* EU presidency to deliver progress report in June
* Draft law proposes minimum number of green fuel stations
* Member states want flexibility, worried by deadline
By Barbara Lewis
BRUSSELS, March 11 (Reuters) - Europe will lag China, Japan and the United States unless it embraces a proposed law requiring millions of new refuelling points across the European Union for electric and natural gas vehicles, the EU transport boss said on Monday.
EU Transport Commissioner Siim Kallas was kicking off the first ministerial debate on a proposal some in the industry say is the most significant yet for alternative transport fuel.
Its aim is to overcome the infrastructure bottlenecks that have deterred development of electric and natural gas vehicles because there is no refuelling network to support them.
"Our competitors Japan, China and the United States are moving towards these targets," Kallas told Monday's debate of EU transport ministers.
On member-state concern about cost, rigid targets and a 2020 deadline for achieving them, he said the European Commission was willing to be flexible and the private sector would pay.
"My general idea is that the necessary investment should be done by the private sector," he said, adding that industry had supported the proposal.
The Commission, the 27-country EU's executive arm, is seeking to reduce dependency on imported fossil fuel as part of aims to improve security of supply and cut carbon emissions.
To make the transport sector greener, it is seeking to enforce tougher carbon emissions standards, as well as to tackle a huge shortage of green refuelling points.
The draft law on reducing dependency on fossil fuel for transport proposes minimum numbers of electricity, hydrogen, biofuel and natural gas refuelling points.
The NGVA (Natural and bioGas Vehicle Association), which represents natural gas vehicles, says biogas means that eventually natural gas vehicles need not use fossil fuels.
"It is the most important policy initiative by the European Commission for our industry and creates confidence at both industry and customer level," Matthias Maedge, EU affairs manager at the NGVA, told Reuters. "The main bottleneck is access to refuelling."
Eurelectric, which represents the electricity sector in Europe, also welcomed Monday's debate.
"We don't see Europe behind yet, but there is a danger," Gunnar Lorenz, head of Eurelectric's Networks Unit, said, adding that roughly 50 percent of EU electricity is carbon-free, including nuclear generation.
Major oil companies did not wish to comment.
EU member Britain, which has an interest in Anglo-Dutch oil major Royal Dutch Shell, broadly supported the proposed law, but with reservations.
"Clear, strong action will be necessary to achieve our targets," Patrick McGloughlin, Britain's transport minister, told Monday's debate. "We therefore support efforts, but we remain technology-neutral and it would be inappropriate to favour or appear to favour specific technology."
He also called for flexibility and said: "Member states must be able to set their own targets."
Leo Varadkar, transport minister for Ireland, which holds the rotating EU presidency, said the presidency aimed to deliver a progress report before the end of June.
"This is a really ambitious proposal which has the potential to unleash a clean-power revolution in transport across Europe," he said.