EN Official Journal of the European Union C 211/17

Opinion of the European Economic and Social Committee on ‘Towards a common energy policy’

(2008/C 211/05)

On 27 September 2007, the European Economic and Social Committee decided to draw up an opinion, under Rule 29(2) of its Rules of Procedure, on

Towards a common energy policy.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 4 April 2008. The rapporteur was Mr Buffetaut.

At its 444th plenary session, held on 22 and 23 April 2008 (meeting of 23 April), the European Economic and Social Committee adopted the following opinion by 173 votes, with 13 abstentions.

1. Conclusions and recommendations

1.1 The question of energy supply, the diversification of energy sources and the development of renewable energy sources is fundamental to the future of Europe, the global equilibrium and combating climate change.

1.2 The EESC believes that the European Union provides an appropriate platform for bringing pressure to bear in the worldwide confrontation arising from the race to secure energy resources and tackle climate change, since it is large enough to have a strong political influence in international negotiations.

1.3 It is pleased to note that Title XX on energy has been incorporated into the draft Lisbon Treaty, since this will reinforce the legal basis for the European Union's activities in this area.

1.4 The EESC emphasises the crucial importance of research and development in the field of sustainable energy and a sustainable environment, and of the proper allocation of resources. Good judgement is imperative when studying the promotion of energies and energy-saving and emission-reduction technologies that are not expected to achieve economic balance, in order to avoid wasting public funds subsidising technologies which have no future. Resources for research should be channelled instead towards technologies deemed by the scientific community to have a promising future, such as technology for minimising or capturing greenhouse gas emissions, energy efficiency, clean coal, vehicle propulsion using electricity or other alternative means, fuel cells, solar energy, reclaiming energy from waste, nuclear fusion and nuclear waste disposal.

1.5 It also highlights the importance of energy efficiency of equipment and buildings.

1.6 It believes that a genuine purchasing policy should be introduced at European level in order to cope with the pressure exerted by producers who are often highly organised, and recommends that policies and positions on energy be coordinated at EU level within international bodies such as the WTO, UN, NATO and OECD.

1.7 It stresses the importance of diversifying supply sources and recommends that a constructive attitude tempered with caution be adopted as regards partnerships with Russia and the Caucasian and Central Asian republics.

1.8 It insists that it would be appropriate to examine the possibility of reviving nuclear energy programmes in countries where there is a consensus on this point and stepping up research into the reprocessing of waste material. It also encourages the development of research into nuclear fusion under Euratom's Seventh Framework Programme for Research and ITER.

1.9 It believes that there is a need for greater cooperation and coordination in energy policy and in representation and action in international bodies, that the neighbourhood policy should be taken further as regards energy and that thought must be given to introducing a common energy policy in due course, possibly based on its own institutions. It believes that the surge in commercial interest in renewable energy throughout the EU reflects people's interest in this field. This situation coincides with the new common energy policy laid down in the draft Treaty of Lisbon and could be the strategic opportunity for it to be accepted and developed.

2. Introduction: the reasons for a European energy policy

2.1 A difficult geostrategic situation

2.1.1 The International Energy Agency anticipates a 55 % increase in global energy demand by 2030.

2.1.2 The European Union is largely dependent for solid fossil fuels, petroleum products and natural gas and this dependency is set to increase in coming years. The EU is 80 % dependent for fossil fuels, and its energy imports are expected to rise from 50 % to 70 % by 2030.

2.1.3 Exhaustion of known oil reserves is to be expected from 2050, while other resources which are not currently exploited will become economically exploitable in the future owing to growing demand and technical progress.

2.1.4 The transition to other forms of energy is inevitable but will be difficult. The world has, however, already experienced similar changes before, particularly in the 19th century when fossil fuels from biomass (primarily wood) gave way to coal, then oil. However, our methods of harnessing renewable energy are not yet sufficient to cause a shift comparable to that experienced in the 19th century.

