# C_2006318EN.01018501.xml

| 23.12.2006 | EN | Official Journal of the European Union | C 318/185 |
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23.12.2006

EN

Official Journal of the European Union

C 318/185

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Opinion of the European Economic and Social Committee on The energy supply of the EU: a strategy for an optimal energy mix

(2006/C 318/31)

In a letter dated 29 August 2005, the European Commission asked the European Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, to draw up an opinion on: The energy supply of the EU: a strategy for an optimal energy mix.

The energy supply of the EU: a strategy for an optimal energy mix

The Section for Transport, Energy, Infrastructure and Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 30 May 2006. The rapporteur was Ms Sirkeinen.

At its 429th plenary session of 13 and 14 September 2006 (meeting of 13 September 2006) the European Economic and Social Committee adopted the following opinion by 162 votes to 27, with 15 abstentions:

1.   Conclusions and recommendations

| 1.1 | The EESC finds that Europe needs to set a strategic goal of a diversified energy mix, meeting optimally economic, security of supply and climate policy objectives. All energy sources and technologies have, in relation to these objectives, benefits and drawbacks, which have to be taken into account in an open and balanced way. |
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1.1

The EESC finds that Europe needs to set a strategic goal of a diversified energy mix, meeting optimally economic, security of supply and climate policy objectives. All energy sources and technologies have, in relation to these objectives, benefits and drawbacks, which have to be taken into account in an open and balanced way.

| 1.2 | A diversified mix is needed:






  — | for reasonable energy costs by providing for fuel-to-fuel competition and an optimal overall efficiency in energy systems, in particular electricity. In addition, sources of supply need to be diversified ensuring competition between suppliers; |
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1.2

A diversified mix is needed:

—

for reasonable energy costs by providing for fuel-to-fuel competition and an optimal overall efficiency in energy systems, in particular electricity. In addition, sources of supply need to be diversified ensuring competition between suppliers;

reasonable energy costs

| — | for better security of supply by providing substitution when delivery problems arise and to increase market power of users; |
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—

for better security of supply by providing substitution when delivery problems arise and to increase market power of users;

security of supply

| — | for European and even global solidarity concerning use of resources and environmental effects. |
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—

for European and even global solidarity concerning use of resources and environmental effects.

global solidarity

| 1.3 | External energy dependence of the EU area cannot presently be avoided. Political, economical and technical problems may arise from high and increasing dependence on one source of supply, in particular from areas not respecting the same rules of the game or with political unrest, as in the case of oil and gas. |
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1.3

External energy dependence of the EU area cannot presently be avoided. Political, economical and technical problems may arise from high and increasing dependence on one source of supply, in particular from areas not respecting the same rules of the game or with political unrest, as in the case of oil and gas.

External energy dependence

| 1.4 | Coal and uranium are available on the world market from various sources, also within the EU, and thus not giving rise to concern. |
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1.4

Coal and uranium are available on the world market from various sources, also within the EU, and thus not giving rise to concern.

| 1.5 | Increased use of renewables for electricity production has a potential that needs to be tapped. But even when the target for 2020 of 20 % renewables, proposed by the European Parliament, would be met, it is not likely that renewables can substitute fully the traditional energy sources in the foreseeable future. |
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1.5

Increased use of renewables for electricity production has a potential that needs to be tapped. But even when the target for 2020 of 20 % renewables, proposed by the European Parliament, would be met, it is not likely that renewables can substitute fully the traditional energy sources in the foreseeable future.

renewables

not likely that renewables can substitute

the traditional energy sources

| 1.6 | The use of gas has increased and still increases for market reasons, but is also driven by political choices. It is now obvious that the continuation of this trend is problematic. For security of supply and cost reasons gas can hardly continue to substitute coal, nor can gas substitute nuclear for reasons of emissions. Voices have also been raised against energy use of the finite supplies of gas, which is a valuable raw material for high added industrial use, as is also oil. |
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1.6

The use of gas has increased and still increases for market reasons, but is also driven by political choices. It is now obvious that the continuation of this trend is problematic. For security of supply and cost reasons gas can hardly continue to substitute coal, nor can gas substitute nuclear for reasons of emissions. Voices have also been raised against energy use of the finite supplies of gas, which is a valuable raw material for high added industrial use, as is also oil.

gas

| 1.7 | In the light of the critical debate taking place in many EU Member States, concerns regarding nuclear safety, decommissioning and spent fuel, an issue which has still not been resolved in the majority of Member States, particularly as regards final storage, have to be addressed in order to continue and even increase the use of this technology, given its benefits vis-à-vis climate change, low economic external dependence and stable costs. In light of scenarios, in the foreseeable future possible substitution of nuclear power would be difficult to achieve without increased use of fossil fuels. |
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1.7

In the light of the critical debate taking place in many EU Member States, concerns regarding nuclear safety, decommissioning and spent fuel, an issue which has still not been resolved in the majority of Member States, particularly as regards final storage, have to be addressed in order to continue and even increase the use of this technology, given its benefits vis-à-vis climate change, low economic external dependence and stable costs. In light of scenarios, in the foreseeable future possible substitution of nuclear power would be difficult to achieve without increased use of fossil fuels.

nuclear

| 1.8 | The EESC supports a careful approach to future choices. It is not wise to assume that the future development is completely predictable and that everything goes in perfect accordance with policy goals or best expectations. Policy choices need to ensure a sufficient supply of energy at reasonable prices also under less beneficial developments. Anything else would be gravely irresponsible. |
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1.8

The EESC supports a careful approach to future choices. It is not wise to assume that the future development is completely predictable and that everything goes in perfect accordance with policy goals or best expectations. Policy choices need to ensure a sufficient supply of energy at reasonable prices also under less beneficial developments. Anything else would be gravely irresponsible.

careful approach to future choices

| 1.9 | All options have to be kept open. The scenarios for EU-25 presented in Chapter 4 clearly support this conclusion. Even the scenario based on assumptions of the strongest developments of energy efficiency and increase of renewables do not render any energy technology obsolete without negative impacts on either environment or economy. |
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1.9

All options have to be kept open. The scenarios for EU-25 presented in Chapter 4 clearly support this conclusion. Even the scenario based on assumptions of the strongest developments of energy efficiency and increase of renewables do not render any energy technology obsolete without negative impacts on either environment or economy.

All options have to be kept open

| 1.10 | The present mix should be developed by political strategies towards less external dependence and more non-emitting sources available in Europe, bearing in mind that market actors make decisions on investments in various technologies. |
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1.10

The present mix should be developed by political strategies towards less external dependence and more non-emitting sources available in Europe, bearing in mind that market actors make decisions on investments in various technologies.

The present mix should be developed by political strategies towards less external dependence and more non-emitting sources available in Europe

| 1.11 | The EESC recommends developing a strategy for an optimal energy mix. In this context it is important to clarify the roles of the EU, Member States, independent authorities and market actors. Because of a high level of interdependence in energy matters between Member States, a better coordination of energy policy within the EU would increase the ability to react to internal and external problems.
  The strategy for an optimal energy mix should consist of the following elements: |
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1.11

The EESC recommends developing a strategy for an optimal energy mix. In this context it is important to clarify the roles of the EU, Member States, independent authorities and market actors. Because of a high level of interdependence in energy matters between Member States, a better coordination of energy policy within the EU would increase the ability to react to internal and external problems.

The EESC recommends developing a strategy for an optimal energy mix.

The strategy for an optimal energy mix should consist of the following elements:

| 1.12 | Energy efficiency, including combined heat and power production, is the first key answer to the energy policy challenges. Better efficiency does not directly serve a balanced mix, but supports all energy policy targets — competitiveness, security of supply, climate change. |
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1.12

Energy efficiency, including combined heat and power production, is the first key answer to the energy policy challenges. Better efficiency does not directly serve a balanced mix, but supports all energy policy targets — competitiveness, security of supply, climate change.

Energy efficiency, including combined heat and power production,

| 1.13 | Renewable energy sources have much potential in the EU and need support. Some technologies merely need some efficiency development to be ready for market access, others need more long term R&D. Policies have to be designed carefully so as not to contribute to the already strong push upwards on energy prices. |
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1.13

Renewable energy sources have much potential in the EU and need support. Some technologies merely need some efficiency development to be ready for market access, others need more long term R&D. Policies have to be designed carefully so as not to contribute to the already strong push upwards on energy prices.

