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DOCUMENTS "COM"
COM(81)540
Vol.1981/0162

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COMMISSIONS OFTHEEUROPEAN COMMUNITIES
COM(81)540 final
Brussels,2ndOctober1981
THEDEVELOPMENT .OFANENERGYSTRATEGY FORTHECOMMUNITY
(Communication fromtheCommission totheCouncil)
F;a■>'^H
*■-Α.-Λ3
»*
COM(81)540final

THEDEVELOPMENT OFANENERGYSTRATEGY FORTHECOMMUNITY
(Communication fromtheCommission totheCouncil)
INTRODUCTION •
InthecourseofrecentyearstheEuropeanCouncilhasrepeatedly declaredtheneed
fortheCommunitytofaceuptotheenergychallenge- ,
ThishasLedtotwoCouncilResolutions-in1974andin1980-settingCommunity
energyobjectives whosemainfeaturesareareductioninoildependencethroughthe
morerationaluseofenergyandabroaderdiversification ofenergysupply.
Butithasnotledtotheimplementation ofanoverallstrategycomprising (.
actionbytheCommunity,MemberStatesandproducers andconsumers.Theinadequacy
andinconsistency oftheactiontakeninthewakeoftheseexpressions ofpolitical
willcanonlybedeplored.
Relatively 'slackdemandbetween1975and1980,combinedwithweakpricingand
taxationpolicies,reversedtheupwardmovementinrealoilprices,leadingtca
certaincomplacency andslackeningofeffortstouseenergymoreefficiently
andtoreplaceoil.-TheeventsinIran,whichcausedpricetensionsonthe
worldmarket,gaverisetoanewinterestonthepart
ofGovernments ,TheconsequentvigilancedisplayedataCommunity andan -
international levelhashelpedtopreventanynewpressures ontheoilmarket
intheshort-term .Butthelonger-term problemsstillawaitsatisfactory
solutions.Itisinevitableinthesecircumstances thatthescopefora
sustainedupturnineconomicgrowthwillbeconstrained onceagainbyundue
dependence onoil.
InstressingthissituationtheCommission doesnotintendtobelittletheimportance
ofthepoliticalcommitments whichhavebeenmadeorthatofthemeasuresalready
adoptedatnationalandatCommunitylevel.Itsobjectiveistopresent-in
thecontextofthefollow-upworktoitsReportontheMandateof30Ma>?-a
frameworkforactionallowingtheCommunitytorespondmoreeffectively and
withoutharmfuldelaytotheseriouschallenges whichtheenergyquestionraises
nowandforthefuture.
'\\ --
THECHALLENGES TOTHECOMMUNITY ;
Despitethesuccessofeffortstoreduceenergyandoildemandsince1973the
Communityisstillthesinglelargestoilimporterintheworld(8.7mbdin1980).
10JN°C153of9.7.75,p.1and0JN°C149of18.6.80,p.1.
2C0M(81)300final.

-2-
Morethanhalfoftheseimportscomefromthreecountries (SaudiArabia,Libya
andNigeria).
Thebroaderinternational pictureisalsofarfromcomforting.Itwouldberisky
tocountonafallorevenastabilising indemandforenergy.
Asfaras.thelessdevelopedcountries(LDCs)areconcernedamarkedincreaseis■
arealpossibility.AtthesametimeworldmarketsuppliesforoiIwi11bederivedfrom
adiminishing numberofoilexporters,withSaudiArabiaplayingamoreandmore
dominantrole. ,
3.TheCommunityeconomyhasbeenbadlyhitbytheeffectsofthedoublingofoil
pricesin1979.Thechallengeistoshielditfromtheriskoffurtherpressure,
bothbyreducingasrapidlyaspossibletheCommunity'sdependence onoilandalso
bytakingeffectivemeasurestolimitpossiblecausesofincreaseintheprice
ofitssupplies.
Totheseendsmeasuresneedtobetakenbothontheenergydemandside
(energysavingandrationaluseofenergy)andonthesgpplyside
(diversification ).Inthelatterfieldeffortsmustbesteppedup,particularly
byincreasingcoalconsumption,pursuingvigorousnuclearprogrammes andby
developingrenewableenergysources.
4.Tobringaboutthenecessarychangeswillrequirefirstandforemostgction
withintheCommunityitself.Butitssuccesswilldependheavilyonwhatis
doneexternally.Theindustrialised countriesneedtoworktogetherifthey
aretoreducetheirdependence onoil.Avenuesforcooperation withtheenergy
exportingcountriestoassurestablesupplies"whilerespectingtheirlegitimate
interests,mustbeexplored.Finallytheseriousproblemsfacedbyalarge
numberofdevelopingcountriesasaresultoftheirpositionasoilimporters
callsforrapid,vigorousandbroadactionbytheworldcommunity.The
EuropeanCommunityhasatitsdisposalinstruments whichallowittogive
technicalandfinancialhelptothesecountriessoastoenablethemto
developtheirresources.

