The fiscal instrument should aim to eliminate national distortions and distortions between
energy producers, encourage more energy saving and lead to the internalisation of damage
caused to the environment internalisation of external costs and the contribution to the
reduction of CO2 emissions. c
Energy saving schemes
Europe has not always kept up the efforts to save energy after the oil crises in spite of the
considerable potential in this field. At the Stockholm European Council, the European Commission will accordingly present a
plan to save energy and diversify sources by improving energy efficiency in accordance with
prioritisation in the various sectors, particular in buildings, and providing support for the
development of a new generation of vehicles with precise targets for 2010. This will replace
the relatively ineffective incentives which have existed up to now at Community level. Efforts
will focus on two priorities
- on the vehicles front, technological developments will help to improve the fuel efficiency of
conventional vehicles and to progress towards more efficient electric and hybrid vehicles as
well as battery-driven vehicles
- regarding fuel, measures must be stepped up to encourage the use of fuel substitutes,
especially for transport and heating biofuels, natural gas for vehicles, in the longer term
hydrogen. A 20 target for 2020 does not seem unreasonable. Even though industry, particularly the energy-intensive sector, has made considerable
progress in achieving high levels of efficiency,
there is still considerable potential for
additional costs-effective improvements. d
Dissemination of new technologies
The efforts made at national and Community level under various programmes have led to new
technologies that consume little energy but are not very competitive. Consequently,
Community programmes should promote the establishment of markets to absorb these new
technologies on the basis of large-scale trials e.g. in the major conurbations. Improving programme concentration and wider dissemination of their results are crucial
conditions for ensuring that technological discoveries are more widely and rapidly used.
using
investment funds built up using tolls on competing road routes. Rationalising the use of conventional private cars in town and city centres and promoting
clean urban transport are also priority objectives and likewise efforts towards using
hydrogen as the fuel for vehicles of the future. Among the initiatives might be the
promotion of the commercialisation of zero or low polluting vehiclesfor private and
commercial use. The development of a new generation of electric, hybrid electric motor
combined with thermal motor or gas-powered cars or, in the long term, vehicles running
on fuel cells are also very promising. Further, in order to promote more environmentally friendly and efficient ways of using
energy, the cost of transport should, in future, take account of the principle of polluter
pays. Also, transport prices and policies should reflect these additional costs leading to
changes in individual and public choices. Without this, societys tolerance in the face of a
general deterioration in living conditions could reach its limits. This concerns in
particular urban mobility, where more space needs to be made for more efficient and
cleaner public transport. b
Buildings major energy savings to be made
63
These measures will shortly be the subject of a White Paper on transport. 84
Greater use of available and economically viable energy-efficient technologies should reduce
the use of energy in buildings by at least a fifth, that is 40 million toe per year64. This is
equivalent to around 10 of current net oil and oil product imports and around 20 of the
EUs greenhouse gas reduction commitment under the Kyoto protocol. Greater energy savings in buildings, as well as reducing our overall energy requirements and
improving the security of our supply, also reduces CO2 emissions and makes homes and
workplaces more comfortable. It promotes social inclusion by raising the living standard of
many people in the EU. Moreover, the introduction of energy saving measures in the building
sector has considerable job-creating potential. The Commission will propose regulatory measures on energy saving in buildings which will
replace existing incentives. They may include the following elements
Targeted energy-saving rules. The introduction of such rules could have positive results. Investment projects for existing buildings could be reviewed and controlled by rules on the
insulation of residential buildings. Energy consumption standards per m³ might need to be
adopted in order to set up a proper system for the energy certification of buildings. The
introduction of standard energy certificates would make the energy variable a factor on the
property market and create demand for energy-efficient buildings. Such certificates could
provide the fiscal basis for encouraging investment in energy saving. Encouraging the use of renewable energy sources in new buildings. Rules could include
provisions governing heating and air conditioning systems which, for example, would have to
be linked to renewable energy sources multi-fuel
investments. The integration of
photovoltaic technology and solar panels in roofs or façades should also be encouraged.
