EU leaders look to energy for growth boost

EU leaders aim to revamp energy policy at a summit Wednesday amid fears a US-led revolution in shale oil and gas development will reshape the global economy and leave Europe far behind.

Stuck in the doldrums, the European economy has lost nearly all momentum, with governments scrambling to find ways forward and energy could give growth a boost.

But energy costs remain high, in marked contrast to the United States where new shale oil and gas resources have sent prices tumbling, offering the country a competitive advantage which some see as the basis for a new industrial revolution.

For a Europe which paid one billion euros a day for its energy imports in 2012, the signs are not good.

"Europe risks becoming the only continent to depend on imported energy," EU President Herman Van Rompuy, who host's Wednesday's summit meeting, has warned.

"In 2035, we will still depend on imports for more than 80 percent of our energy needs and that will have consequences for our competitiveness and our companies," Van Rompuy said.

Luxembourg Prime Minister Jean-Claude Juncker said the US economy was now enjoying lower costs, undercutting Europe's competitive edge, because of shale energy.

"Finally, Europe is realising that we need to talk with one voice" on energy, Lithuania President Dalia Grybauskaite said as she went into the one-day talks.

"In the current economic context, we must mobilise all our policies in support of competitiveness, jobs and growth," a draft of the summit conclusions says in its very first line.

"The supply of affordable and sustainable energy to our economies is crucial in that respect," it adds.

Last week, the International Energy Agency said North American shale energy production had set off a global "supply shock" that is reshaping the whole industry.

"The surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15," the IEA said.

But while the benefits are clear, shale oil and gas also comes with a potentially high environmental cost which worries many.

Critics say hydraulic fracturing -- 'fracking'-- of rocks deep underground to release oil and gas threatens water supplies and may even set off earthquakes.

Against this backdrop, the draft summit conclusions make no direct mention of shale, referring only to European Commission plans to "assess a more systematic recourse to indigenous sources of energy with a view to their safe and sustainable exploitation."

But the message is clear.

"What is happening in the United States with shale gas ... that is one of the factors driving the discussion," an EU official said ahead of the meeting.

Energy, the draft conclusions note, is the preserve of national policy although member states are duty bound to keep their EU partners informed of what they plan to do.

Britain, Hungary, Poland, Romania and Spain favour developing shale energy but others, and France in particular, are opposed, citing the environmental issues involved.

The summit draft otherwise rehearses a series of exhortations to review and improve EU energy policy, and to spend more on investment and development.

With national budgets under intense pressure at a time of austerity, that could prove problematic.

"In the current economic context, we must mobilise all our policies in support of competitiveness, jobs and growth," the draft says.

"The supply of affordable and sustainable energy ... is crucial in that respect."

bmm/ccr/rl