Butinotherwaystootheprocessofchangeposesnewchallengesandoffers
newhopes.Theenergytransitionwillhavefar-reaching fconsequen'cesfor
Communityindustry,offeringprospectsforthedevelopment andapplication of
newtechnologies tohelprevitalisetheindustrialbase.Thisisunderlined
intheFifthMedium-TermEconomicPolicyProgramme^.Thechallengeisto
maintainthecontinuityofactionrequiredinthefaceofshort-termeconomic
fluctuations .Such"continuityisessentialbothtogiveconfidence andto
ensurelastingchanges.
FORMSOFCOMMUNITY ACTION
Tomeetthesechallengesthefirstimperativeistoensuremorerapidprogresstowards
consistency betweenenergypoliciesofMemberStates.AllMember*Stateshaveacommon
interestinthesuccess,orfailure.ofenergypolicythroughouttjieCommunity.
DifferencesofeffortandachievementbetweenMemberStateswill;notonly
meanwideningdivergences inthesecurityofenergysupply.Theywillalso
adverselyaffectthelevelofeconomicactivityintheCommunity ,asawhole..
Equivalenceofeffortdoesnotrequireanysubstantialcentralisation of
energypolicyinstruments;nordoesitrequirethepursuitofuniformity
inthediversification ofsupply,whichmustvaryaccordingtonational
circumstances .Butitdoescallforcollectivedisciplinegoingfbeyondmere
expressionsofcommonagreement.ThepoliciesofeachMemberSt^temust -
reflectawillingnesstopursuecommongoals..... 4EveryyeartheCommissionpresentsareportontheenergypoliciesof
MemberStatesinthelightoftheCommunityobjectivesandafterconsulting
nationaladministrations .Bydrawingattention ,toprogressmadeandto
constraintsandweaknessesthisreportmustnowbecometheinstrumentensuring
consistency.Itwil,lbesubmittedtotheCouncil,togetherwithappropriate
proposalsandrecommendations ,afterexamination bytheMedium-Term Economic
PolicyCommitteeandtheEnergyCommittee.
InthesecondplacespecificCommunityactionmustbesetintrainwherethis
isrequiredbytheprovisionsoftheTreatyorwhereitwillbemore
effectivethanthesumofnationalmeasuresevenwhentheseareproperly
coordinated .ThisistrueasmuchforactionwithintheCommunityasin
externalrelations,wheresolidaritystrengthenscollectivesecurityofsupply.
C0M(81)34Afinal.
4.SeeforexampleC0M(81)64final.

-4-
8.Some action must besupported byfinancial means ,whether from theCommunity
budget orfrom theCommunity 'slending instruments .Uptonowrecourse
f
tothese means hasenabled significant support tobegiven butthis hasbeen
limited inrelation tothetotal financing requirements oftheenergy sector .
The tables atAnnex summarise thefigures .
Thenecessary role forCommunity finance isalready recognised insome areas ,
notably research anddevelopment ,aid toLDCs and aidtocertain kinds of
investment .There areother sectors ,such astechnological "demonstration and
theencouragement ofcertain categories ofinvestment ,where spending isessential
< tomeet common energy objectives andtoimprove collective energy security .
Community financing measures inthese sectors should also command general
support .
Itisofcourse true that the success ofcommon action cannot bemeasured in
terms ofthe "amount ofbudgetary finance involved .Many oftheobjectives
described above canandshould bepursued 'Through ,forexample ,better
coordination ofnational policies supported byasystem ofagreed analysis
andrecommendation .But the financial means available totheCommunity *
must beequal totherequirements foractibn determined byitsstrategic
/ •
objectives .Theamounts assigned toenergy intheCommunity budget must ,
%
therefore grow more quickly than inthepast ,reflecting thestrategic priorities .
9.These principles ofaction will beapplied toevery sector ofenergy supply .~
and demand .
Itisgenerally accepted that coal should have amore important role to v
play inCommunity energy supply .The scope forpossible reconversion to
.coal isconsiderable ,especially inindustry .'Large expenditure isneeded
throughout theCommunity inthis area and incoal transport ,import and
storage .Thebasis therefore exists for areexamination ofCommunity coal
strategy andforcommon action toensure greater consistency between thecoal
policies ofMember States ,andtobypass thesterile arguments between coal
producing andcoal importing countries intheCommunity .Initsabsence
I. > .
theprospects for coal within theCommunity will remain uncertain ,damaging
themorale ofthecoal industry andadding further uncertaint iritothe
development ofnewtechnologies inthe coal sector .
Thedevelopment ofnuclear energy isvital toensure security ofenergy
supply andoneofthemain ways ofreducing dependence onoil .Thepursuit
ofvigorous nuclear -programmes isanessential element inaneconomic policy
forEurope aimed atovercoming 'Structural problems intheenergy sector .