2.1.5 The difficulties are due to a number of factors: energy density, the land surface needed to produce biofuels (at the expense of other, mainly agricultural, activities), the intermittent and unpredictable nature of the inputs (wind, solar energy, tides) which requires thorough planning for storage capacities and the geographical distribution of renewable energy sources. As regards nuclear energy, even if we were to launch a very ambitious policy of rehabilitating old and building new power plants, the global nuclear industry would still not be able to satisfy demand.

2.1.6 Europe is characterised by major energy dependency. It currently imports 50 % of its energy requirements and this dependency is set to reach 70 % by 2030. Europe would thus be 90 % dependent for oil and 70 % dependent for gas!

2.1.7 In March 2006, the European Council produced a disturbing report, which highlighted: — the difficult situation of the gas and oil markets, — the growing dependency of the European Union, — high and volatile energy prices, which have increased still further since then, — the growing global demand for energy, — risks to security of supply, — threats connected to climate change, — slow progress in energy efficiency and the use of renewable energy, — the need to increase transparency in the energy markets and to pursue the integration and interconnection of national energy markets in the context of the liberalisation of the energy market, — limited coordination between energy players although large investments are needed in energy infrastructure. This disturbing report has inspired the proposals set out in the new energy package which is to some extent a response to the challenges which must be met.

2.1.8 European leaders must therefore deal with two problems: dwindling traditional primary resources and the problematic geographical situation of those resources, most of which are in politically unstable countries which could use their resources to bring pressure to bear on dependent countries, as has already occurred.

2.2 The European Union: a suitable framework?

2.2.1 Every Member State of the European Union is affected, but evidence suggests that fragmented individual action is a handicap when confronting producers who are often organised.

2.2.2 It is therefore in the Member States' interests to act together and use the European Union as a lever to frame a common energy policy based on and with the objective of better management of consumption and diversification of the sources of supply.

2.2.3 The European Union has both the appropriate scale and institutional instruments. It is capable of developing trans-national policies, coordinating national policies, bringing about greater consistency at European level as regards energy and finally, developing an energy policy in respect of third countries.

2.2.4 Finally, let us add that after the rejection of the Draft Treaty establishing a Constitution for Europe and in line with the Treaty of Lisbon, a European energy policy might be a uniting factor and provide proof of the practical usefulness of the European Union.

2.3 A legal framework which must evolve

2.3.1 The European Union currently has no powers in the field of energy. Conferring such a power on the Union is one of the major innovations of the draft Lisbon Treaty.

2.3.2 It is true that when the European Economic Community was set up, Euratom and the ECSC dealt with many of the energy issues of the day.

2.3.3 Does this mean however that the European Union has abstained from any action in the field of energy?

2.3.4 Certainly not: under Article 308 of the EC Treaty it has developed a real energy policy, while under Article 154 it has developed a policy on trans-European energy networks (see Decision No 1364/2006/EC). Finally, internal market and competition rules have of course been applied to the energy market (Directive 2003/55/EC on the opening-up of the market in gas, Directive 2003/54/EC on electricity, Directive 90/377/EEC amended by Directive 93/87/ECC on the transparency of gas and electricity prices). The initial effects of this opening-up of the markets and the end of public monopolies have occasionally given rise to concerns regarding energy prices, but in fact, the price rises which have been noted are primarily the result of the rising global demand for limited and sometimes dwindling resources.

2.3.5 To this should be added Commission documents which are not strictly speaking legislative proposals but rather ‘soft law’: the Green Paper on a European strategy for the security of energy supply (28 November 2000), the Communication on Towards a European strategy for the security of energy supply (26 June 2002), the Green Paper on Energy efficiency or doing more with less (22 June 2005), the action plan for the period 2007-2012 (19 October 2006) and the Communication on the Global Energy Efficiency and Renewable Energy Fund (6 October 2006).

