Europe needs a "single market for energy" to bolster investment and move away from its reliance on Russia, the boss of Italian power giant Enel told CNBC, amid a fierce debate over the future of the region's energy policy.
Francesco Starace, CEO of Enel, said the European Union (EU) faces "structural" issues in its energy market as individual member states act alone rather than in a unified way. While Europe has "diversification" in its energy mix, the lack of coherent policy does not allow the continent to reap the benefits.
"Each single state had its own different policy, its own different view of markets. As a result of all this what we have in Europe is a great diversification which is one of the best things to have," Starace told CNBC in a TV interview.
"The only thing is we can't use this diversification because we have single markets that don't allow this diversification to bear fruit. So I think the real thing we need in Europe is a single market for energy. That will let this diversification come to the surface."
Europe's energy policy has been in the spotlight during the Ukraine crisis after its reliance on Russian gas was scrutinized. The EU depends on Russia for around 30 percent of its gas requirements which are piped through Ukraine. While the continent has not felt a dramatic impact from the geopolitical tensions, the potential for knock-on effects was highlighted when Russia turned off the gas to Ukraine earlier this month over payment issues.
While the U.S. has pushed ahead with fracking and the extraction of shale gas, Europe has not embraced the practice which has proved controversial. Environmental campaigners have said the technique, which involves pumping a mixture of water, sand and chemicals into shale rocks, causes contamination of water and methane gas leaks.
The EU has instead put emphasis on green energy, aiming for a 30 percent cut in energy usage and 40 percent in greenhouse gases by 2030. Critics of the targets say renewable energy is too expensive and not sustainable due to the fact it is often funded through government subsidies.
Starace said that the EU needs to agree on a unified energy policy soon or risk much-needed investment in the sector.
"I think you have to separate Europe and the rest of the world. In Europe everyone is waiting for these decisions, what kind of environment do we need…what kind of market? Until this is cleared it is mistake to really push big investments," he said.