Renewable energy sources

| 1.14 | Increase carefully, following profound impact assessments, the use of biofuels for transport. Firstly, the Directive on the promotion of biofuels in force has to be implemented. (1) |
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1.14

Increase carefully, following profound impact assessments, the use of biofuels for transport. Firstly, the Directive on the promotion of biofuels in force has to be implemented. (1)

biofuels for transport

1

| 1.15 | Enhance energy efficiency in transport by a variety of measures (see 6.3.1.5). |
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1.15

Enhance energy efficiency in transport by a variety of measures (see 6.3.1.5).

energy efficiency in transport

| 1.16 | There is an urgent need for even better nuclear safety and a solution to the question of spent fuel, which is still unresolved in the majority of countries. The responsibility will have to be carried by operators, and the safety authorities and relevant international bodies will have to lay down appropriate requirements. As regards the transport of spent fuels, both EU-rules and international commitments have to be respected. |
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1.16

There is an urgent need for even better nuclear safety and a solution to the question of spent fuel, which is still unresolved in the majority of countries. The responsibility will have to be carried by operators, and the safety authorities and relevant international bodies will have to lay down appropriate requirements. As regards the transport of spent fuels, both EU-rules and international commitments have to be respected.

nuclear safety

spent fuel,

| 1.17 | Put serious efforts into clean coal technologies — improved power plant efficiency and commercial applications of carbon capture and storage. This is particularly important in view of global developments. |
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1.17

Put serious efforts into clean coal technologies — improved power plant efficiency and commercial applications of carbon capture and storage. This is particularly important in view of global developments.

clean coal technologies

| 1.18 | Prepare for re-increased use of domestic EU coal reserves, including use in liquid and gas forms. In this and other contexts it should be kept in mind that political decisions regarding energy usually have strong economic, social and environmental effects, and that the dimensions and timescales of changes are big. |
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1.18

Prepare for re-increased use of domestic EU coal reserves, including use in liquid and gas forms. In this and other contexts it should be kept in mind that political decisions regarding energy usually have strong economic, social and environmental effects, and that the dimensions and timescales of changes are big.

use of domestic EU coal reserves

| 1.19 | In order to lessen problems of keeping and increasing the share of gas in the energy mix, encourage investments in liquefied natural gas terminals, with a view to diversify supply sources of gas, and develop gas storage facilities and measures. |
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1.19

In order to lessen problems of keeping and increasing the share of gas in the energy mix, encourage investments in liquefied natural gas terminals, with a view to diversify supply sources of gas, and develop gas storage facilities and measures.

liquefied natural gas

| 1.20 | Sufficient investments in energy production and transmission have to be ensured both by putting the legal framework right and by appropriate financial measures. For instance, long-term contracts can be a helpful instrument, within the limits set by the need for sufficient competition. |
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1.20

Sufficient investments in energy production and transmission have to be ensured both by putting the legal framework right and by appropriate financial measures. For instance, long-term contracts can be a helpful instrument, within the limits set by the need for sufficient competition.

investments

| 1.21 | The EU should speak with one voice and take its position as one of the strongest actors — on the international scene in negotiating with energy suppliers, in particular Russia. In reacting and negotiating on energy supply issues, different features of mutual dependencies need to be taken into account. The Union cannot be an actor in the energy markets, but energy being much in the hands of governments in many supply countries, it should strongly support the interests of EU actors. |
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1.21

The EU should speak with one voice and take its position as one of the strongest actors — on the international scene in negotiating with energy suppliers, in particular Russia. In reacting and negotiating on energy supply issues, different features of mutual dependencies need to be taken into account. The Union cannot be an actor in the energy markets, but energy being much in the hands of governments in many supply countries, it should strongly support the interests of EU actors.

negotiating

Russia.

| 1.22 | When assessing the environment of energy choices, external costs as well as the impact of subsidies have to be analysed. Also, the impact of present and future climate and environmental policy measures on the other energy policy objectives — competitiveness and security of supply — as well as on a diversified energy supply must be carefully assessed. |
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1.22

When assessing the environment of energy choices, external costs as well as the impact of subsidies have to be analysed. Also, the impact of present and future climate and environmental policy measures on the other energy policy objectives — competitiveness and security of supply — as well as on a diversified energy supply must be carefully assessed.

Also, the impact of present and future climate and environmental policy measures on the other energy

| 1.23 | It is necessary to find a global solution to post-Kyoto climate policies, involving at least all major emitters. Otherwise there will not be any significant development in mitigating climate change, but there could be a risk of harming the EU's economic and social developments. |
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1.23

It is necessary to find a global solution to post-Kyoto climate policies, involving at least all major emitters. Otherwise there will not be any significant development in mitigating climate change, but there could be a risk of harming the EU's economic and social developments.

find a global solution to post-Kyoto

| 1.24 | Increase R&D efforts and EU support to energy R&D in line with the high importance and great challenges of energy for society. In the shorter term direct efforts towards better energy efficiency, renewable technologies still far from the market, clean coal technologies and nuclear safety. Many renewables and efficiency technologies mainly need smart engineering to lower their costs. Much basic and longer term research and development work is needed to make the vision of an energy scene with renewables, fusion and hydrogen possible. In the meantime, also elements of other promising future visions need to be encouraged and supported. |
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1.24

Increase R&D efforts and EU support to energy R&D in line with the high importance and great challenges of energy for society. In the shorter term direct efforts towards better energy efficiency, renewable technologies still far from the market, clean coal technologies and nuclear safety. Many renewables and efficiency technologies mainly need smart engineering to lower their costs. Much basic and longer term research and development work is needed to make the vision of an energy scene with renewables, fusion and hydrogen possible. In the meantime, also elements of other promising future visions need to be encouraged and supported.

R&D efforts

2.   Introduction

| 2.1 | Since 2002 the EESC has prepared several own initiative and exploratory Opinions on different energy sources and technologies — nuclear, renewables, fossil fuels and energy efficiency. This opinion builds on these, without specific referrals to the more detailed information and discussion presented in them. |
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2.1

Since 2002 the EESC has prepared several own initiative and exploratory Opinions on different energy sources and technologies — nuclear, renewables, fossil fuels and energy efficiency. This opinion builds on these, without specific referrals to the more detailed information and discussion presented in them.

| 2.2 | Developments in the energy scene are impossible to exactly foresee. All forecasts and scenarios have limitations. Surprising events or strong political actions can shift trends. Policy considerations, let alone decisions, have, however, to be based on profound information on the present situation, best possible forecasts and scenarios as well as understanding of drivers and breaks on change. This opinion is essentially based on scenarios by the International Energy Agency IEA and the European Commission, and covers a time period to 2030. After that the picture is much less precise. |
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2.2

Developments in the energy scene are impossible to exactly foresee. All forecasts and scenarios have limitations. Surprising events or strong political actions can shift trends. Policy considerations, let alone decisions, have, however, to be based on profound information on the present situation, best possible forecasts and scenarios as well as understanding of drivers and breaks on change. This opinion is essentially based on scenarios by the International Energy Agency IEA and the European Commission, and covers a time period to 2030. After that the picture is much less precise.

| 2.3 | Choices of energy sources and technologies are made by investors and can be influenced by political decisions. The EU does not have direct power over Member States' choices of sources, but influences indirectly through its environmental mandate. Member States should facilitate the use of their domestic resources as far as possible. The choices Member States make influence one another. Also, energy users in Member States without, for instance, nuclear or coal power production are part of an electricity market where nuclear and coal are used. |
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2.3

Choices of energy sources and technologies are made by investors and can be influenced by political decisions. The EU does not have direct power over Member States' choices of sources, but influences indirectly through its environmental mandate. Member States should facilitate the use of their domestic resources as far as possible. The choices Member States make influence one another. Also, energy users in Member States without, for instance, nuclear or coal power production are part of an electricity market where nuclear and coal are used.

| 2.4 | Our key question is: Can we already now rule out present or potential future systems or possible options? In other words, do we know enough and are we confident enough to narrow our choices by which to meet the goals of energy policy — sufficient, secure energy supply, reasonable, competitive prices and decreased burden on the environment and climate? We seek to answer this question as well as presenting related conclusions and recommendations. |
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2.4

Our key question is: Can we already now rule out present or potential future systems or possible options? In other words, do we know enough and are we confident enough to narrow our choices by which to meet the goals of energy policy — sufficient, secure energy supply, reasonable, competitive prices and decreased burden on the environment and climate? We seek to answer this question as well as presenting related conclusions and recommendations.

