Any EU funding for strategic energy projects that is not allocated September 2010 should "immediately be re-directed to projects in energy efficiency and renewable energies", according to the European parliament's industry and energy committee.

On 20 March, European leaders agreed to earmark €3.98bn of €5bn of unspent EU agricultural funds for a specific list of gas and electricity interconnection, carbon capture and storage (CCS), and offshore wind projects to help drive Europe's economic recovery and increase energy security.

The money must be spent in 2009-10, they said. Unspent funds would return to member state coffers, European commission president José Manuel Barroso told journalists at the leaders' summit.

Several new member states who are not big winners of strategic energy project funds want to see any leftover money made available for projects they could potentially host, rather than see it flow to countries such as Germany, Spain and the UK, the source suggested.

The parliament has co-legislative rights over the €5bn proposal but it is in a difficult position because it must reach a first-reading agreement with EU governments before its mandate ends in June. Parliament negotiators hope to reach a deal by 21 April. *Meanwhile, the commission announced €15m to promote sustainable energy investments in as part of its Intelligent Energy-Europe programme. MEPs had wanted €500m of the strategic energy project funding dedicated to cities.