* 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 (Reuters) - 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 economist said.
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 renewable subsidies.
“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 said.
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 position.
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 a surplus.
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 wiped out. (Editing by Mark Potter)