EU reaches compromise on energy overhaul

BRUSSELS (Reuters) - Unused funds from a European Union plan to spend 4 billion euros ($5.3 billion) overhauling energy infrastructure will be funneled into energy-efficiency measures, according to a compromise reached on Thursday.

European Union countries struck the deal in closed-door negotiations with the European Parliament after weeks of squabbling within the 27-nation bloc.

The plan is part of EU attempts to bolster itself against energy shocks and follows this winter's gas crisis, caused by a price row between Moscow and transit country Ukraine.

That crisis shook the EU, which has been uneasy about its reliance for energy on the newly assertive Moscow since Russia invaded neighboring Georgia last August.

The plan to subsidize new power projects and hundreds of kilometers of gas pipelines and power cables was meant to enable the bloc's member states to help each other during gas crises.

It was also aimed at tackling the economic crisis by creating new jobs for steel workers and engineers, while helping the EU reach its environment goals.

Some members of the European Parliament criticized the plan after later drafts left out funding for energy-efficiency projects, but Thursday's agreement gave them new hope of funding.

"The Commission will declare its intention to propose using for energy efficiency and renewable energy measures those funds which have not been committed by the end of 2010," a parliament statement said.

The deal will now need to be approved by parliament in May and by all EU member states before becoming law.

(Reporting by Pete Harrison)