* EU's energy strategy could lead to 25 pct CO2 cuts -draft
* EU mulls cancelling allowances to protect carbon prices
* Annual savings on fuel imports could top 175 billion euros
By Pete Harrison
BRUSSELS, Feb 15 Europe's new energy strategy
could lead to a 25 percent cut in greenhouse gases by the end of
this decade and could ultimately cut fuel import bills roughly
in half, a draft strategy paper shows.
The document was leaked amid renewed debate about whether
the EU should deepen planned cuts to greenhouse gases beyond the
current 20 percent goal.
Environmentalists say the goal became too soft after the
economic crisis cut emissions to 17 percent below the baseline.
But with Europe's older industries, such as steel, openly
hostile to raising climate ambitions, politicians are shying
away from setting any new targets.
Instead, they are focusing on actions and financing to
ensure existing plans are rolled out on the ground.
European Union leaders agreed last month to tighten their
enforcement of energy-savings targets, and EU energy
commissioner Guenther Oettinger is preparing an ambitious plan
for upgrading power grids to absorb more green power.
"If the revised energy efficiency plan is fully implemented
so that we meet the 20 percent energy efficiency objective, this
would enable the EU to reduce domestic emissions by 25 percent,"
said the document, "Roadmap 2050", seen by Reuters on Tuesday.
Climate commissioner Connie Hedegaard is expected to present
the strategy next month, and is likely to emphasise the EU still
stands by its offer of moving to a 30 percent cut, if other big
players such as China and the United States follow suit.
Europe's heavy industries have previously clashed with the
Commission over its climate ambitions, fearing tougher targets
might drive up the cost for buying emissions permits from the
EU's carbon market known as the Emissions Trading Scheme (ETS).
The new strategy avoids confrontation with major energy
consumers by seeking to limit the impact on their costs and
could save the average EU household 1,000 euros ($1,356) per
year in avoided energy bills.
Not all industry, however, opposes the move, arguing new
technology will provide the growth Europe needs to drag itself
out of economic crisis.
"Reaching a target beyond 30 percent will unlock innovation
and financing potential, and will increase the European
industry's readiness for new growth," Joaquin Mollinedo,
innovation chief at Spanish infrastructure group Acciona
The strategy also implies major cuts to the amount of money
that drains out of the EU economy each year for fuel imports.
"Taken over the whole 40-year period, it is estimated that
energy efficiency and the switch to domestically produced low
carbon energy sources will reduce the EU's average fuel costs by
between 175 billion euros and 320 billion euros per year," says
the draft. That's roughly half the annual bill.
Campaign group Friends of the Earth Europe welcomed the
debate, but said the Commission was moving too timidly and
should really target a 40 percent cut.
"The cleanest energy is the energy a country doesn't use --
but it's common knowledge that at present rates the EU will miss
its energy savings target by more than half," said campaigner
Although the EU strategy avoids setting a new 25 percent
target, it implies further ratcheting down of caps to emissions
under the ETS.
Failure to do that would lead to an oversupply of carbon
permits as energy-efficiency measures, combined with the effects
of the recession, curb the activity of power producers.
That, in turn, would lead to further erosion of carbon
prices and undermine green investment.
The answer might be for the European Union to support carbon
prices in the ETS from 2013-2020, by cancelling 500-800 million
That would probably be done by reducing the number of
permits auctioned, rather than by reducing the number of permits
given to industry for free.
That could push up the value of free permits already
allocated to some industry sectors, reducing their opposition to
the move in this highly politically-charged debate.
(Editing by James Jukwey)