EN Official Journal of the European Union C 182/8

Opinion of the European Economic and Social Committee on ‘The external dimension of the EU's energy policy’

(2009/C 182/02)

Rapporteur: Ms SIRKEINEN

At its plenary session held on 17 January 2008 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on:

The external dimension of the EU's energy policy.

The Section for External Relations, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 11 December 2008. The rapporteur was Ms SIRKEINEN.

At its 450th plenary session, held on 14-15 January 2009 (meeting of 14 January 2009), the European Economic and Social Committee adopted the following opinion by 181 votes for to 4 votes against with 3 abstentions.

1. Conclusions and recommendations: Towards an external energy strategy of the EU

1.1 Energy has for long been in the centre of international politics. The other big players on the world political scene have strong energy agendas, open or hidden. Energy is also often used as an instrument or even weapon in international disputes.

— In the EESC's view the EU, as the strongest global economic unit, must urgently claim its role on the international energy scene.

1.2 European citizens are concerned about the security of their energy supply, high and volatile energy prices as well as climate change and unsustainable global developments in general. The EESC finds that the EU needs a clearly defined, comprehensive external energy strategy to respond to its citizens' concerns, and, in particular, the will and determination to implement it.

— The EESC proposes two pillars for an external energy policy of the EU: — Securing EU supply of energy, and — An active and responsible energy and climate policy.

1.3 Many elements for such a strategy are already in place. Energy security was taken up by the European Council in its conclusions on 15-16 October 2008, and further proposals were presented by the Commission in its 2nd Strategic Energy Review of 13 November 2008 (1), to which the EESC will return in detail in a later Opinion.

— In the view of the EESC, EU needs a developed strategy on external energy policy and a practical action plan, taking account i.a. of comments made in this Opinion.

— Recognising the mutual interdependence between suppliers and users of energy, the EESC in particular urges for reciprocity on access to networks and conditions for investments, including access to upstream investments.

— Several pipeline projects between Europe and the Caucasus area, Asia and Russia are under development. These are of utmost importance, but may not even be sufficient for Europe in the medium term.

1.4 The EU energy policy has so far concentrated on creating an internal market for energy, in particular electricity and gas.

— The EESC supports the view that an effective external strategy and performance can only be based on a clear common internal policy and a functioning internal energy market.

— The EESC underlines that internal energy policy measures can decisively decrease external energy dependence and increase security of supply, in particular energy efficiency, a diversified energy mix, sufficient investments in infrastructure as well as crisis averting measures like early warning, information sharing and stockpiling/substitution.

1.5 Europe has both the responsibility and the potential to drive a profound change in the energy consumption culture — the third industrial revolution.

— The EU should keep its lead in global climate policy and by all available means enhance a sustainable energy future in developing countries.

1.6 In meeting both short term and long term energy challenges, both domestically in the EU as well as globally, new and better technologies have a crucial role to play.

— The EESC urges for sufficient resources to be directed to energy R&D and innovation by the EU, Member States and companies, as well as for more inclusive global cooperation in energy R&D.

1.7 The Lisbon Treaty provisions on energy policy and external relations would strengthen the EU's possibilities to act together and have a stronger impact on the global energy policy scene.

— The EESC recommends that all responsible parties should do their utmost to find a solution to bring the Lisbon treaty into force as soon as possible.

The most crucial requirement is that the EU really acts together. Therefore the strategy should be based on a clear understanding of the different roles of the Union, the Member States and economic actors.

1.8.1 On the external, purely political level the powers are with the Members States. In meeting the challenge of speaking with one voice, positive development has recently been shown in particular in relations with Russia.

— The EESC urges Member States to act together on external policy and work against energy being used as a weapon in international disputes.

1.8.2 The EU has a common trade policy that is based on uniform principles. The Commission is responsible for conducting trade negotiations on the basis of a mandate given by Council.

— The EESC recommends that the mandates for multilateral negotiations and for bilateral negotiations with countries and regions are sufficiently ambitious but workable to bring tangible energy-related results.

1.8.3 Contracts on purchasing, infrastructure and other projects are concluded and implemented by companies. Governments often have a strong or even decisive enhancing role in contract negotiations.

