| DAVOS, Switzerland
DAVOS, Switzerland Jan 23 Europe's high gas
prices risk driving away a big share of its energy-intensive
industries such as cement and steel unless countries boost shale
gas output and trim green subsidies, the International Energy
Agency's chief economist said.
"These industries are critical for the European economy as
they employ over 30 million people and it could have a major
knock-on effect on the EU economy," the IEA's Fatih Birol told
Reuters on the sidelines of the World Economic Forum in Davos.
Concern among European Union 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.
Gas prices in Europe are around three times higher than
those in the United States thanks to a shale gas boom that has
seen U.S. output soar, while European consumers increasingly
rely on imports from Russia and Norway as domestic fields age.
Tackling the continent's rising energy bills requires a
wide-ranging approach, Birol said.
Not only must European countries renegotiate gas contracts -
two-thirds of which will expire in the next decade - to get more
favourable terms, but they should also boost production of
unconventional gas resources such as shale, he added.
EU regulators have already said they are preparing to charge
Russian gas export monopoly Gazprom with abusing its
dominant position in central and eastern Europe.
They have voiced concern that Gazprom imposed unfair prices
by linking gas to oil prices, helping to keep tariffs high,
especially to nations most reliant on Russian gas.
The European Union should also consider trimming the $60
billion it spends annually on subsidising renewable sources of
electricity generation, such as wind and solar.
"In some cases it is excessive and puts an unnecessary
burden on consumers," Birol said.
The policy recommendations, which also include introducing
energy-efficiency measures to cut consumption, follow pleas from
industry, which argues energy policy has to focus on
But with the current gas price disparities between Europe
and the United States, more European firms are considering
relocating to take advantage of America's cut-rate energy.