There should be no new taxes on energy within the EU, and current taxes should not be raised, if prices are to be kept competitive with rivals fuelled by cheap shale gas in the US, the EU's energy chief has told the Guardian.
He was speaking as David Cameron's government prepared for a bruising collision with the European commission over renewable energy, in a policy clash that could shape the development of energy infrastructure for decades to come.
Günther Oettinger told the Guardian that Europe's industry must become more efficient, and that energy markets must be further liberalised across the bloc, if the EU is not to fall behind US industry.
"To compete we must have a functioning internal market for electricity, with more competition [among energy suppliers]," he said. "Energy efficiency is very important – we must consume less. And no new taxes on energy, and no higher taxes on energy, to get to a suitable price for energy consumers [including energy-intensive businesses]."
EU manufacturers have been increasingly concerned about the impact of competition from the US, where the massive expansion of shale gas has sent gas prices plummeting to less than a fifth of those seen in the EU and other countries such as Japan. US manufacturers are still only beginning to take advantage of the differential, but this is expected to intensify.
Shale gas could play "an additional role" in the EU, Oettinger said. But experts say it is unlikely to be central.
Connie Hedegaard, the commissioner for climate change, also told the Guardian that shale gas would not be the game-changer that it has been in the US. "We should not fool ourselves," she said. "This is not going to be as cheap as in the US. We have different geology that makes it more tricky [to extract shale gas]. We don't have the same wide open spaces. We pay more attention to what local people think."
As a result, she said, the EU needed to place far more emphasis on energy efficiency and renewable generation. "The US is becoming self-reliant on energy, but we are going in the opposite direction – from 60% imports to 80% by 2035, on business as usual, according to the International Energy Agency. We need to do more on renewables."
The EU's current renewables target, of 20% of energy, is set to expire in 2020, along with the separate target of cutting emissions by 20% by the same date.
As part of the push to generate more of Europe's energy at home, the commission says a renewed higher target for 2030 is vital for energy security and economic growth, but the UK wants to scrap the renewables goal in favour of a standalone 2030 goal on cutting greenhouse gases, allowing member states to reach it as they wish.
Hedegaard said: "This is important for our renewables industry, which is a stronghold in Europe, creating jobs and economic growth." She said Europe would end up paying "a high price", in climate change and economically, without a further commitment to renewables.
Oettinger agreed, saying a 2030 renewables target would be "meaningful" in sending a signal to industry. "I prefer to have a renewables target – if there is no binding target, then member states can reduce renewable energy after 2020, to less than 20pc. That should not be the case. I think we need a realistic new target."
George Osborne, Britain's treasury chief, is understood to believe that shale gas, both produced here and imported from the US, as Centrica signed a deal to do this week, could result in lower fossil fuel energy prices in future and hence is hostile to a renewables target.
The row is likely soon to become intense, after the EC fired the starting gun on three months of intense lobbying that will help decide 2030 targets for climate change, carbon emissions and energy.
Publishing a long-awaited green paper on climate and energy, commissioners on Wednesday set out their aims of forging new targets and policies for Europe that will apply from 2020, when the current set of targets – an emissions cut of 20% and 20% of energy to come from renewable sources – expire.
But there is little agreement yet on what form any 2030 targets should take, and by opening a consultation from now until 2 July, the EC is inviting member states, businesses, green campaigners and other groups to make their views known. The results of the consultation will feed into the EC's deliberations, and draft proposals are expected to be drawn up by the end of the year, to be put before the European parliament.
The debate is likely to be heated, as these proposals will set out the shape of EU energy and climate policy for decades to come, and are taking place at a crucial time, when many member states are in deep recession, the eurozone is in repeated crises, and there are elections looming in Germany and – next year – for the EU.
Current targets prescribe not just emissions cuts for each member state but what each must do to contribute to the separate renewable energy target. But some member states – including the UK – want to scrap the renewables target after 2020, arguing that an emissions target alone is enough.
That has dismayed the renewable energy industry, who say that without a firm target the progress made on renewables may be lost.
Business groups are also concerned about the price of energy in the EU, with some arguing that it is too high because of green policies, which is allowing overseas rivals to undercut EU companies.
Some want to see more progress on international climate negotiations under the United Nations before the EU makes its commitments, but this will be hard to achieve as the UN negotiations are not expected to bear fruit until 2015, when a new global treaty is expected to be signed, to come into force from 2020.
Hedegaard urged EU citizens to make their views on climate change action known. "This is about everybody," she said.