GERMANY'S 2007 EU PRESIDENCY: THE ENERGY AGENDA

UNCLAS SECTION 01 OF 02 BERLIN 001651 SIPDIS SENSITIVE STATE FOR EUR EUR/AGS, EUR/ERA, EB/ESC, AND OES PASS TO USTR SDONNELLY, MMOWREY DOE FOR IEP E.O. 12958: N/A TAGS: ENRG ETRD PGOV SENV EINV PREL EUN GM SUBJECT: GERMANY'S 2007 EU PRESIDENCY: THE ENERGY AGENDA SENSITIVE BUT UNCLASSIFIED ¶1. (U) SUMMARY: Germany expects to coordinate an ambitious energy initiative for the country's 2007 EU Presidency in the first half of 2007. Germany's EU Presidency will include a kind of "Lisbon Agenda" action plan for EU energy efficiency, use of renewables, and internal market coordination. Germany expects a EU energy policy initiative will mean closer coordination among EU member states' energy policies rather than full integration of EU energy policy in the hands of Brussels. German officials expect the June 15- 16 EU Council to launch the EU's foreign energy policy by approving the start of energy dialogues with key supplier and consumer nations, including Russia. Germany will help prepare an EU consensus on other energy issues to enable the late December EU Council under Finland to approve key mandates that would be achieved during Germany's Presidency. END SUMMARY ¶2. (SBU) German Economics Ministry and MFA officials told us June 14 Germany seeks to implement an EU Strategic Energy Review as part of its EU Presidency in the first half of 2007, working from the EU Green Paper on energy issued in March. According to MFA officials, the EU will take a first step towards a coordinated energy policy when the June 15-16 EU Council approves EU Foreign Affairs High Representative Solana's foreign energy policy paper, enabling the Commission to begin dialogues on energy with major countries. For Germany, officials hope the dialogue would address global energy supply questions by engaging with both producer and consumer countries. In the latter category, the EU would engage with the U.S., China and India as leading energy consumers. (German Foreign Minister Steinmeier already began such a dialogue bilaterally with China when he visited Beijing in January.) ¶3. (SBU) The EU Commission would also begin energy discussions with producers, including Russia, Caspian region countries, producers in North Africa, the Middle East, and other OPEC producers. An MFA official told us Germany looked forward to using this process for an "elegant solution" to the current EU impasse with Russia over the Energy Charter. He said most EU members are aware Russia would not sign the pact, creating the need for another approach. The MFA foresees the EU using the renegotiation of the EU-Russia Partnership agreement (due to expire in 2007) as the basis for re-starting energy talks with Russia, making energy cooperation a new part of overall Partnership agreement. ¶4. (U) German MFA officials said the June 15-16 EU Council will put in train the review of overall EU energy policy that will culminate in the German presidency. EU member states have already begun intensive discussions of energy efficiency, renewables, energy supply, and internal energy market reforms. According to the MFA, Finland's EU Presidency in the latter half of 2006 will shepherd these discussions with a goal of obtaining an EU Council mandate on energy at its late December meeting. This mandate would enable Germany to achieve approval for a coordinated EU energy policy during its 2007 Presidency. ¶5. (SBU) German officials emphasized the Commission has no legal basis in EU treaties for directing or regulating energy policy as part of the single market. The EU would therefore launch its energy policy in the form of an Action Plan similar to the method used for the Lisbon Agenda for economic competitiveness - an approach Germany prefers. The EU's limited energy competence suits Germany's goal of retaining its own national energy policy for supply and other questions. German officials want "the minimum necessary EU role" in energy questions, emphasizing the vital role of the private sector since ultimately new energy sources and supply routes will be a matter for private investment. ¶6. (SBU) German officials expect Finland to achieve progress on energy efficiency in its Presidency as it addresses improved technologies and better coordination between EU energy markets. To continue the push towards greater efficiency and energy security, Chancellor Merkel recently announced that Germany seeks a leading role in pioneering renewable energy sources, including wind, solar, and biomass. According to the MFA, the EU's current energy planning will provide Merkel with a timely platform for implementing solid renewables measures during Germany's Presidency. ¶7. (SBU) When we asked about calls from Poland and the Baltic states for solidarity among EU states in sharing supplies in cases of crisis, German MFA officials said these proposals were no longer part of EU planning. The German side considered these proposals "confrontational" in exaggerating the risks to supply from Russia and others. According to an MFA official, private sector agreements among EU energy firms have already addressed many concerns about reliability of gas and other supplies in case of crisis, thus removing the issue from EU member states' agenda. Informally, German officials comment that some EU members must play "catch up" in long neglected infrastructure investments needed to assure real energy security. ¶8. (U) German officials involved in preparing the June 15- 16 EU Council said that, aside from the energy issue, the Austrian Presidency had produced a rather "thin" agenda for EU leaders. Austria had met major political obstacles to its ambitions regarding the issues of EU enlargement and the Constitution. TIMKEN JR