Exclusive: EU's Oettinger plans 1 trillion euro energy revamp

BRUSSELS (Reuters) - Europe needs to spend 1 trillion euros ($1.4 trillion) over the next decade on overhauling its energy system to reduce pollution and ensure supply, EU energy chief Guenther Oettinger is expected to warn in the next few weeks.

High voltage power lines are seen as the sun sets near the Staudinger coal power plant of German E.on energy company in Grosskrotzenburg, 30 km (18 miles) south of Frankfurt, September 25, 2010. REUTERS/Kai Pfaffenbach

“The energy challenge is one of the greatest tests Europe has to face. It will take years and decades to put our energy system onto a more sustainable and secure path,” reads an early draft of the EU’s “Energy 2020” strategy, which the 27-member bloc’s energy commissioner may propose as soon as November.

The strategy lays out how Europe might achieve the twin goals of cutting greenhouse gas emissions and preventing energy crises, such as the three-week cut in supplies of Russian gas via Ukraine in January 2009.

That calls for massive refurbishment of its draughty buildings and creaking distribution networks, a tough foreign policy stance for negotiating energy imports and new powers to force through unsightly infrastructure projects.

“Investments needed by 2020 are estimated at 1 trillion euros to deliver the energy and climate targets,” reads the document, seen by Reuters on Wednesday. “Energy prices will be affected by the rising investment needs.”

Parts of the strategy worried environmentalists.

“If Oettinger gives the message that we should sweep away protections for citizens to make way for infrastructure, all he’ll get is public outcry,” said Claude Turmes, of the Green group in the European Parliament.


Despite efforts to cut consumption, gas and electricity demand are forecast to increase.

Power generation is expected to rise 23 percent to 4,073 terawatt hours in 2030, according to fresh data revealed in the draft of Oettinger’s “Energy Infrastructure Priorities,” which he plans to launch on November 17.

“An estimated 50,000 km (31,000 miles) of electricity transmission lines will either have to be built or upgraded from now to 2020,” says the plan, also seen by Reuters.

Electricity bills will also face upward pressure due to huge investments in green energy sources, such as wind turbines in the North Sea or solar panels around the Mediterranean, but that may be mitigated by a determined drive for energy efficiency.

“Average energy savings for a household can amount to 1,000 euros per year,” says the Energy 2020 report.

An EU draft discussion paper on energy efficiency, also obtained by Reuters, points to the advantages of scaling back oil and gas bills as Europe recovers from its worst economic crisis in 80 years.

“At a European level, we export annually an estimated 350 billion euros of the EU’s wealth, mainly to countries rich in oil and natural gas,” it says.

Despite strong economic arguments in favor of energy efficiency, improvements are not happening. The EU is set to cut energy consumption by about 10 percent by 2020 -- only halfway toward its stated target, the discussion paper said.

Turmes said the plan lacked the concrete measures needed to make a difference. “Oettinger is refusing to put anything of substance onto the desks of EU leaders,” he said.

Most importantly, the strategy stops short of giving mandatory energy efficiency targets -- something sought by environmentalists and builders around Europe.

“It’s worrying that some Commission officials are still publicly stating that energy demand will continue to rise,” said energy campaigner Erica Hope, at Climate Action Network Europe.

“We’re falling woefully short of the potential gains we could make through efficiency and energy savings.”

The European Builders Confederation (EBC) said a concerted push for energy efficiency could create massive employment among small and medium enterprises.

“Legally binding targets for renovation is the best way, but if not, we should still have indicative targets,” said EBC secretary general Riccardo Viaggi.

Editing by Jane Baird