— The EESC recommends that in the context of contract negotiations the EU Member States' government representatives require, as a prerequisite for support to the contract, that the third country in question applies certain rules on its markets, like reciprocity, equal treatment, transparency and protection of investments as well as respect for rule of law and human rights, and that Council agrees on a framework of such principles to be applied to all negotiations on energy contracts with third countries.

1.9 The objective of an external energy strategy is to respond to people's needs and concerns in their private and professional lives.

— The EESC recommends that the social partners as well as environmental organisations and other civil society representatives should be heard and actively involved in defining the external energy strategy. Their capacities to support international dialogue and negotiations should be fully exploited.

1.10 The organised civil society as well as Economic and Social Councils have influence and therefore their own responsibility for forging EU's external energy policy.

— The EESC invites civil society organisations to urge their national and regional governments to act together at the EU level on these issues. Solidarity between Europeans is to be put before narrow local or national interest, because the goals of energy security and international responsibility can be better achieved by acting together.

1.11 Dialogue and negotiations on international energy relations are performed in many different fora, given the geopolitical and substantial multitude of the issue. An open dialogue covering, as far as possible, the different aspects of the subject would help a broader understanding and involvement by stakeholders.

— The issue of energy should be put on or kept as a standing point on the agenda of the EESC's meetings and round tables with its international partners.

— The EESC sees a role for itself in organising regularly broadly based seminars on external aspects of EU's energy policy, in particular involving civil society organisations also from third countries and regions. The hearing organised by the EESC Study Group on the external energy policy on 1 October 2008 in Brussels already proved fruitful.

2. Introduction

2.1 Energy has come to stay on the top of the political agenda all over the globe. This is accentuated by political and even military unrest with an obvious link to energy. The backdrop is increasing demand mainly in developing countries — following the positive development of the standard of living in these countries — and envisaged scarcity of some fossil fuels. Moreover, oil and gas supply is marked by high dependency on a few producing countries, and supply is expected to concentrate increasingly in the future.

2.2 Global economic turmoil links to energy prices. Less than two years ago oil and subsequently gas prices started to increase strongly, causing high inflation and considerable problems for consumers and the society as a whole. Presently the oil price has dropped dramatically, causing in its turn concern about sufficiency of production and security of supply. Amidst the volatility the trend of energy prices is expected to be rising, due to market balances and, in particular, political measures to combat climate change. The weakest in our societies are threatened by energy poverty.

2.3 Presently, 53 % of all primary energy used in the EU is presently imported. Import dependency for solid fuels is 40 %, for gas 56 % and for oil 82 % (2005 figures). The Commissions' baseline scenario update 2007 shows a total import dependence in 2030 of 67 %. According to the recent 2nd Strategic Energy review imports of fossil fuels are expected to stay at roughly today's levels in 2020 when the EU's climate and energy policies are fully implemented.

2.4 More than 40 % of its gas imports and a fourth of its oil imports come from Russia, and the share of gas, in particular, will grow. Next biggest oil suppliers are the Middle East and Norway, while for gas the second import source is Norway followed by Algeria. The dependency is reciprocal — suppliers to the EU are dependent on our demand. In particular this is true for Russia, as more than half of its energy exports go to the EU.

2.5 The high figures of import dependency as well as the dominance of certain import sources, which are not all respecting the same market and political rules as the EU, have lifted the issue of energy security high on the EU agenda. This has been further enhanced by some delivery interruptions from Russia as well as recent military actions in Georgia.

2.6 Energy is not one homogenous sector as regards external or other energy policy. Oil is predominantly used in transports and cannot easily be substituted. EU is part of the global oil markets and has therefore little room of manoeuvre. Other energy sources and technologies have diversified uses and are to a great extent interchangeable. Coal and uranium are traded on an open world market, while attention needs to be directed to gas, due to fast growth of demand and the limited number and characteristics of suppliers.

2.7 The EU has, during the last few years, entered several actions with the aim of securing its external energy supply.

2.8 Recently, the European Council on 15-16 October 2008 requested the Commission to submit relevant proposals or initiatives on the issue of energy security, identifying six priorities. The Commission has responded to this in its 2nd Strategic Energy Review. The EESC will prepare a separate, detailed Opinion on this document and the accompanying package of proposals.