Our key question is: Can we already now rule out present or potential future systems or possible options?

3.   Global energy market and carbon dioxide emission developments

| 3.1 | The world energy future has an effect on the European energy future. Energy consumption now and growth are biggest outside Europe. Global growing fossil fuel demand has an impact on prices and availability in Europe. Price changes also lead to changes in energy choices, consumer and corporate behaviour and direction of R&D-efforts. All this affects the situation in the EU, too. Therefore it is essential to have an overall global picture of the energy future as a backdrop when considering European options. The International Energy Agency IEA presents its views of the world energy future in the World Energy Outlook 2004 with two scenarios from 2004 to 2030.

  The Reference Scenario (WEO-R04) takes account of those government policies and measures that were enacted or adopted by mid-2004. The World Alternative Policy scenario analyses (WEO-A04) how the global energy market could evolve if the countries around the world would adopt a set of policies and measures that they are either currently considering or might reasonably be expected to implement over the projection period. Some parts of both the Reference and the Alternative Scenario were updated in the IEA World Energy Outlook 2005 (WEO-R05, WEO-A05). |
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3.1

The world energy future has an effect on the European energy future. Energy consumption now and growth are biggest outside Europe. Global growing fossil fuel demand has an impact on prices and availability in Europe. Price changes also lead to changes in energy choices, consumer and corporate behaviour and direction of R&D-efforts. All this affects the situation in the EU, too. Therefore it is essential to have an overall global picture of the energy future as a backdrop when considering European options. The International Energy Agency IEA presents its views of the world energy future in the World Energy Outlook 2004 with two scenarios from 2004 to 2030.

world energy future

World Energy Outlook 2004

The Reference Scenario (WEO-R04) takes account of those government policies and measures that were enacted or adopted by mid-2004. The World Alternative Policy scenario analyses (WEO-A04) how the global energy market could evolve if the countries around the world would adopt a set of policies and measures that they are either currently considering or might reasonably be expected to implement over the projection period. Some parts of both the Reference and the Alternative Scenario were updated in the IEA World Energy Outlook 2005 (WEO-R05, WEO-A05).

The Reference Scenario

WEO-R04

The World Alternative Policy scenario

WEO-A04

Reference

Alternative Scenario

World Energy Outlook 2005

WEO-R05, WEO-A05

| 3.2 | World primary energy demand in the WEO-R05 scenario is projected to expand by 52 % between 2002 and 2030. More than two-thirds of the increase will come from developing countries. The annual rate of growth in energy demand (1.6 %) will slow down from the 2.1 % level of the past three decades. The transport and power-generation sectors will absorb a growing share of global energy. World electricity consumption will double over the period. |
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3.2

World primary energy demand in the WEO-R05 scenario is projected to expand by 52 % between 2002 and 2030. More than two-thirds of the increase will come from developing countries. The annual rate of growth in energy demand (1.6 %) will slow down from the 2.1 % level of the past three decades. The transport and power-generation sectors will absorb a growing share of global energy. World electricity consumption will double over the period.

World primary energy demand

WEO-R05 scenario

| 3.3 | In the WEO-A05 scenario global energy demand would be 10 % lower than in the WEO-R05 scenario. |
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3.3

In the WEO-A05 scenario global energy demand would be 10 % lower than in the WEO-R05 scenario.

WEO-A05 scenario

WEO-R05 scenario.

| 3.4 | Energy use in final sectors will grow by 1.6 % per year through to 2030 (WEO-R04). Transport demand will grow quickest, at 2.1 % per year. Residential and service sector consumption will grow at an average annual rate of 1.5 %, as will industrial demand. |
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3.4

Energy use in final sectors will grow by 1.6 % per year through to 2030 (WEO-R04). Transport demand will grow quickest, at 2.1 % per year. Residential and service sector consumption will grow at an average annual rate of 1.5 %, as will industrial demand.

Energy use in final sectors

WEO-R04

| 3.5 | World electricity demand will double between 2002 and 2030 in the WEO-R04 scenario. The largest sectoral increase will be in the residential electricity consumption (119 %), followed by the services sector (97 %) and industry (86 %). About 4 800 GW of new capacity or nearly 10 000 new installations are needed to meet the projected increase in electricity demand and to replace ageing infrastructure. |
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3.5

World electricity demand will double between 2002 and 2030 in the WEO-R04 scenario. The largest sectoral increase will be in the residential electricity consumption (119 %), followed by the services sector (97 %) and industry (86 %). About 4 800 GW of new capacity or nearly 10 000 new installations are needed to meet the projected increase in electricity demand and to replace ageing infrastructure.

World electricity demand

WEO-R04 scenario

| 3.6 | Fossil fuels will according to the WEO-R05 scenario continue to dominate global energy use. They will account for around 83 % of the increase in world primary energy demand. The share of nuclear power falls from 6.4 % to 4.7 %, while the share of renewable energy sources is projected to increase from 13 % to 14 %.
  In the WEO-A04 fossil-fuel demand falls by 14 % in 2030 as compared to WEO-RO4, while the use of nuclear power goes up by 14 % and that of non-hydro renewable energy sources (excluding biomass) rises by 27 %. |
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3.6

Fossil fuels will according to the WEO-R05 scenario continue to dominate global energy use. They will account for around 83 % of the increase in world primary energy demand. The share of nuclear power falls from 6.4 % to 4.7 %, while the share of renewable energy sources is projected to increase from 13 % to 14 %.

Fossil fuels

WEO-R05 scenario

In the WEO-A04 fossil-fuel demand falls by 14 % in 2030 as compared to WEO-RO4, while the use of nuclear power goes up by 14 % and that of non-hydro renewable energy sources (excluding biomass) rises by 27 %.

WEO-A04

| 3.7 | Oil will remain the single largest fuel. Oil demand in the world will grow by 1.4 % per year up to 2030 (WEO-R05). OPEC's worldwide market share will rise from 39 % in 2004 to 50 % in 2030. Net inter-regional oil trade will more than double during that period. Exports from the Middle East will rise most.
  Primary oil demand is 11 % lower in WEO-A04 compared to WEO-R04. |
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3.7

Oil will remain the single largest fuel. Oil demand in the world will grow by 1.4 % per year up to 2030 (WEO-R05). OPEC's worldwide market share will rise from 39 % in 2004 to 50 % in 2030. Net inter-regional oil trade will more than double during that period. Exports from the Middle East will rise most.

Oil

WEO-R05

Primary oil demand is 11 % lower in WEO-A04 compared to WEO-R04.

WEO-A04

WEO-R04.

| 3.8 | Natural gas demand will grow at a steady rate of 2.1 % per year (WEO-R05). Consumption of natural gas will increase by three quarters between 2003 and 2030. Gas-to-liquids plants will emerge as a major new market for natural gas, making possible the use of reserves located far from traditional markets. Production will increase most in Russia and the Middle East.
  Gas demand would be 10 % lower in WEO-A04. |
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3.8

Natural gas demand will grow at a steady rate of 2.1 % per year (WEO-R05). Consumption of natural gas will increase by three quarters between 2003 and 2030. Gas-to-liquids plants will emerge as a major new market for natural gas, making possible the use of reserves located far from traditional markets. Production will increase most in Russia and the Middle East.

Natural gas

WEO-R05

Gas demand would be 10 % lower in WEO-A04.

WEO-A04

| 3.9 | Coal will continue to play a key role in the world energy mix with the average annual rate of increase of 1.4 % (WEO-R05). Coal demand will increase most in developing Asian countries. The electricity sector will be responsible for over 95 % of the growth. Over 40 % of the world's coal reserves, which are equal to almost 200 years of production at current rates, is located in OECD countries.
  Coal demand would be nearly a quarter lower in 2030 in the Alternative scenario than in the Reference scenario. |
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3.9

Coal will continue to play a key role in the world energy mix with the average annual rate of increase of 1.4 % (WEO-R05). Coal demand will increase most in developing Asian countries. The electricity sector will be responsible for over 95 % of the growth. Over 40 % of the world's coal reserves, which are equal to almost 200 years of production at current rates, is located in OECD countries.

