* EU should focus on efficiency, single market, new sources
* EU also needs to renegotiate gas contracts
* Competitiveness headache likely to get worse
By Barbara Lewis
BRUSSELS, Nov 29 Europe's energy prices will
stay up to three times higher than in the United States for the
next 20 years, unless the region can develop domestic supplies
and increase efficiency, the International Energy Agency's chief
Concern among EU nations about the impact of energy costs on
their already suffering industry is intensifying, with some
member states debating a freeze on prices and stripping away
"There may be a narrowing of the gap, but if no new policies
are put in place, Europe will still have two to three times
higher gas prices than the United States for 20 years," Fatih
Birol told a Brussels meeting.
"Competitiveness will be more of a problem for many
countries. Today it's a headache. Tomorrow it will be a migraine
for the European economies if no policies are put in place."
The biggest transatlantic price difference is for gas as the
United States has benefited from a shale gas revolution,
although electricity prices in Europe are also around double
those of the United States as gas is used to generate power.
The European Commission, the EU executive, is analysing the
impact of energy prices on member states and is devoting two EU
summits to energy and competitiveness early next year.
It will also publish in January its vision of 2030 energy
and climate goals to follow the existing 2020 targets to cut
greenhouse gases, improve energy efficiency and increase
renewable energy use.
In line with pleas from industry, which argues energy policy
has to focus on affordability, Birol said energy and industrial
policies may need to be linked "for the long term".
But he also said Europe could not afford to abandon climate
policies if the world is to stand a chance of achieving the U.N.
goal of limiting climate change to an increase of 2 degrees
Celsius - the limit scientists say will prevent the most
devastating consequences of more extreme weather.
"If we are not able to address climate change, there will be
only losers," he said.
Policy should focus on efficiency, connections across a
single European energy market and improving domestic supplies
through development of shale gas, renewable and nuclear energy,
He also urged companies to renegotiate gas contracts as they
expire to get more favourable terms.
EU regulators have already said they are preparing to charge
Russian gas export monopoly Gazprom for abuse of its
They have voiced concern Gazprom has imposed unfair prices
by linking gas to oil prices, helping to keep tariffs high,
especially to nations most reliant on Russian gas.
The consequences of the U.S. energy revolution are
far-reaching. While Europe faces a deepening trade deficit
because of imported energy costs, the United States can hope for
If the United States begins shipping liquefied natural gas
in large quantities to Europe, it could help by making it easier
for gas buyers to negotiate better deals.
However, Birol noted that prices in Europe were about $11
per million British thermal units (mmBtu) versus $3.5 per mmBtu
in the United States. Given the cost of liquefaction and
shipment - up to $6 mmBtu - any price benefit would be all but
(Editing by Mark Potter)