TheCommunity canhelptoensurethebestpossibleprogressinthenuclear .
sectornotonlybyexercisingitsspecificresponsibilities inthefield
butalsobysettingthedevelopment of.nuclear powerwithintheframework
ofanoverallenergystrategy.
Naturalgashasbecomeoverthepastfifteenyearsanimportantelement
intheenergybalanceofMemberStates,makingausefulcontribution to
diversification ofsupply.Maintenance ofthistrendhoweverposesa
numberofproblemsasregardssecurityofdeliveries,coordination of
investments andcoherenceinpricingpolicy.
Newenergysourceshaveagreatpotential'forgrowthbutthereareproblems
ofcostandoftiming.AsmoothentryontothemarketsofallMemberStates
willnotbeassuredwithoutactionaheadoftime(inresearchandtechnological
development).Suchactionwillnotbearallitsfruit-intheenergyand
industrialfields-withoutaCommunityapproachtakingaccountofthe
differentpossibilities ineachMemberStates.
OilisboundtoremainamajorelementintheCommunity'senergybalanceand
thebulkofoilsupplieswillcomefromoutside.TheremustbeCommunity
solidarityinmeasurestoguaranteesecurityofthesesupplies.Thepricing
ofoilproductsmustreflectboththeneedtoreduceoildependence and
theobjectivesofeconomicpolicy.
Onthedemandsidestructural changeisalreadyunderway.Thismustbe
continued sothat.consumers canadaptinthebestpossibleeconomicconditions
totheshiftfromoiltootherenergysources.'s'
Agriculture^isaspecialcasebothonthesupplyandthedemandside.
■Ss N.
Itconsumesdirectlyandindirectly largeamountsofenergy.Ithas
therefore anurgentneedfornewtechnologies andadditional investmentto
reduceitsenergyconsumption .Butwhileincreasesinoilproductprices
setsnewconstraints onagriculture,theyalsoofferthepossibility ofnew
outletsforproductsofagricultural originforuseasrawmaterialforenergy
production .TheCommunity haseveryinterestinpromotingprogressinboth
thesedirections andinusingitsfinancialinstruments tothatend.
BetweennowandtheendofMarch1982,theCommissionwillsetoutits-viewsin
eachoftheseareasinmoredetail,togetherwithproposals.
C0M(80)800final.

