Leaders from across the EU are convening in Brussels to discuss the continent’s energy market, including the need to improve Europe’s energy infrastructure, remove barriers to competition and develop renewables.
Prime Minister David Cameron will be among the representatives calling for more to be done to ensure consumers and businesses are given a fairer deal and that exploitation and inflated margins in the energy market become a thing of the past.
The summit is set against the backdrop of a new report that reveals electricity prices in Europe are currently 37% higher than those in the US, and nearly 20% higher than those in Japan.
Cause of concern
The figures are the cause of significant concern across the continent, with businesses worried that rising prices may harm Europe’s industrial competitiveness and consumers concerned that their already-squeezed finances will be subject to further pressure.
While it is easy to identify the problem, it is harder to solve it, according to Pat Rabbitte, energy minister for Ireland, current holder of the EU presidency, who told the Financial Times that a solution may be beyond the powers of the convened EU leaders.
“Coming up with simple, short-term solutions in energy is not something that I think is easily available to the European Council,” he explained.
Bailed out by shale?
One suggestion is to move forward with extraction of shale gas – the controversial resource that has split opinion but nevertheless has contributed significantly to limiting energy bill increases in the US.
However, no agreement is likely to occur at the EU summit, and any kind of uniform backing will likely remain some way off. One major concern is that the geology of member states is not suited to shale gas exploration, and this alone could be enough to nullify the prospect of drilling.
“There are concerns. It is too early to say where the shale debate will settle,” Mr Rabitte said.
The UK chancellor George Osborne remains firmly behind shale gas exploration but he has yet to gain universal support from within the cabinet, and expanding this to EU leaders is likely to prove even more problematic.
Another debate will focus on the European Commission urging EU governments to implement energy legislation agreed two years ago and help to reduce the reliance on importing fossil fuels.
European Commission figures show that the gas price index for households within the EU rose by 45% between 2005 and 12, compared with 3% in the US, while the electricity price index increased by 22% in Europe compared with 8% across the Atlantic.
Co-operation is key
Current estimates suggest that imported gas will represent 80% of total EU consumption in the EU by 2035, if the trend continues, and leaders are set to discuss how to significantly reduce this dependence on other nations – with a great focus on renewables being the key suggestion.
The solution will require unity within the EU, but this appears some way off, as national governments continue to formulate differing climate change policies that are often at odds with one another.
Fulvo Conti, chief executive of the Italian utility company Enel, said that leaders are “ignoring the benefits of European co-operation” as they strive to resolve the issue.
This co-operation will be essential if the continent is to secure its energy market and ensure businesses and consumers alike will not shoulder the burden.