2.3.6 Therefore, the European Union has examined energy-related issues in considerable depth but its action has rested on a rather uncertain legal basis, i.e. Article 308 EC, the ‘flexibility clause’, which states that: ‘If action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community, and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, take the appropriate measures’. It has also approached the issue indirectly, through the use of internal market, competition and environment rules. The process was, at least in appearance, more technical and legal than political.

2.3.7 This is precisely why, in view of the pre-eminence of energy in the day-to-day life of Europe's people and in the economic activity and stability of the world, the draft Lisbon Treaty includes Article 176 on energy, which defines the Union's objectives in the field of energy ‘with regard for the need to preserve and improve the environment’ and ‘in a spirit of solidarity between Member States’.

2.3.8 As stated in the future treaty, the European energy policy will aim to: — ensure the functioning of the energy market, — ensure security of energy supply, — promote energy efficiency and energy saving and the development of new and renewable forms of energy, — promote the interconnection of energy networks.

2.3.9 This policy will fall under shared competence where the rule should be qualified majority, except for taxation which will still require unanimity. However, the second subparagraph of Article 176 A(2) stipulates that ‘a Member State's right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply’ is not affected by the measures taken to achieve the objectives identified by the first paragraph of this new article.

2.3.10 The European Union will therefore have competence, the primary, crucial instrument for taking stronger and more concrete action. Will this instrument be enough or must we take further institutional action? But even before designing this instrument, we must frame policies which can evolve under the combined influence of external constraints and the development of services and technology.

3. Which policies?

3.1 European energy policies have so far been subject to economic demands and/or the demands of sustainable development: the determination to liberalise the energy market by means of directives and the policy on network industries, the policy to support energy efficiency, the policy to promote and develop renewable energy, combating CO2 emissions, etc.

3.2 In a way, since the European Union does not have powers in the field of energy, it has approached the issue rather indirectly, using internal market, competition and environment rules. Its action was, at least in appearance, more technical and legal than political.

3.3 This has not prevented it from being highly active in enacting legislation and setting out guidelines for the energy sector. The Union has in fact recently (19 September 2007) issued a series of legislative proposals amending the current texts (amendment to the Regulation on conditions for access to the network for cross-border exchanges in electricity, the Regulation establishing an Agency for the Coordination of Energy Regulators, amendment to the Regulation on conditions for access to the network for cross-border exchanges in natural gas, amendment to the directives on common rules for the internal market in gas and electricity).

3.4 If the Lisbon Treaty is ratified as it stands, the Union will be able to deal with this major area of policy with greater clarity and directness. However, legal competence does not in itself remove all the political, economic and social difficulties. It is well known that there is considerable disparity between national policy choices, particularly as regards nuclear energy. Since the informal European summit held at Hampton Court, the European Council has mapped out the foundations for a genuine European energy policy, reflected in the new energy package prepared by DG Energy and DG Environment.

3.5 As we have seen, the European Union wanted at first to use market mechanisms, with the aim of setting up a competitive market which would supposedly be more efficient and thus, thanks to the trans-European energy networks, achieve an interconnected market.

3.6 It also wanted to promote energy efficiency, particularly in the most energy-intensive sectors: heating and air conditioning of buildings, manufacturing and transport.

3.7 The ambitious target of the action plan for the period 2007-2012 (October 2006) is to save 20 % of the annual consumption of energy by 2020, that is to say a saving of approximately 1,5 % of energy intensity each year until 2020.

3.8 The Union has also placed great emphasis on the need to develop renewable energy. The Union's target in this respect is also very ambitious: 20 % of total energy consumption by 2020, plus a proposed mandatory minimum objective of 10 % for biofuels (Renewable Energy Road Map of 10 January 2007).

