Barroso has his work cut out over energy targets

European Diary: On the surface the fleet of shiny new cars sitting in the car park at the headquarters of Clean Energy Partnerships…

European Diary:On the surface the fleet of shiny new cars sitting in the car park at the headquarters of Clean Energy Partnerships in Berlin looked like your average motor. But a quick glance under the bonnet unveiled the latest hydrogen fuel cell technology that could spell the end for petrol and the CO2 emissions that it produces.

"Instead of an internal combustion engine, fuel-cell cars have an electric motor that is fed by the fuel cell," explained a technician.

"The fuel cell produces electricity in a chemical process, converting hydrogen and oxygen from the air to electricity, and creating only water and heat as byproducts."

So could hydrogen-powered cars be the answer to spiralling greenhouse gas emissions and the threat posed to the planet by global warming? At the same time as I was checking out the hydrogen powers in Berlin, 650km away in Brussels, European Commission president José Manuel Barroso was making the case for green energy.

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The commission's blueprint for a new energy policy places renewables and energy efficiency at the core of its strategy to tackle emissions. It also seeks to address the threat to energy supplies from unpredictable partners such as Russia and states in the unstable Middle East.

Calling for a new "post industrial revolution in energy" the commission strategy sets ambitious targets: reducing CO2 emissions by 20 per cent by 2020, saving 20 per cent of energy consumption by 2020 and reconsidering phasing out nuclear energy. It also calls for a shake-up of the EU's own internal energy market and the diversification of external suppliers of fossil fuels such as oil to limit the risk of supply disruption.

If no action is taken, the commission warns of catastrophic climate change, forecasting a 50 per cent chance that temperatures will rise this century by five degrees. Just a 2 per cent rise in global temperatures is considered unsustainable by most scientists.

Yet despite all the dire warnings emanating from Brussels, the energy package is not assured of an easy passage into law when it comes before member states for approval in March.

The targets set for renewable energy would require a massive investment by industry and governments, which until now, have been loathe to support such projects properly.

Back in Berlin, at Clean Energy Partnerships, which is a partnership between the government and several car manufacturers, there is scepticism about levels of public investment on offer to meet development costs.

"There hasn't been enough political will to make a difference to the use of clean energy resources . . . we are getting just half the money we ask for from European technology funds," said Klaus Bonhoff.

There is also a need for EU states to support the project, said Dr Bonhoff, who emphasises that the cost of developing a single car model is more than €500 million.

Hydrogen cars are also unlikely to help Europe meet its 2020 target as it costs €1 million to build each car. A commercial product is unlikely to be on the market until close to the end of the next decade.

The ambitious targets set for emissions reduction are also seen as unrealistic by industry.

Within hours of the publication of the commission strategy the European employers' federation, Unice, warned that the "far-reaching unilateral EU targets for reducing emissions" were unacceptable to industry. It wants an energy policy that focuses more on maintaining European industry competitiveness.

German economy minister Michael Glos echoed their concerns, warning about the danger of firms relocating from Europe to avoid punitive costs from unilateral policies that cut CO2 emissions.

"We would like a fair and balanced burden sharing so all major emitting countries must be included," Mr Glos said. "We know how important this is but we must also consider competition to Europe and German industry."

The third element of the commission's strategy, which promises to shake-up the internal energy market, is probably the most controversial.

Competition commissioner Neelie Kroes wants to tackle the huge energy firms such as EON and GdF that dominate the EU market. She plans to split these near-monopolies into separate firms, one that owns or operates the pipes that carry electricity and gas, and another that supplies the fuel. The plan, which has already been watered down after early opposition from France and Germany, will prompt an intense debate.

For its part the commission can highlight the recent interruption of oil supplies from Russia to states such and Germany and Poland as clear evidence that something must be done to diversify and safeguard energy supplies. It can also point to one of the warmest winters in living memory as evidence of global warming. But when EU leaders meet to negotiate the final shape of the energy package in March, expect the fireworks to fly and compromises to be accepted.