Precise targets for the integration of these technologies in new buildings could be fixed. B. Managing supply dependence
While improved and durable energy supply security for the European Union depends
primarily on the adoption of policies controlling demand, a responsible policy for managing
dependence must also consider supply, even if the EUs power to act and margins for
manoeuvre are very limited in this respect, as seen above. 1. a
Internal supply
Development of less pollutant energy sources
Nuclear energy and solid fuels have been decried, oil is subject to geopolitical hazards which
are hard to control, renewables are failing to penetrate the market because they present
technological difficulties and are not profitable enough. Natural gas supplies could in the long
run be subject to risks of instability. Demand is changing, adapting to the new rules governing
the operation of the market and taking increasing account of environmental concerns. - New and renewable energy sources
Hydroelectricity does not have much potential in Europe for improving security of supply. New and renewable forms of energy, however, are the first option for action in relation to
security of supply, the environment and rural populations. 64
According to some estimates, the energy-saving potential in the building sector would be much greater
when energy prices are rising. 85
Sustained efforts should be made to promote the penetration of new and renewable energy
sources such as hydrogen and co-generation in our economies. The European Union has set
itself an ambitious target in this respect 12 of energy consumption in 2010 should come
from renewables. This means, above all, mobilising aid to promote their development and
use. Renewable forms of energy can only reach a sufficient level of competitiveness if they
receive aid for a relatively long time. These forms of energy do not have the same development facilities that other sectors
had. Moreover, aid for renewables is justified on the grounds that conventional energies do
not contribute much towards the external costs they entail which been the subject of thorough
quantitative evaluations. For example, the CO2 emissions they produce are not taxed.
This is
why today renewables - generally unprofitable - could be financed by temporary levies on a
share of the profits of other operators in the energy sector oil, gas, nuclear. - Nuclear energy
The nuclear option must be examined in terms of its contribution to security of supply and
greenhouse gas emission reductions . Nuclear energy saves Europe around 300 million tonnes
of CO2 emissions per year. This is equivalent to taking 75 million cars off the roads. This is
entirely without prejudice to the sovereign decisions of the countries that have decided to
phase out nuclear power plants or put a moratorium on investment in this sector. The present
phase-outs do not affect the Communitys ability to fulfil Kyoto objectives by 2012. With the
current state of the art, giving up nuclear energy would mean that 35 of electricity produced
would have to come from conventional energy sources and renewables. Hence the following priorities
Supporting research into the reactors of the future, notably nuclear fusion, and
continuing and stepping up research into irradiated fuel management and waste storage. The Union must maintain its leading-edge technological capability, know-how and potential
for exporting to third countries, notably with respect to supply of equipment, enrichment,
manufacture and reprocessing of spent fuel, and waste management. The European Union is examining the ways of treating the question of nuclear safety in
the enlargement process, as requested by the Helsinki European Council. The European Union should ensure that commitments are met with respect to the
closure and dismantling of reactors which cannot be modernised. Financial help should be
available for this. b
Preserving access to resources
In order to widen and renew policy of fuel stocks, the European Union could
- examine ways of strengthening its strategic oil stocks mechanism, by taking on a greater
role in stock management. In order to combat speculative moves, means of intervention
are needed, like on the money markets, to make prices more stable65 or respond to
exceptional demand. The EU should consider establishing a strategic oil reserve for helping
to mitigate and modify erratic price fluctuations and serve as a safety net in addition to the 90
days existing reserves for finished products. Initially, part of the stocks covering more than
90 days could be managed at Community level and where necessary be used for
anti-speculative measures. 65
Cf. the Commissions Communication entitled The European Unions oil supply COM 2000 631
86
- consider extending the stocks mechanism to natural gas. It must be remembered that 40
of Community needs are cover by imports and that this figure will rise to 60 in 2030. The
Union needs to guard itself against excessive vulnerability, resulting from too great a degree
of dependence. - analyse whether to maintain access to Community coal reserves and whether to maintain
a minimum production platform for this purpose. This raises the question of a platform for
primary Community production, which could be 15 of the share not covered by the rules
provided for in the Directive on the internal market in electricity.
