Q&A: EU energy plans

The EU is keen to boost wind power and other renewables

It hopes these policies will help to curb its rapidly growing dependence on oil and gas imports, while it makes parallel efforts to secure stable supplies of fossil fuels for the future.

At the same time, the EU wants to strengthen its ability to cope with supply crises, to expand the energy grid connecting different European countries, and to improve the functioning of the internal energy market.

The outlines of a common policy were drawn up by the European Commission.

What are the main climate change targets the EU is setting itself?

The following have all been set as goals to achieve by 2020:

• A 20% reduction in EU greenhouse gas emissions, as compared with 1990 levels, or 30% if other developed nations agree to take similar action
• An increase in the use of renewable energy, to 20% of all energy consumed. This is a binding target. However, the plan allows flexibility in how each country contributes to the overall EU target
• A 20% increase in energy efficiency
• An increase in the use of biofuels, to 10% of all fuel used in transport

The EU hopes that international action will prevent average temperatures rising by more than two degrees Celsius on average. It is therefore hoping to persuade other countries, such as the US and China, to join the effort to halve greenhouse gas emissions by 2050, compared to the 1990 level.

Germany has invited Brazil, China, India, Mexico and South Africa to a G8 summit at Heiligendamm in June, where it hopes to lay the foundation of an international accord to update the Kyoto Protocol, once its first period comes to an end in 2012.

What are the EU's priority areas for action?

An action plan for 2007-9 has been put to the 2007 spring summit in Brussels, with the following key points:

Internal market: measures to increase competition, encourage investment and boost interconnections between national energy grids.

Security of supply: diversification of energy sources and transport routes, and better systems for responding to crises.

International energy policy: negotiating a new treaty framework for energy co-operation with Russia, improving relations with energy-rich countries in Central Asia and North Africa.

Energy efficiency and renewable energy: measures to make transport, electrical appliances and buildings more energy efficient; development of national action plans with specific targets for use of renewable energy in power generation and heating, and biofuels in transport; improvements to the EU emissions trading system.

Energy technology: funding for research that will bring down the price of renewable energy and low-carbon technology and find new ways of increasing energy efficiency; plans to stimulate construction of 12 plants that will demonstrate sustainable fossil fuel technologies, such as carbon capture, in action; research programmes on nuclear waste management.

Will the EU's plans cost consumers money?

There is no easy answer to this. The Stern report commissioned by the UK government argued that it would cost less to avert serious climate change than to deal with the consequences, though some economists have challenged parts of the calculation.

The European Commission envisages both financial costs and financial benefits, including the chance of achieving world leadership in a range of clean energy technologies. EU renewable technologies already have a turnover of 20bn euros per year and employ 300,000 people.

The commission says that achieving a 20% share for renewables will cost about 18bn euros (£12bn; $24bn) per year, if oil costs $48 a barrel in 2020. But if oil were to cost $78 a barrel, and the price of a permit to emit a tonne of CO2 were to rise to 20 euros (on the EU's emissions trading market), the cost would be about the same.

The commission also says increasing energy efficiency by 20% by 2020 would generate savings of 100bn euros per year - but it does not estimate how much investment would be necessary to achieve this goal.

What does the EU say about nuclear power?

The European Commission recognises that there are deep differences between pro- and anti-nuclear member states, but it warns that any reduction in nuclear power in Europe could undermine the objective of cutting greenhouse gas emissions.

It also says nuclear power is the cheapest low-carbon source of energy in Europe today.

By 2050 the commission envisages energy being derived from nuclear fusion as well as nuclear fission.

What kind of renewable energies is the EU pinning its hope on?

The European Commission says reaching the 20% target will require "massive growth" in all three renewable energy sectors - electricity, biofuels, heating and cooling. The precise mix will vary from one member state to another.

It points out that wind power already provides about 20% of electricity needs in Denmark and 8% in Spain.

It says progress in heating and cooling will have to come from a number of technologies. If other member states matched Sweden's use of geothermal heat pumps or Germany's and Austria's use of solar panels, the share of renewables in heating and cooling would jump by 50%, the commission says.

In Sweden 4% of the petrol market is already bioethanol, and in Germany 6% of the diesel market is bio-diesel.

Since when has the EU taken such a big interest in energy policy?

The idea of a common energy policy was approved at the Hampton Court summit in London in October 2005. A Green Paper was published in 2006, followed by a draft Energy Policy for Europe in January 2007.

How soon will parts of the policy become law?

There are some ideas that still need further work. The EU has yet to decide how to share out the burden of meeting the 20% reduction in greenhouse gas emissions - some countries will have to do more, while some do less. A similar burden-sharing agreement will be necessary if the member states agree on a binding target for the proportion of renewable energy.

A controversial proposal to break energy supply companies' control over the distribution network (known as "unbundling") also needs more work to decide the mechanisms used to achieve the goal.

Some draft legislation will appear this year, and how long it takes to become law depends on whether it needs the approval of the European Parliament. The co-decision process - by which legislation is approved both by member states (the Council) and MEPs - typically takes between one and two years.

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