Coal

WEO-R05

Coal demand would be nearly a quarter lower in 2030 in the Alternative scenario than in the Reference scenario.

| 3.10 | Carbon dioxide global emissions will according to the WEO-R05 scenario increase by 1.6 % per year over 2003-2030. Nearly 70 % of the increase will come from developing countries. Power generation is expected to contribute about half the increase in global emissions. Transport stays the second largest source for carbon dioxide emissions worldwide.
  In the WEO-A05 scenario carbon dioxide emissions are 16 % lower than in the Reference Scenario in 2030. The annual growth rate over the projection period falls to 1.1 %. |
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3.10

Carbon dioxide global emissions will according to the WEO-R05 scenario increase by 1.6 % per year over 2003-2030. Nearly 70 % of the increase will come from developing countries. Power generation is expected to contribute about half the increase in global emissions. Transport stays the second largest source for carbon dioxide emissions worldwide.

Carbon dioxide global emissions

WEO-R05 scenario

In the WEO-A05 scenario carbon dioxide emissions are 16 % lower than in the Reference Scenario in 2030. The annual growth rate over the projection period falls to 1.1 %.

WEO-A05 scenario

4.   Energy market and carbon dioxide emission developments in the EU

| 4.1 | The European Commission has made numerous scenarios on the EU energy future with different assumptions. In this chapter two different scenarios are presented. The Baseline 2005 scenario (BL-05) shows the future under current trends and EU and Member States policies decided upon before the end of 2004. The high levels of energy efficiency and renewables (HLEER-04) scenario aims at simulating the energy and environment effects of successfully implementing strong policies for both energy efficiency and renewables as far as such measures can be modelled. The HLEER-04 has not been updated, so comparisons are made with the Baseline 2004 (BL-04), i.e. the two scenarios are not directly comparable. The Commission has not presented calculations of the cost difference between BL- and HLEER-scenarios. |
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4.1

The European Commission has made numerous scenarios on the EU energy future with different assumptions. In this chapter two different scenarios are presented. The Baseline 2005 scenario (BL-05) shows the future under current trends and EU and Member States policies decided upon before the end of 2004. The high levels of energy efficiency and renewables (HLEER-04) scenario aims at simulating the energy and environment effects of successfully implementing strong policies for both energy efficiency and renewables as far as such measures can be modelled. The HLEER-04 has not been updated, so comparisons are made with the Baseline 2004 (BL-04), i.e. the two scenarios are not directly comparable. The Commission has not presented calculations of the cost difference between BL- and HLEER-scenarios.

scenarios

The Baseline 2005

BL-05

The high levels of energy efficiency and renewables (HLEER-04)

HLEER-04

Baseline 2004

BL-04

BL-

HLEER-

| 4.2 | In the year 2005 primary energy use in the present day EU-25 was composed of 18 % solid fuels (mainly coal), 37 % liquid fuels (oil), 24 % natural gas, 14 % nuclear and 7 % renewable energy sources. Electricity was generated from 29 % coal and lignite, 20 % gas, 31 % nuclear, 15 % renewables (incl. big hydro) and 5 % petroleum products. |
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4.2

In the year 2005 primary energy use in the present day EU-25 was composed of 18 % solid fuels (mainly coal), 37 % liquid fuels (oil), 24 % natural gas, 14 % nuclear and 7 % renewable energy sources. Electricity was generated from 29 % coal and lignite, 20 % gas, 31 % nuclear, 15 % renewables (incl. big hydro) and 5 % petroleum products.

In the year 2005 primary energy use in the present day EU-25 was

| 4.3 | EU primary energy demand in the BL-05 Scenario is projected to be 15 % higher in 2030 than it was 2000 (+0.5 % pa), with a GDP growth of 79 %. The BL-05 shows a continuation of the decoupling of energy demand from GDP. Energy intensity (the ratio of energy use to GDP) is improving by 1.5 % pa.
  In the HLEER-04 scenario primary energy need is projected to be -14.1 % below BL-04 levels in 2030, but still slightly above the level in 2000. |
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4.3

EU primary energy demand in the BL-05 Scenario is projected to be 15 % higher in 2030 than it was 2000 (+0.5 % pa), with a GDP growth of 79 %. The BL-05 shows a continuation of the decoupling of energy demand from GDP. Energy intensity (the ratio of energy use to GDP) is improving by 1.5 % pa.

EU primary energy demand

BL-05 Scenario

BL-05

In the HLEER-04 scenario primary energy need is projected to be -14.1 % below BL-04 levels in 2030, but still slightly above the level in 2000.

HLEER-04

BL-04

| 4.4 | Energy use in final sectors is projected to grow by 25 % to 2030 (BL-05). Energy demand for services is projected to be 49 % higher in 2030 than it was in 2000. This development is driven by increasing demand for electricity. Household energy demand is expected to rise by 29 % between 2000 and 2030. Transport energy demand in 2030 is projected to be 21 % and industry 19 % higher than in 2000.
  In the HLEER-04 scenario energy demand is 10.9 % below BL-04 levels in 2030. |
| --- | --- |

4.4

Energy use in final sectors is projected to grow by 25 % to 2030 (BL-05). Energy demand for services is projected to be 49 % higher in 2030 than it was in 2000. This development is driven by increasing demand for electricity. Household energy demand is expected to rise by 29 % between 2000 and 2030. Transport energy demand in 2030 is projected to be 21 % and industry 19 % higher than in 2000.

Energy use in final sectors

BL-05

In the HLEER-04 scenario energy demand is 10.9 % below BL-04 levels in 2030.

HLEER-04

BL-04

| 4.5 | EU electricity demand will rise 43 % between 2005 and 2030 (BL-05). Demand growth will be especially rapid in the household sector (62 %), followed by the tertiary sector (53 %) and industry (26 %). |
| --- | --- |

4.5

EU electricity demand will rise 43 % between 2005 and 2030 (BL-05). Demand growth will be especially rapid in the household sector (62 %), followed by the tertiary sector (53 %) and industry (26 %).

EU electricity demand

BL-05

| 4.6 | EU electricity production is expected to increase by 51 % between 2000 and 2030 (BL-05). An increasing share of electricity will be produced in the form of combined heat and power (up almost 10 percentage points to reach 24 % CHP share in 2030). The structure of power generation changes significantly in favour of renewables and natural gas while nuclear and solid fuels losing market shares.
  In the HLEER-04 scenario the overall electricity production in 2030 is projected to fall 16 % from BL-04 levels. Solid fuels and nuclear energy decrease by similar amounts of electricity generation in absolute terms (-9.3 % from BL-04 in 2030 respectively). |
| --- | --- |

4.6

EU electricity production is expected to increase by 51 % between 2000 and 2030 (BL-05). An increasing share of electricity will be produced in the form of combined heat and power (up almost 10 percentage points to reach 24 % CHP share in 2030). The structure of power generation changes significantly in favour of renewables and natural gas while nuclear and solid fuels losing market shares.

EU electricity production

BL-05

In the HLEER-04 scenario the overall electricity production in 2030 is projected to fall 16 % from BL-04 levels. Solid fuels and nuclear energy decrease by similar amounts of electricity generation in absolute terms (-9.3 % from BL-04 in 2030 respectively).

HLEER-04

BL-04

BL-04

| 4.7 | Oil remains the most important fuel, although its consumption in 2030 should not exceed the current level (BL-05). Natural gas demand is expected to expand considerably (38 % up to 2030) after the substantial increase already seen in the 1990s. Solid fuels are projected to decrease somewhat by 2020 but return almost to the current level in 2030, following the high oil and gas prices and the nuclear phase-out in certain Member States.
  In HLEER-04 scenario lower energy needs, combined with promotional policies for RES, significantly reduce future demand for fossil fuels. The biggest decline occurs for solid fuels (-37.5 % from BL-04 levels). |
| --- | --- |

4.7

Oil remains the most important fuel, although its consumption in 2030 should not exceed the current level (BL-05). Natural gas demand is expected to expand considerably (38 % up to 2030) after the substantial increase already seen in the 1990s. Solid fuels are projected to decrease somewhat by 2020 but return almost to the current level in 2030, following the high oil and gas prices and the nuclear phase-out in certain Member States.

Oil

BL-05

Natural gas

Solid fuels

In HLEER-04 scenario lower energy needs, combined with promotional policies for RES, significantly reduce future demand for fossil fuels. The biggest decline occurs for solid fuels (-37.5 % from BL-04 levels).

