ambitious strategy. A coalition of countries led by Poland, which in previous years vetoed EU attempts to pave the way for tighter climate countries, urged further analysis of the proposed policies on the bloc’s economy.
EU leaders asked the commission today to analyze the impact of its climate and renewable energy proposals for individual member states and review energy efficiency measures. Europe will reach the decision on carbon goals in stages, taking stock of the debate in June and defining the targets in October, said France’s President Francois Hollande.
EU chiefs agreed that their new emissions goal for 2030 will be in line with the long-term aim of cutting greenhouse gases by at least 80 percent by 2050, EU Climate Commissioner Connie Hedegaard said in an e-mailed statement. To achieve that remit in the most cost-efficient manner, the EU should lower pollution by 40 percent by 2030, according to analyses by the commission.
Such an agreement aims to avoid a setback for United Nations Secretary General Ban Ki-moon, who is convening world leaders on Sept. 23 to facilitate a global deal to reduce emissions in 2015. The EU has for decades been at the forefront of that process, and hesitation on its part may remove a spur for the U.S. and China to act.
“The crisis in Ukraine seems to have cemented the arguments that Europe needs to have coherent energy security, industrial competitiveness and climate policies rather than rushing a climate package through,” William Pearson, director for global energy and natural resources at Eurasia Group, said by phone from Brussels today.
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