2. Maintaining competition
In order to prevent economic risks in oil supply and limit the consequences, in particular the
social consequences, the Commission must tighten the control of competition rules in the oil
sector downstream refining-distribution. It is essential to ensure that the fuel distribution market remains open, in particular for
independent operators. This is a guarantee for competition in the market. This is why an
inquiry into barriers to independent operators whether from public or private decision is
being carried out. The results will allow the Commission to evaluate the conditions for
competition in the internal market and to define the actions which could be taken with regard
to rules of competition. It would be useful to make a systematic comparison of prices of oil
products in the Member States in order to highlight disparities. 3. Ensure external supplies
The European Union must use its political and economic influence to ensure flexible and
reliable external supply conditions. a
Relations with producer countries making our voice heard
The European Union must establish an ongoing dialogue with producer countries and
not only in response to major movements on the market. This will lead to greater
transparency on the market and obtain stable prices. It is important to be aware of the
expectations of several producer countries regarding political developments in the Middle
East. Such dialogue must facilitate the improvement of pricing mechanisms, the
conclusion of agreements and the use of reserve stocks for mutual benefit. This dialogue should be extended to all matters of common interest,
protection of the environment flexibility mechanisms and technology transfer. in particular
At Mr Prodis initiative, an energy partnership with Russia is in preparation as
confirmed by the statement adopted at the end of the Russia-European Union Summit
held in Paris on 30 October 2000. Russia said that it was prepared to work towards
improving the Unions long term security of energy supply and, as President Putin stated,
concerning prices and quantities, to put the emphasis on balance. For its part, the European Union is prepared to mobilise European technical assistance to
facilitate European investments in transport and production in the energy sector oil,
natural gas and electricity. Specific measures should be carefully studied whether they
concern a precise legal framework for investments in the energy sector, questions relating
to taxation or a guarantee mechanism for investments. These measures should be
finalised within the framework of a co-operation and partnership agreement between the
European Union and Russia.
87
In addition, we should keep a watchful eye on the development of oil and gas
resources in the Caspian sea basin and in particular on transport routes to open up
oil and gas production. b
Strengthening supply networks
To improve Europes energy supply, it is not sufficient to ensure the steady procurement of
energy sources at reasonable prices and on a long-term basis. It is also necessary to have a
supply network with security guarantees. The way in which energy is transported is of
fundamental importance for the security of supply. For instance, the European Union imports
90 of its oil by sea. Consequently, it is committed to strengthening the rules and regulations
on ships ban on single hull and should restore its supply balance by shifting the emphasis
towards oil pipelines. The construction of new oil and gas pipelines will make it possible to import oil and gas
from the Caspian Sea basin and the southern Mediterranean, thereby improving security of
supply by diversifying geographic sources of supply. Hence the emphasis in technical
assistance programmes such as MEDA and TACIS on improving energy infrastructure. In this context, in the MEDA framework, financing should be available for refining ideas
and feasibility studies concerning regional infrastructure networks which aim to link
national networks among themselves South-South, or to link these up to transeuropean
networks Transmediterranean. By giving them the label Euro-Mediterranean
partnership66, it would be possible to give an additional dimension to large regional
projects. the INOGATE6768 and TRACECA69 programmes are indispensable
Likewise,
instruments to open up resources in particular countries Azerbaijan, Kazakhstan,
Turkmenistan. In particular, the European Union should ensure that the provisions of the Energy Charter
and those of the protocol concerning transit are implemented as soon as possible, mainly
by the applicant countries and the NIS. Special attention must also be given to the
INOGATE umbrella agreement. that, within the Union, bottlenecks
For imports of electricity, there should be better interconnections between the networks of
the Member States and those of the Union with the applicant countries and Russia. This
should be removed by constructing
means
infrastructure currently lacking. All the Member States would thus be able to benefit from
new sources of supply.