HLEER-04

BL-04

| 4.8 | Renewables increase more than the other fuels in relative terms in BL-05 (more than doubling their contribution from current levels by the year 2030). They contribute nearly as much as natural gas towards the increase of energy demand.
  In the HLEER-04 scenario promotional policies for RES bring a large increase in renewables deployment in the EU-25 energy system. The increase is 43.3 % above the BL-04 levels in 2030. |
| --- | --- |

4.8

Renewables increase more than the other fuels in relative terms in BL-05 (more than doubling their contribution from current levels by the year 2030). They contribute nearly as much as natural gas towards the increase of energy demand.

Renewables

BL-05

In the HLEER-04 scenario promotional policies for RES bring a large increase in renewables deployment in the EU-25 energy system. The increase is 43.3 % above the BL-04 levels in 2030.

HLEER-04

BL-04

| 4.9 | Nuclear in the BL-05 is somewhat smaller in 2030 than it was in 2000 (-11 %), because of the political decisions on nuclear phase-out in certain old Member States and plants with safety concerns in some new Member States.
  In the HLEER-04 scenario the share of nuclear would be 19.9 % smaller than in the BL-04. |
| --- | --- |

4.9

Nuclear in the BL-05 is somewhat smaller in 2030 than it was in 2000 (-11 %), because of the political decisions on nuclear phase-out in certain old Member States and plants with safety concerns in some new Member States.

Nuclear

BL-05

In the HLEER-04 scenario the share of nuclear would be 19.9 % smaller than in the BL-04.

HLEER-04

BL-04

| 4.10 | Import dependency continues to grow reaching 65 % in 2030, which is up nearly 15 % points from today's level (BL-05). Import dependency for oil continues to be highest reaching 94 % in 2030. Natural gas import dependency rises from just over 50 % at present to 84 % in 2030. Similarly, solid fuel supplies will be increasingly based on imports reaching 59 % in 2030.
  In the HLEER-04 scenario import dependency would be 4–6 % lower than in the BL-04. |
| --- | --- |

4.10

Import dependency continues to grow reaching 65 % in 2030, which is up nearly 15 % points from today's level (BL-05). Import dependency for oil continues to be highest reaching 94 % in 2030. Natural gas import dependency rises from just over 50 % at present to 84 % in 2030. Similarly, solid fuel supplies will be increasingly based on imports reaching 59 % in 2030.

Import dependency

BL-05

In the HLEER-04 scenario import dependency would be 4–6 % lower than in the BL-04.

HLEER-04

BL-04

| 4.11 | Carbon dioxide emissions sank between 1990 and 2000. Today they have returned to the 1990 level. Over the next years, carbon dioxide emissions are projected to increase exceeding the 1990 level by 3 % in 2010 and by 5 % in 2030. In the long term, the moderate further carbon dioxide increase reflects low energy consumption growth and the rather strong role of the carbon dioxide free sources renewables and nuclear.
  In the HLEER-04 scenario carbon dioxide emissions are considerably lower than under BL-04 developments (-11.9 % from the BL-04 levels in 2010 and -22.5 % in 2030). The decrease from 2000 would be close to 10 %. |
| --- | --- |

4.11

Carbon dioxide emissions sank between 1990 and 2000. Today they have returned to the 1990 level. Over the next years, carbon dioxide emissions are projected to increase exceeding the 1990 level by 3 % in 2010 and by 5 % in 2030. In the long term, the moderate further carbon dioxide increase reflects low energy consumption growth and the rather strong role of the carbon dioxide free sources renewables and nuclear.

Carbon dioxide emissions

In the HLEER-04 scenario carbon dioxide emissions are considerably lower than under BL-04 developments (-11.9 % from the BL-04 levels in 2010 and -22.5 % in 2030). The decrease from 2000 would be close to 10 %.

HLEER-04

BL-04

5.   Policy challenges

5.1   Price developments

| 5.1.1 | Price increases that are demand-driven and global — although they affect consumers — do not have a strong effect on the national economies, when price increases create demand in producer countries. Price increases in one economic area, as now partly is the case with electricity, harm both consumers and competitiveness. Higher prices, in the longer term, change the competitive situation of different energy sources and technologies, the profitability of efficiency measures as well as behaviour in general. |
| --- | --- |

5.1.1

Price increases that are demand-driven and global — although they affect consumers — do not have a strong effect on the national economies, when price increases create demand in producer countries. Price increases in one economic area, as now partly is the case with electricity, harm both consumers and competitiveness. Higher prices, in the longer term, change the competitive situation of different energy sources and technologies, the profitability of efficiency measures as well as behaviour in general.

| 5.1.2 | Oil and oil product prices have risen dramatically in recent years. Several reasons could keep oil prices high or even raise them in the years to come, mainly:






  — | strong demand-side pressures from fast economic growth in Asian countries, |
| --- | --- | --- |

5.1.2

Oil and oil product prices have risen dramatically in recent years. Several reasons could keep oil prices high or even raise them in the years to come, mainly:

Oil and oil product

—

strong demand-side pressures from fast economic growth in Asian countries,

| — | under investment in supply infrastructure, as well as |
| --- | --- |

—

under investment in supply infrastructure, as well as

| — | geopolitical factors and political instability. |
| --- | --- |

—

geopolitical factors and political instability.

| 5.1.3 | Gas prices have risen strongly in all regions, following oil prices. In Europe gas prices are normally indexed to oil prices. As European supplies are concentrated in Russia and Norway, and LNG is not likely to become competitive soon, the price link will remain. Gas-to-gas competition could put downward pressure on gas prices, but the effect would largely be offset by rising supply costs. |
| --- | --- |

5.1.3

Gas prices have risen strongly in all regions, following oil prices. In Europe gas prices are normally indexed to oil prices. As European supplies are concentrated in Russia and Norway, and LNG is not likely to become competitive soon, the price link will remain. Gas-to-gas competition could put downward pressure on gas prices, but the effect would largely be offset by rising supply costs.

Gas

| 5.1.4 | Coal prices are likely to be moderate in the long term, because many market fundamentals remain unchanged. There are many existing and potential suppliers, the market is still highly competitive and coal prices are expected to remain low relative to the prices of other primary energy commodities. |
| --- | --- |

5.1.4

Coal prices are likely to be moderate in the long term, because many market fundamentals remain unchanged. There are many existing and potential suppliers, the market is still highly competitive and coal prices are expected to remain low relative to the prices of other primary energy commodities.

Coal

| 5.1.5 | The capital costs of renewable energy are assumed to go on declining in the future. The fastest rate of decline will come in costs of photovoltaics, which is today's most capital-intensive energy system. Substantial decreases are also expected in the capital costs of offshore wind, solar thermal and tidal and wave technologies. The cost of hydropower generally is low and stable, the potential for newbuild is limited and increasingly costly. |
| --- | --- |

5.1.5

The capital costs of renewable energy are assumed to go on declining in the future. The fastest rate of decline will come in costs of photovoltaics, which is today's most capital-intensive energy system. Substantial decreases are also expected in the capital costs of offshore wind, solar thermal and tidal and wave technologies. The cost of hydropower generally is low and stable, the potential for newbuild is limited and increasingly costly.

renewable energy

| 5.1.6 | Electricity prices have risen in the EU for several reasons. Higher gas prices contribute to electricity prices in most parts of the EU, where gas is the marginal fuel for generation. It is difficult, however, to justify higher prices for electricity generated in coal-fired power stations by reference to rising raw material prices. The tightening balance between supply and demand also has started to reflect on prices. Energy supply companies sometimes quote emissions trading as the reason for higher prices adding the ‘cost’ of emissions rights to retail prices, although they have been allocated these rights free of charge. Measures to support renewable energy sources have in some cases increased electricity prices, as have also taxes and other levies. In addition, the Commission presently investigates whether insufficient competition in the electricity market has had an adverse effect on prices. |
| --- | --- |

5.1.6

Electricity prices have risen in the EU for several reasons. Higher gas prices contribute to electricity prices in most parts of the EU, where gas is the marginal fuel for generation. It is difficult, however, to justify higher prices for electricity generated in coal-fired power stations by reference to rising raw material prices. The tightening balance between supply and demand also has started to reflect on prices. Energy supply companies sometimes quote emissions trading as the reason for higher prices adding the ‘cost’ of emissions rights to retail prices, although they have been allocated these rights free of charge. Measures to support renewable energy sources have in some cases increased electricity prices, as have also taxes and other levies. In addition, the Commission presently investigates whether insufficient competition in the electricity market has had an adverse effect on prices.