3. Internal elements of EU's external energy policy

3.1 Many policy actions within the EU and the Member States can pave the way for lower external energy dependency and for higher energy security followed by the EU's better position in its external energy policy actions. These measures will be only briefly reiterated here, as they have been discussed thoroughly in other EESC opinions.

3.2 Better energy efficiency is the first and foremost measure, as it affects the development of energy demand and thereby external dependency.

3.3 A balanced energy mix and energy source diversification towards in particular low carbon indigenous energy sources, such as bio, wind and nuclear energy.

3.4 Concerning fossil fuels high efficiency combined heat and power production as well as carbon capture and storage should be enhanced.

3.5 Competition in gas trade should be increased by enhancing establishment of LNG terminals and other infrastructure.

3.6 A well functioning internal energy market supports resource efficiency and solution of possible local or regional supply problems. Sufficient investment in infrastructure is needed as well as open access to networks and other infrastructure. Efficient interconnection requires effective cooperation between energy regulators.

3.7 To deal with risks of security of supply, specific actions are needed. Effective solidarity and early warning mechanisms should be set up to act jointly in case of energy crises and disruptions of supply. The EESC will in due course express its Opinion on the Commission's recent proposals on these issues.

3.8 The EESC expresses its particular support for efficient measures to connect isolated parts of the Union, especially the Baltic States, to the common energy market and ensure a sufficient and diverse energy supply.

4. EESC general comments on an EU external energy policy

4.1 The EESC defines two pillars of external energy policy

— Securing EU supply of energy, and

— Active and responsible global energy and climate policy.

4.2 Such policies need a short term and a long term view. In the short term, because large scale substitution of energy sources and use infrastructures take time, there is a need to increase the supply of energy, while taking all possible short term measures to decrease demand. In the longer term, when investments in research and new technologies will be bearing fruit, energy demand can be even more reduced and, in particular, limited or otherwise problematic sources of energy can be substituted by alternatives.

4.3 Meanwhile the EESC expects that climate change policies will strongly affect the energy scene in two directions — higher prices and decreasing dependence on fossil fuels.

4.4 New technology is the ultimate way to increase energy use and replace problematic sources of energy. In Europe, being a frontrunner on energy and climate policies, we should grasp the possibility, develop the necessary technologies, help others to solve their problems and create new jobs. To achieve this, it is necessary already today to invest sufficiently in energy research and technology development.

5. Securing EU's supply of energy

5.1 EU has made many efforts bilaterally and multilaterally to extend its rules and their implementation to the rest of the world, in particular its energy partners. The success has so far been limited. Stronger action is required.

5.2 Reciprocity on conditions for investments is urgently needed. Many energy producing countries need foreign investment to develop their energy sources and infrastructures, but this will not happen as long as rules are absent, unclear or not systematically implemented. The arrangements of the Energy Charter should be maintained and similar approaches included in future bilateral energy treaties.

5.3 The same applies to other regulatory issues, like equal treatment, freedom and respect of contract and access to transit infrastructure.

5.4 The EU should actively require and defend the rights and possibilities of European companies to invest upstream in energy source development and infrastructures.

5.5 Europe needs security of supply while our suppliers, in particular Russia, point out that they need security of demand in order to make necessary investments. Long term contracts are often needed to support development of large scale infrastructures. In order to strike a better balance of power, such contracts should be done within a European framework. This would require information sharing between Member States and close cooperation with market actors.

5.6 EU's Priority Interconnection Plan covers a few big interconnection projects, including one for external connection — the Nabucco pipeline bringing gas from the Caspian to central Europe. These projects are of utmost importance, but may not be sufficient for Europe in the medium term.

5.7 Linking the EU to the Caucasus and Central Asia could require several new pipelines in addition to the Nabucco project. The EU should present proposals to coordinate regional projects reaching a significant size, and to mobilise public and private investment.

5.8 The EESC notes the six priority infrastructure actions proposed by the Commission in its 2nd Strategic Energy Review. The Committee will take position to these as well as to the Green Paper ‘Towards a secure, sustainable and competitive European Energy Network’ (2).