3.9 However, these sources have so far had many disadvantages compared to fossil fuels: lower energy density, land usage (photovoltaic fields, for example), intermittency of production and of course the cost of the technologies concerned. So although the relative cost disadvantages are steadily diminishing this means that the move towards these technologies is likely to be gradual and lengthy unless given significantly more political and financial support, and that all new energy sources require in-depth impact assessments (see OECD Observer, December 2006, No 258/259: ‘21st century energy: Some sobering thoughts’ by Vaclav Smil).

3.10 In the case of energy for transport, the Commission has focused on the promotion of biofuels and on fuel cells and hydrogen. The scale of expansion envisaged for biofuels however raises certain problems. Fuel cells are highly efficient energy converters which can significantly reduce the emission of greenhouse gases and pollutants. However, these technologies are unlikely to become commercially viable in the near future.

3.11 Therefore, in line with the seventh framework programme for research and a joint technical initiative to set up public-private partnerships, the Commission has issued a draft regulation setting up the fuel cells and hydrogen joint undertaking (COM(2007) 571 final). This proposal is intended to launch a programme of research, technological development and demonstration in the field of fuel cells and hydrogen.

3.12 In order to promote the development of hydrogen powered vehicles, the Commission has also issued a draft regulation on type-approval of these vehicles (COM(2007) 593 final) to ensure that standards do not vary from one Member State to another, which could only hinder the spread of this technology.

4. These guidelines are necessary, but are they enough?

4.1 The demand for fossil fuels will continue to be both strong and critical. Consequently, discussion cannot overlook this unavoidable fact and care must be taken to remain realistic as regards renewable energy.

4.2 In this respect, the EU Member States must implement a concerted policy as regards countries which produce fossil fuels in the ‘spirit of solidarity’ urged by the Lisbon Treaty. A purchasing policy would also be extremely useful but is primarily a matter for multinational companies in the oil sector.

4.3 The oil market is officially organised by OPEC. Under these conditions, the 27 Member States would clearly have greater weight as a group than if they operated individually, particularly since they are among the most highly developed of the industrialised countries and are therefore major energy consumers. It must not be forgotten that the EU represents an integrated market of almost half a billion consumers.

4.4 A purchasing bloc of this nature would have strong political influence when dealing with the cartel of oil producers; the situation regarding gas is different as there are no cartels in the gas industry.

4.5 Diversification is an imperative for security of supply. In this respect, relations with Russia, a major European nation, are at least as important as those with OPEC. Similarly, thought should be given to establishing a supply policy with the Caucasian and Central Asian republics.

4.6 In the case of fossil fuels, efforts should be directed towards establishing alternative sectors, particularly coal-based. ‘Clean coal’ research is making considerable progress, and will need to be accelerated if a new expansion of coal use is not to exacerbate global warming. A major European R&D plan in this field should be developed, particularly since Europe still has large coal reserves and this resource is conspicuously cheaper than oil on the world market. However, methods of mining coal continue to be a highly sensitive issue; the difficult and sometimes dangerous conditions in mines are well known. Working conditions and health and safety at work in this sector must therefore be considered with particular care.

4.7 Used tyres could also be used as a renewable resource provided that the emissions resulting from combustion are captured efficiently. Electricity plants powered by tyres have been operational in a number of countries for some decades.

4.8 Progress is being made as regards the technology for storing CO2 but this is still costly, difficult and involves the risks of leakage, for example in the event of fissures in the rock or earthquakes, and pollution of the water table. EESC opinions currently being drawn up will deal with these issues in detail.

4.9 In addition to fossil fuels, there is a local resource which is abundantly — too abundantly — available: waste. Billions of tonnes are produced in the EU. Recycling and reuse of waste materials are usually regarded as the best way of disposing of waste since they reduce demand for virgin materials of all kinds and avoid the production of greenhouse gases associated with most forms of waste disposal. But where this is not possible, using waste as a source of energy should certainly be considered. Research and development should also be encouraged in this field so as to improve energy efficiency while cutting greenhouse gas and other polluting emissions as far as possible.