Electricity

5.2   Security of supply

| 5.2.1 | In its Green Paper on security of supply the Commission pointed out its serious concern on the issue. EU external energy dependence was forecasted to grow from 50 % to 70 % in three decades. In its Opinion on the Green Paper the EESC (2) strongly shared this concern. Today the question of security of supply is even much more pressing. |
| --- | --- |

5.2.1

In its Green Paper on security of supply the Commission pointed out its serious concern on the issue. EU external energy dependence was forecasted to grow from 50 % to 70 % in three decades. In its Opinion on the Green Paper the EESC (2) strongly shared this concern. Today the question of security of supply is even much more pressing.

Green Paper

2

| 5.2.2 | Dependence on oil imports from external sources is growing and increasingly concentrated in the Middle East. Also growing gas demand increases dependence on external sources is growing and concentrating on Russia. An additional concern is transportation via long pipelines often through politically unstable regions. |
| --- | --- |

5.2.2

Dependence on oil imports from external sources is growing and increasingly concentrated in the Middle East. Also growing gas demand increases dependence on external sources is growing and concentrating on Russia. An additional concern is transportation via long pipelines often through politically unstable regions.

Dependence on

imports

| 5.2.3 | Some network failures have pointed the attention, in addition to managerial and some regulatory problems, to insufficient investments in relation to increased transmission demand and distances. The interconnection of both electricity and gas grids throughout Europe has advanced, but important structural bottlenecks exist between Member States. Regulation of networks has to support safety, quality and sufficient investment. |
| --- | --- |

5.2.3

Some network failures have pointed the attention, in addition to managerial and some regulatory problems, to insufficient investments in relation to increased transmission demand and distances. The interconnection of both electricity and gas grids throughout Europe has advanced, but important structural bottlenecks exist between Member States. Regulation of networks has to support safety, quality and sufficient investment.

Some network failures

| 5.2.4 | Investments in power stations and oil refineries have been low in the last two decades. As for electricity, the period of overcapacity is ending and investments of 600-750 GW of power generation capacity are needed until 2030 in order to meet rising electricity demand and replace ageing plants. The need for investment in additional generation capacity, in particular for peak load, could be partly counteracted by fully interconnected grids. |
| --- | --- |

5.2.4

Investments in power stations and oil refineries have been low in the last two decades. As for electricity, the period of overcapacity is ending and investments of 600-750 GW of power generation capacity are needed until 2030 in order to meet rising electricity demand and replace ageing plants. The need for investment in additional generation capacity, in particular for peak load, could be partly counteracted by fully interconnected grids.

Investments

| 5.2.5 | EU policies to increase the use of renewable energy sources are a powerful move to counteract increasing external dependence. At the same time greenhouse gas emissions will be mitigated and, in some cases, grid dependence decreased. In the case of biomass and biofuels, longer term optimal use of land has to be observed. |
| --- | --- |

5.2.5

EU policies to increase the use of renewable energy sources are a powerful move to counteract increasing external dependence. At the same time greenhouse gas emissions will be mitigated and, in some cases, grid dependence decreased. In the case of biomass and biofuels, longer term optimal use of land has to be observed.

use of renewable

| 5.2.6 | Uranium is to 95 % imported to the EU from various sources. According to the IAEA and the OECD–Nuclear Energy Agency present known economic uranium sources should satisfy world demand at its present level for 50 years. Potential deposits based on geological readings defer the exhaustion prospect to 280 years. Later on new technologies may provide further fuel supply options. |
| --- | --- |

5.2.6

Uranium is to 95 % imported to the EU from various sources. According to the IAEA and the OECD–Nuclear Energy Agency present known economic uranium sources should satisfy world demand at its present level for 50 years. Potential deposits based on geological readings defer the exhaustion prospect to 280 years. Later on new technologies may provide further fuel supply options.

Uranium

5.3   Climate change

| 5.3.1 | The EU has taken the global lead in tackling climate change. EU policies are unique, highly advanced and ambitious, in particular the emissions trading scheme and enhancing renewables. Many other parts of the world, including the biggest emitters, have not followed suit. |
| --- | --- |

5.3.1

The EU has taken the global lead in tackling climate change. EU policies are unique, highly advanced and ambitious, in particular the emissions trading scheme and enhancing renewables. Many other parts of the world, including the biggest emitters, have not followed suit.

The EU has taken the global lead

| 5.3.2 | In the context of global warming trends the Kyoto targets are modest, but nevertheless they seem to be hard to meet for most EU Member States. |
| --- | --- |

5.3.2

In the context of global warming trends the Kyoto targets are modest, but nevertheless they seem to be hard to meet for most EU Member States.

| 5.3.3 | Most reductions so far have been achieved by substituting coal by gas in heating and electricity generation (in the UK) and through closing down and renewing old production units in the eastern parts of Germany. Many of the present and future emission reductions are more cumbersome and costly. |
| --- | --- |

5.3.3

Most reductions so far have been achieved by substituting coal by gas in heating and electricity generation (in the UK) and through closing down and renewing old production units in the eastern parts of Germany. Many of the present and future emission reductions are more cumbersome and costly.

reductions so far

| 5.3.4 | It is necessary to find a global solution to post-Kyoto climate policies, involving at least all major emitters. Otherwise there will not be any significant development in mitigating climate change, but there could be a risk of harming the EU's economic and social developments. |
| --- | --- |

5.3.4

It is necessary to find a global solution to post-Kyoto climate policies, involving at least all major emitters. Otherwise there will not be any significant development in mitigating climate change, but there could be a risk of harming the EU's economic and social developments.

find a global solution to post-Kyoto

6.   Future options

6.1   Long-term vision

| 6.1.1 | At present it seems that one ideal future energy vision, minimizing environmental and climate impacts as well as securing sufficient global supply, would consist of renewable energy sources for heat and variable electricity loads, nuclear fusion for base load and the use of hydrogen as an energy carrier. Such an energy mix is not expected to be operational by 2050, probably much later. Another vision shows high energy efficiency, renewables supported by a technological solution to electricity storage — for instance hydrogen — and coal coupled with CO2 capture and storage. |
| --- | --- |

6.1.1

At present it seems that one ideal future energy vision, minimizing environmental and climate impacts as well as securing sufficient global supply, would consist of renewable energy sources for heat and variable electricity loads, nuclear fusion for base load and the use of hydrogen as an energy carrier. Such an energy mix is not expected to be operational by 2050, probably much later. Another vision shows high energy efficiency, renewables supported by a technological solution to electricity storage — for instance hydrogen — and coal coupled with CO2 capture and storage.

one ideal future energy vision

| 6.1.2 | Fusion technology still entails big challenges and uncertainty. Some basic technical breakthroughs are needed and, in particular, much development to reach economic viability. A widespread hydrogen economy, again, requires abundant availability of electricity. Hydrogen based on renewables or gas cannot, at least not alone, provide for a fully-fledged hydrogen economy. |
| --- | --- |

6.1.2

Fusion technology still entails big challenges and uncertainty. Some basic technical breakthroughs are needed and, in particular, much development to reach economic viability. A widespread hydrogen economy, again, requires abundant availability of electricity. Hydrogen based on renewables or gas cannot, at least not alone, provide for a fully-fledged hydrogen economy.