5.9 Dialogues with OPEC and the Gulf Cooperation Council need to be deepened as well as of the agreements with Azerbaijan and Kazakhstan fully implemented. Stronger ties are needed with Central Asian producers like Turkmenistan and Uzbekistan to facilitate transport of Caspian energy resources to the EU.

5.10 The importance of Africa as an energy supplier has increased considerably. A developed partnership with Africa needs to be comprehensive, assisting in a balanced way the sustainable development of African oil and gas producers' economies.

5.11 The Mediterranean cooperation, which is under strong development, has an important role to play by covering different aspects of energy — production, transit and consumption.

5.12 The importance of the Northern Dimension will be increasing. Oil and gas fields in the Arctic Ocean and the cooperation in the northern areas should have a higher priority in the EU's external energy policy. The Baltic area cooperation on its part covers mainly energy user and transit countries, where the link to Russia is a key feature.

5.13 With Russia the goal should be a robust, comprehensive framework agreement based on equality, mutual understanding and reciprocity Russia should allow transit of gas in the Russian network and allow European firms to invest in the development of Russian networks and sources. It falls on the Russian part to alleviate concerns about its reliability as energy supplier, just as its European partners are expected to respect their contracts and commitments.

5.14 The EU should also develop cooperation with other energy users, within and beyond the framework of the International Energy Agency.

6. An active and responsible global energy and climate policy

6.1 The present energy consumption culture was created in Europe and in the United States starting with the first industrial revolution. While trying to increase their standard of living many developing countries are now in the same phase where Europe was a few decades ago. In those countries it means fast increase in energy consumption — it is their right and necessary for the global security and peaceful development. Presently, Europe has both the responsibility and the potential to drive a profound change in energy consumption culture — the third industrial revolution.

6.2 Around 2 billion people around the world in developing countries live without access to electricity and have to rely on wood, dung and agricultural wastes, which have made indoor air pollution one of the world's top 10 causes of premature death. Access for these people to an electricity grid and production capacity is one of the biggest global tasks the world has. It means huge investments and huge increase in the global energy consumption. However, these investments must be done in order to allow everybody human and decent living conditions and the possibility of a higher standard of living.

6.3 EU has rightfully taken the lead in climate policies. The overriding objective here should be to achieve an effective international agreement covering all countries, because both effects of global warming and the increase in greenhouse gas emissions will be strongest outside Europe. The Copenhagen Climate Conference in December 2009 will be the corner stone of global negotiations and the EU should put all possible effort on that conference. However, unilateral actions by the EU would put an unsustainable burden on EU's economy.

6.4 EU has and is further developing the instruments for mitigating climate change — renewable and other low-carbon energy technologies as well as energy efficiency technologies. These technologies should be effectively deployed globally. This should also increase demand for European know-how and products, creating new jobs.

6.5 The EESC strongly supports the idea of an international agreement on energy efficiency between the major energy consuming countries (US, Canada, Japan, Australia, India and China). One step in this direction is the forum agreed by G-8 in Japan in July 2008. But it has to be ensured that all these key consumers effectively participate in the agreement and contribute their fair share. The agreement should cover, in addition to promoting energy efficiency policies and development and diffusion of technologies and renewables, also the prevention of dual pricing, i.e. subsidized energy prices to domestic users. This leads to considerable waste of energy.

6.6 The EU should also effectively support energy efficiency in developing countries. Here the approach should be to avoid investments in energy intensive production and consumption. EU development policies should be used better for this purpose.

6.7 Supporting education and training should be the main tool in the toolkit for energy cooperation with developing countries.

6.8 The EESC underlines that all cooperation, in particular with developing countries, has to take into account the goal of sustainable development of these countries, including development of democracy and respect of human rights.

Brussels, 14 January 2009. The President of the European Economic and Social Committee Mario SEPI

(1) Communication from the European Commission: Second Strategy Energy Review ‘An EU energy security and solidarity action plan’ SEC(2008) 2794, SEC(2008) 2795.

(2) Green Paper ‘Towards a Secure, Sustainable and Competitive European Energy Network’ COM(2008)782 final.