OPERATIONAL PRIORITIES
10.TherearefivemainprioritiesforCommunityaction:
Ci)ensuringanadequatelevelofinvestmentbothinalternatives tooiland
inthemorerationaluseofenergy;
(ii)thedevelopment ofacommonapproachtoenergypricingandtaxation;
v(iii)theestablishment ofmeasuresofCommunitysolidaritytoavoid
instability onthemarkets:
(iv)thereinforcement ofcommonpoliciesinthefieldsofresearch,
development andtechnological demonstration ;
Cv)thefurtherdevelopment ofcommonapproachesandinitiatives in
externalenergyrelations. I
•(i)Investment
11.Diversifying thesourcesofenergysupplyandthemorerationaluseofenergy
.(includingenergysaving)willrequireamajorinvestmenteffort.
12.Atthepresenttimeenergyinvestmentisstagnatingataround1.6%ofGOP.
ThemostoptimisticforecastsofMemberStatespointtoapossiblerisetoanaverageof
2.2%ofGDPoverthedecade.OverthesameperiodtheUnitedStatesexpects
energyinvestmenttoamounttoabove-4%ofGDPandJapantobetween3and3.5%.
Theparticularcircumstances ofthesecountriesare notasufficientexplanation
ofthisdifferenceinordertomagnitude.IftheCommunitydoesnottakethe.
necessarydecisionsitsoveralllevelofinvestmentcouldbetoolow,adversely
affectingitsabilitytoadapttohighenergycostsandtherebyitscompetitivity .
13.'Thereismoreoverarealriskthattheforecaststhemselveswillnotberealised.
Actionmustthereforebetakeninrelationtoevery-factorliable/toinfluence
thelevelofinvestment;
I
-Manydecisionsareheldupbytheuncertaintyofinvestorsandconsumersabout
futuretrendsinoilimportpricesandabouttheenergypricingandtaxation
politiesofpublicauthorities .TheactionproposedbytheCommissionon
energypricingandtaxation(seeiibelow)willhaveanessentialroleto
playinthisrespect;
-Thefearerisksinherent,intheindustrialapplicationofnewprocessessuch
ascoalgasification andliquefaction orinthelarge-scaleexploitation of

-7-
solarenergyandotherrenewableenergysources.Theactionproposedby
theCommissioninthefieldoftechnological demonstration (seeivbelow)
isintendedtohelpovercometheconstraints onthebehaviourofinvestors
inthisfield.
-Publicconcernisanotherfactordelayingcertainprojects.Itisfelt
mostclearlyaboutthehealthandsafetyrisksinnuclearprogrammes .More
recentlyithasalsobeenexpressedinrelationtotheecological impact
ofincreasedcoalconsumption ^
TheCommunityhasadirectroletoplaybothinpresenting balancedinformation
ontheadvantages anddisadvantages ofdifferent waysofmeetingenergyneeds
andindeveloping commonactiontoresolvespecificproblems.Communityaction
inthefieldsofresearchonradioactive wastedisposal,improvingsecurity
ofsupplyandsafeguarding nuclearmaterials mustbestrengthened .The
Commissionwillpresentproposalsveryshortly. '
-Therecessionandtheriskthatitmaypersistalsoraise
doubtsabouttheprofitability ofcertaininvestments .
I
Thisfactorweighsparticularly heavilyonthedevelopment ofinvestments
inthemorerationaluseofenergy:innewenergy-efficient equipment,
theconversionofoil-firedheatingandmotivepowertocoalrandtheapplication
ofnewenergytechnologies inindustry.Theseinvestmentsofferthebest,
prospects fortheregeneration ofCommunityindustryandforthedirectand
indirectcreationofemployment andtheyhavethemostdirecteffectsin
reducingoilimportsandhelpingthebalance-of-payments.
14.TwostudiescompletedfortheCommission haveexamined,respectively ,the
\,- .......... -6technicalfeasibility ofrapidadvancesinthemorerationaluseofenergy
anditsinvestmentandemploymentimplications^,concludingthatthescopefor
andbenefitsofaccelerated investment onthedemandsideareconsiderable .
Theupperlimitofcost-effective investmentofthiskindamountsperhapsto
asmuchas250billionECUoverthisdecade.Theseinvestments aredelayed
howeverbecausetheyinvolvealargenumberofdecision-makers -households
andcompanies-manyofwhomareaffectedinthepresenteconomicclimateby
problemsofshort-termprofitability andaccesstoexternalfinanceonacceptable
terms.
InfavourofanEnergy-Efficient Society,XVII235(79)EN.
^InvestmentandEmploymentinanEnergy-Efficient Society,XVII/052/81.