Fusion

hydrogen

| 6.1.3 | The global potential of renewable energy sources, when taking into account some natural limitations and the economy, is difficult to establish. Some studies have pointed to the possibility of close to a 100 % share of renewables in 2050 in Europe, but this view is not broadly shared nor do Commission scenarios support this — even the most renewables-intensive alternative scenario gives a 15 % share of renewables in 2030. So far the use of renewable energy sources in EU-25 has developed slower than targets set. |
| --- | --- |

6.1.3

The global potential of renewable energy sources, when taking into account some natural limitations and the economy, is difficult to establish. Some studies have pointed to the possibility of close to a 100 % share of renewables in 2050 in Europe, but this view is not broadly shared nor do Commission scenarios support this — even the most renewables-intensive alternative scenario gives a 15 % share of renewables in 2030. So far the use of renewable energy sources in EU-25 has developed slower than targets set.

renewable energy sources

6.2   Energy efficiency

| 6.2.1 | Energy efficiency and energy saving are key elements of energy policy. The EESC has recently, in its Opinion responding to the Green Paper on energy efficiency, strongly supported actions in this policy area and commented on a large number of potential instruments and measures. |
| --- | --- |

6.2.1

Energy efficiency and energy saving are key elements of energy policy. The EESC has recently, in its Opinion responding to the Green Paper on energy efficiency, strongly supported actions in this policy area and commented on a large number of potential instruments and measures.

| 6.2.2 | Better efficiency has an influence on the future energy mix. The relative decrease in demand would through market forces be directed to a decreased use of the most uneconomic source of supply, or possibly by political measures to the least desired source. |
| --- | --- |

6.2.2

Better efficiency has an influence on the future energy mix. The relative decrease in demand would through market forces be directed to a decreased use of the most uneconomic source of supply, or possibly by political measures to the least desired source.

| 6.2.3 | In its recent Green Paper on energy efficiency the Commission estimates the potential of economic efficiency improvements to be 20 %, 1.5 % annually and thereby going back to the demand level of 1990 for EU-25. The scenarios published by the Commission do not show such a decrease by 2030, not even the one assuming the strongest policy measures. |
| --- | --- |

6.2.3

In its recent Green Paper on energy efficiency the Commission estimates the potential of economic efficiency improvements to be 20 %, 1.5 % annually and thereby going back to the demand level of 1990 for EU-25. The scenarios published by the Commission do not show such a decrease by 2030, not even the one assuming the strongest policy measures.

| 6.2.4 | The EESC in its opinion strongly supports the idea of better energy efficiency as a prerequisite for sustainable development, competitiveness and economic independence. Better energy efficiency simply makes good economic sense, when not driven too far. Enhancing energy efficiency is an everyday practice in enterprises and voluntary agreements a functioning tool. In other sectors many measures are required, like awareness and knowledge spreading as well as appropriate economic measures. The EESC sees, however, the goals presented in the Green Paper as optimistic. |
| --- | --- |

6.2.4

The EESC in its opinion strongly supports the idea of better energy efficiency as a prerequisite for sustainable development, competitiveness and economic independence. Better energy efficiency simply makes good economic sense, when not driven too far. Enhancing energy efficiency is an everyday practice in enterprises and voluntary agreements a functioning tool. In other sectors many measures are required, like awareness and knowledge spreading as well as appropriate economic measures. The EESC sees, however, the goals presented in the Green Paper as optimistic.

| 6.2.5 | In spite of efficiency measures, in the light of the scenarios it seems unlikely that energy demand would turn towards a decrease before 2030 in EU-25, possibly it could even increase. A stronger development of energy efficiency would bring great benefits. |
| --- | --- |

6.2.5

In spite of efficiency measures, in the light of the scenarios it seems unlikely that energy demand would turn towards a decrease before 2030 in EU-25, possibly it could even increase. A stronger development of energy efficiency would bring great benefits.

6.3   Options in fields of use

In order to analyse energy mix options in relation to the above-mentioned policy challenges, it is helpful to look at the different sectors of primary energy use — transport, heating and electricity separately. They are only marginally interdependent.

6.3.1   Transport

| 6.3.1.1 | Transport is almost fully dependent on liquid fuels, in practice oil products. Presently the only substitute is, to some extent, electrical rail transport. A small but growing part of gas is used in public transport, which provides for diversification but encounters the questions linked to increased use of gas. |
| --- | --- |

6.3.1.1

Transport is almost fully dependent on liquid fuels, in practice oil products. Presently the only substitute is, to some extent, electrical rail transport. A small but growing part of gas is used in public transport, which provides for diversification but encounters the questions linked to increased use of gas.

dependent on liquid fuels

| 6.3.1.2 | EU has a target for substituting oil-based fuels with biofuels up to 5.75 % by 2010. With present high oil prices much higher substitution rates are widely discussed. The Commission presented a Communication on increased use of biofuels in February 2006 (Biomass Action Plan). When planning for policies in that direction many factors have to be taken into account, like net energy balances, trade, finance, environment and agricultural policies as well as costs to users. Additional important issues are a secured continuous supply as well as the impact on alternative uses of biomass. |
| --- | --- |

6.3.1.2

EU has a target for substituting oil-based fuels with biofuels up to 5.75 % by 2010. With present high oil prices much higher substitution rates are widely discussed. The Commission presented a Communication on increased use of biofuels in February 2006 (Biomass Action Plan). When planning for policies in that direction many factors have to be taken into account, like net energy balances, trade, finance, environment and agricultural policies as well as costs to users. Additional important issues are a secured continuous supply as well as the impact on alternative uses of biomass.

biofuels

| 6.3.1.3 | Fuel cell driven cars are in the testing phase. A key issue is what the fuel would be. In the future hydrogen may be produced from renewables or natural gas as well as from water by electricity. So far, fuel cells are much more expensive than combustion motors. |
| --- | --- |

6.3.1.3

Fuel cell driven cars are in the testing phase. A key issue is what the fuel would be. In the future hydrogen may be produced from renewables or natural gas as well as from water by electricity. So far, fuel cells are much more expensive than combustion motors.

Fuel cell

| 6.3.1.4 | Electricity can offer a viable alternate as an energy carrier for transport, for example plug-in hybrid vehicles. |
| --- | --- |

6.3.1.4

Electricity can offer a viable alternate as an energy carrier for transport, for example plug-in hybrid vehicles.

| 6.3.1.5 | There is no fast way in sight to an oil-free transport system. Therefore strong efforts have to be directed to increase energy efficiency in transport by:






  — | better engine and fuel technology, |
| --- | --- | --- |

6.3.1.5

There is no fast way in sight to an oil-free transport system. Therefore strong efforts have to be directed to increase energy efficiency in transport by:

increase energy efficiency

—

better engine and fuel technology,

| — | lighter cars, more efficient road goods transport vehicles, |
| --- | --- |

—

lighter cars, more efficient road goods transport vehicles,

| — | better public transport, supported by road tolls in city centres, |
| --- | --- |

—

better public transport, supported by road tolls in city centres,

| — | transfer as much as possible to rail and waterways, given that they work efficiently, |
| --- | --- |

—

transfer as much as possible to rail and waterways, given that they work efficiently,

| — | counteracting congestion, for instance by flexible working hours. |
| --- | --- |

—

counteracting congestion, for instance by flexible working hours.

Transport needs can be decreased by regional planning and teleworking.

For a more general in-depth analysis of the European transport infrastructure and its future challenges please see the EESC opinion ‘Preparing transport infrastructure for the future: planning and neighbouring countries — sustainable mobility — financing’.

6.3.2   Heating and cooling

| 6.3.2.1 | In Europe predominantly fossil fuels are used for heating — oil, gas and coal. The share of gas is increasing fast. Electricity is used to some extent, while biomass has entered the scene in the north and solar in the south. For cooling electricity is still the dominant source, but other options, in particular district cooling services from CHP-plants are gaining ground. |
| --- | --- |

6.3.2.1

In Europe predominantly fossil fuels are used for heating — oil, gas and coal. The share of gas is increasing fast. Electricity is used to some extent, while biomass has entered the scene in the north and solar in the south. For cooling electricity is still the dominant source, but other options, in particular district cooling services from CHP-plants are gaining ground.

predominantly fossil fuels

| 6.3.2.2 | 40 % of energy in Europe is used in buildings, for heating and cooling. According to experts the potential for better energy efficiency and savings is big, and the EU has already acted on this. |
| --- | --- |

6.3.2.2

40 % of energy in Europe is used in buildings, for heating and cooling. According to experts the potential for better energy efficiency and savings is big, and the EU has already acted on this.

energy efficiency

| 6.3.2.3 | Renewables have a big potential in this area. Biomass could be much more widely used in modern area or district heating and cooling systems, combined with electricity production when applicable. Geothermal energy offers almost untapped potentials. Solar heating is surprisingly little developed in some southern countries. In addition, the extraction of ambient heat via heat pumps represent an abundant and energy efficient source of renewable energy. |
| --- | --- |

6.3.2.3

Renewables have a big potential in this area. Biomass could be much more widely used in modern area or district heating and cooling systems, combined with electricity production when applicable. Geothermal energy offers almost untapped potentials. Solar heating is surprisingly little developed in some southern countries. In addition, the extraction of ambient heat via heat pumps represent an abundant and energy efficient source of renewable energy.

