Ministers of the EU member states have failed to meet the deadline for agreement on how to fund key economic stimulus measures which would have put 3.75 billion euros (4.8 billion dollars) of community money into various energy projects.
As part of the 5 billion euro European Economic Recovery Plan endorsed by the European Council in December the European Commission had unveiled proposals for 3.5 billion euros (4.6 billion dollars) of energy projects to increase energy efficiency, cut dependence on Russian gas supplies and boost the economy, the cash to be found from unused EU agricultural budget funding for 2008,
But the plan, presented by the Commission to EU ambassadors on 28 January, swiftly came under critical fire from member states, with many balking at the prospect of financing such long-term projects at a time of economic crisis.
Several delegations questioned the capacity of the proposals to have a real impact on the economy. "It's going to be difficult to reach agreement at the European summit in March," one European diplomat said. "There is very little support for these propositions," said another, predicting lengthy negotiations.
The commission's proposals called for, among other things, 1.025 billion euros to be invested in infrastructure, improving gas connections between EU states, with 700 million euros for inter- European electricity links. A further 500 million euros was earmarked for offshore wind generation projects and 1.25 billion for carbon capture and storage projects. Among the selected projects, the controversial Nabucco pipeline to bring Caspian Sea gas to Europe, bypassing Russia and Ukraine, would have received 250 million euros. The plans also included a €150 million investment in a North Sea electricity grid to integrate offshore wind capacity in the UK, Netherlands, Germany, Ireland and Denmark. The European offshore wind test centre in Aberdeen was slated to receive €40 million. Prospective CCS investment was focused on projects in Germany, the Netherlands, Poland, Spain and the UK.
Discussions were held on 23 February to try and resolve the issue, but they failed and now the deadline for using those funds has passed without agreement.
"We aren't blocking it but there is a need for a discussion," said German foreign minister Frank-Walter Steinmeier. Germany and Austria favour considering the projects involved on a case-by-case basis for funding. To try and overcome the problem, the commission rejigged its plans, giving more to energy security measures, but this failed to convince several European Union nations.
Spanish Foreign Secretary Diego Lopez Garrido, attending Monday's Brussels meeting, expressed his country's misgivings. Spain is contesting the geographical balance of the projects earmarked for financing, as is Portugal and "to a certain extent" Greece and Bulgaria. A British diplomat said there should be debate on funding the plans over the next three years, out of the EU's 2009, 2010 and 2011 budgets. Another option would be to set up a separate funding mechanism, but there was little appetite for extra funding while Europe is in recession.
Diplomats said that a deal would be sought ahead of an EU summit in Brussels on March 19. Heads of state and government are expected to return to the subject during an informal summit in the Belgian capital on 1 March dedicated to the financial and economic crises.
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