EU leaders face up to shale challenge

EU leaders agreed Wednesday to face up to the challenge posed by the shale oil and gas revolution which has slashed US energy prices, undercutting Europe's competitive edge. "All leaders are aware that sustainable and affordable energy is key to keeping factories and jobs in Europe," European President Herman Van Rompuy said. "Industry finds it hard to compete with foreign firms who pay half the price for electricity, like in the United States," Van Rompuy said at the close of an EU summit focused on energy and tax evasion. Britain, Hungary, Poland, Romania and Spain favour developing shale energy but others, and France in particular, are reluctant or opposed, citing environmental fears. Mindful of such sensitivities, Van Rompuy said member states "countries could also develop safe and sustainable ways to tap other resources - conventional and unconventional. "Yes, this includes shale gas, which could become part of the energy mix for some member states, perhaps less for others." The EU's 27 heads of state and government met amid fears the US-led shale boom will reshape the global economy and leave Europe far behind. Stuck in the doldrums, the European economy has lost nearly all momentum, with growth hard to come by and rising energy costs a real concern. "We need to secure good value energy supplies ... (which) involves making most use of indigenous resources, such as shale," said British Prime Minister David Cameron. "We need to ensure that the old rules do not hold us back ... regulation must not get in the way" of developing such resources, he added. "Rising energy prices are a real problem," European Parliament head Martin Schulz told the one-day summit, putting EU companies "at a competitive disadvantage" against US firms. "That is the bad news: if we do nothing, energy costs will continue to increase, and our energy dependence on third countries will increase with them," he said. "The good news is that energy policy in particular offers enormous potential for boosting growth, improving competitiveness and creating jobs." The challenge is enormous for a Europe which paid more than one billion euros a day for its energy imports in 2012. Van Rompuy had warned ahead of the meeting that Europe risked "becoming the only continent to depend on imported energy. "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," he said. 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 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. The summit conclusions said leaders agreed to work in four areas -- establishing a fully integrated energy market, boosting investment, diversifying resources and improving energy efficiency. While highlighting the "diversification of Europe's energy supply," the conclusions did not mention shale directly, reflecting the sensitivity over shale development. "In the current economic context, we must mobilise all our policies in support of competitiveness, jobs and growth," the summit conclusions said in the very first line. "The supply of affordable and sustainable energy to our economies is crucial in that respect," it added.