Renewables

| 6.3.2.4 | Heating and cooling represent very local use of energy. Measures to enhance efficient energy use in buildings need to be taken locally. At the EU-level actions should be taken to support technology development, share knowledge and best practices and ensure a functioning internal market for related products and services. |
| --- | --- |

6.3.2.4

Heating and cooling represent very local use of energy. Measures to enhance efficient energy use in buildings need to be taken locally. At the EU-level actions should be taken to support technology development, share knowledge and best practices and ensure a functioning internal market for related products and services.

6.3.3   Electricity

| 6.3.3.1 | Sources of electricity generation are diverse — coal, gas, oil, hydro, nuclear and wind as well as non-fossil solid fuels, like biomass. Photovoltaic and tidal technologies are under development. |
| --- | --- |

6.3.3.1

Sources of electricity generation are diverse — coal, gas, oil, hydro, nuclear and wind as well as non-fossil solid fuels, like biomass. Photovoltaic and tidal technologies are under development.

diverse

| 6.3.3.2 | The majority of power plants in Europe are coming up for replacement in the near future. This is the case for the major kind of plants, based on fossil fuels, as well as for nuclear. This gives a unique possibility for a major move towards non-carbon energy sources and at the same time a decrease in external dependency as well as an improvement of efficiency in electricity generation. |
| --- | --- |

6.3.3.2

The majority of power plants in Europe are coming up for replacement in the near future. This is the case for the major kind of plants, based on fossil fuels, as well as for nuclear. This gives a unique possibility for a major move towards non-carbon energy sources and at the same time a decrease in external dependency as well as an improvement of efficiency in electricity generation.

power plants

replacement

| 6.3.3.3 | Energy efficiency measures can be adopted throughout the electricity chain — from fuel and power plant technology to eco-efficient design of electricity-using products. |
| --- | --- |

6.3.3.3

Energy efficiency measures can be adopted throughout the electricity chain — from fuel and power plant technology to eco-efficient design of electricity-using products.

Energy efficiency

| 6.3.3.4 | The general view is, however, that electricity demand will still grow for a few decades and nearly 400 GW of new power plants, or some 400-800 of them, have to be constructed in the EU-25 in order to cover increased demand. In addition new plants of hundreds of GW are needed to replace old ones. |
| --- | --- |

6.3.3.4

The general view is, however, that electricity demand will still grow for a few decades and nearly 400 GW of new power plants, or some 400-800 of them, have to be constructed in the EU-25 in order to cover increased demand. In addition new plants of hundreds of GW are needed to replace old ones.

electricity demand will still grow

| 6.3.3.5 | An optimal power supply mix includes different types of generation capacity, responding to different demands. Base load capacity, for stable and continuous demand, is optimally provided by hydropower, nuclear or combustion plants using less expensive fuels like coal. Variable loads — the majority of use — require easily regulated supply, like hydropower or thermal power. Peak loads are preferably supplied by plants with low capital costs, usually coupled with high running costs, like gas turbines. Base load capacity can also be utilised to increase hydropower for peak load use. The use of intermittent power sources requires easily regulated back-up supply. |
| --- | --- |

6.3.3.5

An optimal power supply mix includes different types of generation capacity, responding to different demands. Base load capacity, for stable and continuous demand, is optimally provided by hydropower, nuclear or combustion plants using less expensive fuels like coal. Variable loads — the majority of use — require easily regulated supply, like hydropower or thermal power. Peak loads are preferably supplied by plants with low capital costs, usually coupled with high running costs, like gas turbines. Base load capacity can also be utilised to increase hydropower for peak load use. The use of intermittent power sources requires easily regulated back-up supply.

optimal power supply mix

| 6.3.3.6 | Sufficient and successfully functioning transmission grids, including interconnectors, are needed to make the use of power plants more efficient and decrease the need for newbuild. On the other hand, the system needs to be optimized so as not to use long distance transmission instead of building power plants where demand is high. Distributed generation, preferably CHP-plants, are an option to be developed. Well designed demand-side management could decrease peak demand in a well functioning market. |
| --- | --- |

6.3.3.6

Sufficient and successfully functioning transmission grids, including interconnectors, are needed to make the use of power plants more efficient and decrease the need for newbuild. On the other hand, the system needs to be optimized so as not to use long distance transmission instead of building power plants where demand is high. Distributed generation, preferably CHP-plants, are an option to be developed. Well designed demand-side management could decrease peak demand in a well functioning market.

transmission grids,

Brussels, 13 September 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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(1)  Dir. 2003/30/EC, OJ L 123 of 17.05.2003.

1

(2)  ‘Towards a European Strategy for Energy Supply Security’, OJ C 221 of 07.08.2001.

2

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APPENDIX

to the Opinion of the European Economic and Social Committee

The following proposal for amendment was rejected, but received at least a quarter of the votes cast.

New point, 2.2.1

‘The EESC would point out that the forecasts on which this opinion is based could prove to be wrong or out-dated in the light of current developments on the energy markets, in particular the trend in the price of oil. In the case of all forecasts, a factor of decisive importance is the general terms of reference used and over the last few months the data in question has changed to a crucial degree. To illustrate this point, a study
   (1)
  drawn up on behalf of the Federal Ministry of Economic Affairs in Germany came to the conclusion that, on the basis of a future price of oil of USD 60 per barrel — the price level which is now expected — energy consumption is set to decline by 17 % by 2030 and there will be an increase in the use of coal and renewable sources of energy. Hitherto, it was assumed, on the basis an expected future price of oil of USD 37 a barrel, that energy consumption would increase.’

Reason

Clearly, any assertions we make have to be based on particular forecasts and the rapporteur rightly quotes scenarios advanced by the International Energy Agency and the European Commission. The EESC should, however, at least incorporate the latest developments into its opinion, without having to change its conclusions as a result.

Outcome of the vote:

For: 69

Against: 85

Abstentions: 19

Point 2.3

Amend as follows:

‘Choices of energy sources and technologies are made by investors and can be influenced by political decisions. The EU does not have direct power over Member States' choices of sources, but influences indirectly through its environmental mandate. Member States should facilitate the use of their domestic resources as far as possible. The choices Member States make influence one another. Also, energy users in Member States without, for instance, nuclear or coal power production are part of an electricity market where nuclear and coal are used.’

Reason

This statement is incorrect as currently formulated. Countries which do without, or intend to do without, nuclear energy often have sufficient alternative generating capacity. The fact that, for example, nuclear power is imported into Germany from France or the Czech Republic has to do with the European internal market and the fact that surplus capacity has been deliberately generated in certain countries. It is not because an alleged energy shortfall can only be covered by foreign nuclear power stations.

Outcome of the vote:

For: 60

Against: 115

Abstentions: 13

Point 5.2.6

Amend as follows:

‘Uranium is to 95 % imported to the EU from various sources. According to the IAEA and the OECD–Nuclear Energy Agency present known economic uranium sources should satisfy world demand at its present level for 50 years. Potential deposits based on geological readings defer the exhaustion prospect to 280 years. This period is likely to be radically shortened, however, if certain countries' nuclear power plant construction plans come to fruition. Thus, for example, India is planning to increase its nuclear power generation capacity from 3,000 MW at present to 300,000 MW, which would clearly have a serious impact on the global availability of uranium. Later on new technologies may provide further fuel supply options, but such technologies are not yet proven or actually available.’

Reason

Clarification.

Outcome of the vote:

For: 62

Against: 124

Abstentions: 6

Point 6.3.3.2

Amend as follows:

‘The majority of power plants in Europe are coming up for replacement in the near future. This is the case for the major kind of plants, based on fossil fuels, as well as for nuclear. This gives a unique possibility for a major move towards non-carbon energy sources less environmentally damaging energy generation systems (district heating plants and clean coal technology) and at the same time a decrease in external dependency as well as an improvement of efficiency in electricity generation.’

Reason

Self-explanatory. See also the observations on clean coal technologies set out in points 1.17 and 1.18 of the opinion.

Outcome of the vote:

For: 62

Against: 121

Abstentions: 12

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(1)  Study drawn up by the Prognos Institut of Basel and the Energy Industry Institute (Energiewirtschaftliches Institut) of the University of Cologne.

1

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