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New EU path on climate and energy

The European Commission is due to unveil a wide-ranging set of proposals on energy and climate issues.

It will include targets on reducing greenhouse gas emissions and increasing use of renewables, and measures to free competition among energy providers. The Commission aims to set a global benchmark for reducing emissions when Kyoto Protocol targets expire in 2012. The package of measures will have to be approved by European governments before it can come into force. Analysts anticipate disagreement on some of the likely proposals, notably on freeing up competition in energy supply. The launch will come at 1230 local time in Brussels (1130 GMT) at the end of a meeting of commissioners from the various European directorates.

Road block
In recent years the European Union has been the most powerful political voice urging targets on reducing greenhouse gas emissions beyond the current Kyoto period. But at the latest UN climate meeting its attempts to get new targets debated met with failure. The Commission is now likely to urge that all developed countries across the world adopt a goal of cuts in the order of 30% by 2020. If other developed nations demur, the Commission will argue that Europe should set itself a less stringent unilateral target. Its principal tool for achieving cuts would be an enhanced Emissions Trading Scheme (EU ETS).
But that only affects businesses, leaving emissions from road transport and domestic heat and power unaffected. A voluntary agreement under which car manufacturers promised to increase the efficiency of their products has not produced the results which the Commission wanted, and it may now propose a mandatory regime. In October the EU announced a set of about 75 measures aimed at increasing energy efficiency overall by 20% by 2020, and the Commission may urge setting a comparable 20% by 2020 target for renewable energy.

Competing interests
On the business side, the Commission is likely to propose an enhanced "unbundling" of energy supply across the continent in a bid to increase competition. In the last three years it has raided the offices of energy firms it believed were operating uncompetitively, and warned 17 member states for failing to implement competition legislation; but it is poised now to go further. New measures could include "unbundling" the ownership of energy businesses to avoid conflicts of interest. It may propose that companies generating electricity and distributing it would not be permitted to have owners in common; gas production companies would be divorced from pipeline operators.
But analysts believe these measures may not meet with the approval of all Europe's national governments. Some countries have historically preferred a more joined-up approach to the power business, while new entrants to the EU might argue the free market, competition-based model is not appropriate for them. A tough stance on greenhouse gas emissions may also prove controversial, with several European governments having recently sought to increase their emissions under the ETS. Ministers are likely to debate the Commission's proposals in March. (BBC News)