Can gas crisis fix Europe's electricity troubles? (News Feature)

By Katerina Zachovalova and Mike Collier Jan 29, 2009, 11:12 GMT

Prague - Czech leaders quip that they could not have wished for a better start to their half-year European Union presidency than the one they got: refereeing a Europe-wide gas crisis that highlighted one of their key causes.

As a two-week cut-off of Russian supplies via Ukraine left thousands of eastern Europeans without heat amid freezing temperatures, the Czech government found it had the perfect opportunity to promote energy security - a Czech government priority.

In the wake of the crisis, Czech Prime Minister Mirek Topolanek has continued to make strong calls for a European common energy policy, billing it a major 'integration test' for the 27-member bloc.

Eastern European leaders, who fear dependence on Russian supplies more than their Western counterparts, see a EU common energy market as a matter of national security that should transcend economic interests.

Topolanek continues to work hard to keep the two-week shutdown in public memory. He said on Wednesday that the crisis is over for the moment but could be back 'next year', even 'next month.'

Analysts, experts and diplomats remain skeptical that the memory of the gas dispute will do much to speed up costly solutions to the bloc's energy security problems or make it overcome the hurdles to creating an internal electricity market.

'We [Czechs, as well as the], Bulgarians and Slovaks remember the crisis,' said the Czech Republic's energy security envoy Vaclav Bartuska a week after the gas taps opened on January 20. 'The big (EU) countries were not impacted. We shall not fool ourselves.'

Arno Behrens, a research fellow with Brussels-based Centre for European Policy Studies, said that the supply cut-off 'will have no major impact on investment decisions.'

As European governments draft stimulus packages in the wake of the global financial crisis, the Czech politicians - themselves thrifty when it comes to spending public money on jump-starting the economy - see a chance to focus government funds on upgrading and linking the continent's aging power grids.

But there is also a catch. While the governments need to spend the money now to get their economies moving, 'a great portion of projects will not be finished in the next two years,' Bartuska said.

That leaves EU funding. The European Commission has so far earmarked 3.5 billion euros (4.6 billion dollars) as part of a 200- billion-euro economy stimulus plan. The EU's executive presented a list of projects on Wednesday.

The plan, which requires approval by member states, slates 705 million euros in cross-border electricity grid links.

The Baltic states, which renewed calls for EU support to link the formerly-Soviet region to EU power grids, received more than a third of that.

The commission wants 100 million euros spent on Estlink 2, the second undersea link between Estonia and Finland. The first cable, launched in 2006, cost 110 million euros.

Another 175 million euros should go to connecting the Baltics to Sweden and improving the region's Soviet-era grid.

The link between France and Spain would get 150 million euros. Undersea power connections between Italy and Sicily and Ireland and Wales would receive 100 million euros each.

The off-shore wind farms and grids in the North Sea get 500 million euros as the renewable project is viewed a crucial one in curbing global warming.

But Wladyslaw Mielczarski, a professor at Poland's Technical University of Lodz who coordinates plans for an EU-backed power link between Germany, Poland and Lithuania, said that 'the money is not an issue' in bridging EU grids.

He said that varied regulation, bureaucracy, environmental protests and land ownership hurdles pose a greater threat to speedy construction of cross-border power links that would help prevent power outages.

'In many countries it is practically impossible to get access to land,' he said. 'You have to go to court. It takes years and years.'

It also remains unclear if the recent gas crisis can bridge conflicting energy interests of member states.

The Baltics, for example, have jointly asked the EU for help in connecting to bloc's grid. But Lithuania and Latvia have yet to decide which country will connect to the Sweden-bound cable.

'Of course we think it would be best if it went to Lithuania,' Lithuanian Prime Minister Andrius Kubilius said on Tuesday.

Mielczarski's answer to discord is firm leadership in Brussels. 'We need a strong European Commission that can impose a long-term policy,' he said.