4.10 Legislation and case law should be developed on this point, since energy recovery from waste is not recognised in its own right. The revised proposal for a framework directive on waste, under discussion at the European Parliament, is an encouraging sign.

4.11 Finally, the issue of nuclear energy will inevitably be considered. It will be difficult to achieve the target of a 20 % reduction in greenhouse gas emissions by 2020 without considering a revival of the programmes for new generation nuclear power stations for the Member States who have decided to use this energy. The others should improve their policies on renewables.

4.12 We are obviously well aware of the challenges of safety, security and waste management connected to the development of this industry. But can we really do without it?

4.13 The choice of energy sources gives rise to controversy, but none can approach the level of acrimony existing between the for and against camps on nuclear energy. There is in fact a real nuclear divide in Europe, making it most advisable to leave any decision to the Member States alone on whether or not to use this energy source.

4.14 Europe has an effective tool in Euratom, which must be put to use to maintain its technical edge, ensure its competitiveness, reduce its energy dependency and step up its efforts and international cooperation for security, safety and non-proliferation. Thought could also be given to drawing up new guidelines for Euratom.

4.15 One of the major challenges is fusion research. Euratom's seventh framework programme for research has a budget of EUR 2,75 billion, of which nearly two thirds are earmarked for research on fusion energy. This priority must be encouraged and maintained because if this technology could be mastered, it would contribute greatly to facilitating the management of waste by considerably reducing its lifespan. The launch of ITER throughout the EU is promising.

4.16 As regards vehicle propulsion, the EU should look into hybrid vehicles, solar energy, fuel cells and compressed air propulsion. Research and development is progressing in this field as well, and a French engineer has developed a very economical vehicle which can reach speeds of up to 150 km/h using compressed air propulsion, with production set to begin in the next few months. The well-known Indian company, Tata, has bought the rights for India.

4.17 In this context, the EESC reaffirms its earlier recommendations on the European Union's energy resources, which paved the way for and back up the points made in this opinion.

5. Which instruments?

5.1 Identifying policies and selecting priorities are key elements, but the political and legal instruments to implement them are still needed. In this respect, will the provisions of the Lisbon Treaty, if it is ratified, be sufficient or must we go further?

5.2 Proclaiming the need for a spirit of solidarity between Member States in the energy sector is certainly an excellent thing and the identification of four strands for this policy is an innovation which can only be welcomed, even if these strands are not very innovative.

5.3 But we cannot help but think that the gravity of global energy challenges deserves more.

5.4 The Lisbon Treaty may well have been overly cautious, even if a common energy policy supported by a specific institutional framework along the lines of the ECSC and Euratom is not yet possible.

5.5 In the global race for energy, the competitors are continental in scale. The Community framework gives greater weight, but the creation of a specific authority responsible for energy ‘diplomacy’, purchasing policy, and drawing up and funding R&D framework programmes would probably make Europe a major player in the great global energy game, which is impossible for the Member States individually.

5.6 The current situation is characterised by strongly diverging national approaches, no doubt due to the fact that after the first oil crisis in 1973, everyone was keen to guarantee the security of their own energy supply. There are many examples of uncoordinated efforts and different approaches.

5.7 So as to avoid any disharmony which would cause Europe to lose its pre-eminence, a major European energy policy is needed, closely integrated with the leading position it is endeavouring to establish on climate change policy in international negotiations. This should be based on meticulous coordination within international bodies such as the WTO, UN, NATO and the OECD as soon as energy matters are brought to the table. It should be accompanied by the coordination of energy policies and in particular the introduction of a strong purchasing policy, and a truly committed rather than merely pragmatic network interconnection policy. Finally, when appropriate, this policy of coordination, consultation and common projects could be based on specific institutions to help Europe respond to the energy challenge. Will we have the courage to do so?

Brussels, 23 April 2008. The President of the European Economic and Social Committee Dimitris DIMITRIADIS