In a move likely to fuel controversy, the paper to be presented on Wednesday also advocates a broad debate on the use of nuclear power - anathema in some EU nations such as Austria but key to energy independence in states such as France.

Critics have opened fire before the document is published. Environmentalists say it will not do enough to reduce consumption of polluting fuels, while industry says it expects the paper to offer ideas to reduce high energy costs.

The Commission's proposals come as energy issues have risen up the political agenda in Europe and around the world with oil at more than $60 a barrel and tension over gas supplies.

A pricing dispute between Russia and Ukraine briefly disrupted supplies to the EU earlier this year, highlighting the bloc's vulnerability to foreign suppliers of oil and gas.

Strict commitments under the Kyoto Protocol to reduce emissions of gases that cause climate change and projections of greater future oil and gas import dependence are also driving the EU's desire to diversify supply, boost the market for renewables and lead the world in energy efficiency.

"Europe has entered into a new energy era," said the latest draft copy of the so-called green paper seen by Reuters. "Our goal remains to attain secure, sustainable and competitive energy. But this is getting harder to achieve."

ONE VOICE?

Squabbles among EU nations like France, Spain, Italy and Germany over proposed mergers in the utility sector have added a new challenge to the bloc's goal of energy unity.

The EU executive has asked France to explain a government engineered merger of Gaz de France and Suez, which is contested by potential Italian bidder Enel.

It is also demanding that Spain explain legal moves that may hamper a bid for Endesa by Germany's E.ON.

At the same time, the Commission is mulling antitrust probes of energy companies suspected of anti-competitive behaviour in monopolising pipelines and supply networks.

The EU executive believes an open, competitive gas and electricity market is crucial to the EU's energy future.

The green paper encourages the EU to diversify sources of energy and accompanying supply routes, and improve connections between national power grids and gas pipelines.

Environmentalists said the policy should put more emphasis on reducing demand for oil, gas and electricity.

"In its approach, the Commission is preoccupied with the security of supply. Any energy policy, which fails to address how we use our energy is naive and short-sighted," said Claude Turmes, of the Greens/EFA group in the European Parliament.

"We need a new approach, which puts efficient use of energy at the centre of the new EU energy policy."

The paper proposes an international agreement on energy efficiency with developed and developing countries.

"What does it mean in terms of action for Europe?" said Stephan Singer, head of energy policy at environmental group WWF in Brussels.

The paper was good at analysing the problems Europe faced but weak in offering solutions, he said.

Business group UNICE said it hoped the paper would address ways to reverse recent hikes in energy prices.