However, care should be taken to ensure that the development of
trade does not in the medium term lead to the placing on the Community market of
electricity produced in nuclear power stations whose safety is not guaranteed. 66
67
68
69
COM2000 497 Reinvigorating the Barcelona Process
Russia has made the first steps towards joining INOGATE and has asked for a EUR 2 million
participation. INOGATE INterstate Oil and Gas. Programme for the development and rehabilitation of oil and gas
pipelines in the countries of the former Soviet Union
TRACECA programme for the rehabilitation of transport in the countries of the former Soviet Union.
This programme has for the first time enabled the transport of goods from the Caspian Sea by rail. 88
GUIDELINES FOR THE DEBATE
Three main points emerge from the Green Paper
-
The European Union will become increasingly dependent on external energy sources
enlargement will not change the situation based on current forecasts, dependence will reach
70 in 2030. The European Union has very limited scope to influence energy supply conditions it
-
is essentially on the demand side that the EU can intervene, mainly by promoting energy
saving in buildings and the transport sector. At present, the European Union is not in a position to respond to the challenge of
-
climate change and to meet its commitments, notably under the Kyoto Protocol. In these circumstances, the Commission would like the debate on the future strategy to be
structured around the following principal questions
1. Can the European Union accept an increase in its dependence on external energy sources
without compromising its security of supply and European competitiveness? For which
sources of energy would it be appropriate, if this were the case, to foresee a framework policy
for imports? In this context, is it appropriate to favour an economic approach energy cost or
geopolitical approach risk of disruption? 2. Does not Europes increasingly integrated internal market, where decisions taken in one
country have an impact on the others, call for a consistent and co-ordinated policy at
Community level? What should such a policy consist of and where should competition rules
fit in? 3. Are tax and state aid policies in the energy sector an obstacle to competitiveness in the
European Union or not? Given the failure of attempts to harmonise indirect taxation, should
the whole issue of energy taxation be re-examined taking account of energy and
not
environmental objectives? 4. In the framework of an ongoing dialogue with producer countries, what should supply and
investment promotion agreements contain? Given the importance of a partnership with Russia
in particular, how can stable quantities, prices and investments be guaranteed? 5. Should more reserves be stockpiled -as already done for oil - and should other energy
sources be included, such as gas or coal? Should the the Community take on a greater role in
stock management and, if so, what should the objectives and modalities be? Does the risk of
physical disruption to energy supplies justify more onerous measures for access to resources? 6. How can we ensure the development and better operation of energy transport networks in
the European Union and neighbouring countries that enable the internal market to function
properly and guarantee security of supply? 7. The development of some renewable energy sources calls for major efforts in terms of
Research and Technological Development,
investment aid and operational aid. Should
co-financing of this aid include a contribution from sectors which received substantial initial
development aid and which are now highly profitable gas, oil, nuclear? 89
8. Seeing that nuclear energy is one of the elements in the debate on tackling climate change
and energy autonomy, how can the Community find a solution to the problem of nuclear
waste, reinforcing nuclear safety and developing research into reactors of the future, in
particular fusion technology? 9. Which policies should permit the European Union to fulfil its obligations within the Kyoto
Protocol? What measures could be taken in order to exploit fully potential energy savings
which would help to reduce both our external dependence and CO2 emissions? 10. Can an ambitious programme to promote biofuels and other substitute fuels, including
hydrogen, geared to 20 of total fuel consumption by 2020, continue to be implemented via
national
initiatives, or are co-ordinated decisions required on taxation, distribution and
prospects for agricultural production? 11. Should energy saving in buildings 40 of energy consumption, whether public or
private, new or under renovation, be promoted through incentives such as tax breaks, or are
regulatory measures required along the lines of those adopted for major industrial
installations? 12. Energy saving in the transport sector 32 of energy consumption depends on redressing
the growing imbalance between road haulage and rail. Is this imbalance inevitable, or could
corrective action be taken, however unpopular, notably to encourage lower use of cars in
urban areas? How can the aims of opening up the sector to competition, investment in
infrastructure to remove bottlenecks and intermodality be reconciled? 13. How can we develop more collaborative visions and integrate the long-term dimension
into deliberations and actions undertaken by public authorities and other involved parties in
order to evolve a sustainable system of energy supply.