-8-
15.Thereisalreadyanactivedebateonhowtoacceleratetheseinvestments,
andtheCommissionisconducting-withtheaidofMemberStates-adetailed
surveyoftheperspectives andproblemsassociatedwithinvestmentinthe
morerational 1useofenergy.Thissurveywillenableittodefinethemost
effectivewaysofstimulating theseinvestments andwjllserveasabasisfor
proposalsinthisareathatwillfollowshortlyfromtheCommission.
InthemeantimetheCommissionwillproposethattheNewCommunityInstrument
shouldbeusedmoreinsupportofinvestmentinthemorerationaluseofenergy
withaspecifictranchesetasideforthatpurpose.TheCommissionwillalso
useinterest-rate subsidiesfinancedfromtheECSCbudgettosupportthesame
kindofinvestment inthecoalandsteelsectors.
Investmentin.energysavingandinsubstitution foroilmustbeencouragedboth
asameansofreducingtheshareofoilintotalenergyconsumption andbecause
ofitsfavourableeffectsonthelevelofeconomicactivityandemployment.The
responsibility oftheCommunityinthisfieldislinkedtothatinthefieldof
medium-term economicpolicy.
(ii)Pricesandtaxation
16.Throughitsimpactbothonenergydemandandinthelongtermonenergyinvestment,
energypricinghasafundamentalroletoplayinthepursuitofenergypolicy
objectives.Butpricingpolicyalsohaswiderimplications,affectingindustrial
competitivity andtradebetweenMemberStatesandwiththerestoftheworld.
.
Acommonapproachtoenergypricingisthereforeacriticaldeterminant ofthe
coherenceoftheenergypoliciesofMemberStates,supportinginvestmentpplicy
andenablingproperjudgmentstobemadeabouttheeffectiveness ofenergysaving
measuresandtheeconomicsofalternatives tooil.Moreover,itisessential
totheavoidanceof.distortions inintra-Cpmmunity competition andinthe
encouragement ofgreaterconsistency .betweenthepursuitofgeneralmacro­
economicorbudgetaryobjectives,ontheonehand,andenergypolicyobjectives,
ontheother.Finally,,itisimportanttothecredibilityoftheCommunity
initsencouragement ofsensiblepricingpracticesinthecountrieswithwhich
ittradesandcompetes.
17.TheCommissionhasalreadyunderlinedthesepointsinacommunication on
8EnergyandEconomicPolicy",andhasdevelopedsomeoftheminitspaperon
C0M/80/583.

9"OilTaxation".TheCouncilhasalsobeeninvitedtoadoptarecommendation
10onelectricitytariffstructures
11Inaseparatecommunication ,theCommissionhasfurtherdevelopedtheprinciples
ofenergypricingadoptedbytheCouncilinaResolutionof9June1980.These
principlesemphasisetheneedforconsumerpricestoreflectinfullthecost
ofdevelopmentofalternative energyresourcesandsotoencourageinvestment,
evenwhenintheshortrunworldpricesforoilarestableorfalling.
WithintheCommunitythereshould ,beacommonmarketinprimaryenergy.
Differencesinthepricesatwhichcoal,crudeoilandgasaremadeavailabletothe
energyindustriesshouldbelimitedtothosearisingfromdifferences in
transportcosts.Thisdoesnothowevermeanthatconsumerpricescanorshould
beidenticalthroughouttheCommunity.Onthecontrary,itisrightthat
prudentinvestmentinenergytransformation (refining,transport,distribution
andespecially-electricitygeneration )withinindividual MemberStatesshould
bereflectedinadvantageous consumerprices.However,consumerpricesare
determinednotonlybycomparative costs,butalsobyimportantdifferences in
policy,notablyasregardstaxation,pricecontrolandthefinancingofpublic *
utilities.
Consistency inenergypricingandtaxationpolicies,inaccordancewithenergy
supplyanddemandobjectives,requiresfirstofallanimprovement intransparency
ofenergypricesandtariffsandacommonefforttoadaptoiltaxationtotheaims
ofenergyandeconomicpolicy.
(iii)Amechanismtoavoidinstability onthemarkets
18.Theobjectivesofsecurity,andstabilityofsupplyapplytoallformsofenergy
andtheirpursuitisakeyfeatureofCommunitystrategy.Theyareofparticular'
importanceasfarasoilisconcernedgiventhedominantroleplayedbyoil\
i"pricesandthelessflexiblenatureoftheoilmarketcomparedwiththepast.
19.Thelessonof1979wasthatevenverylimitedshortfallsinoilsupplyovera
briefperiod-andeventheriskitselfofsuchadevelopment-canhaveserious
anddisproportionate effectsonoilpricemovements.Arepeatofthoseevents
.wouldhavedamagingconsequences .Therelativeslacknessofthemarketinrecent
monthscouldmeanthatthisdangerwillbeunderestimated eventhoughtherise
C0M/81/511. '
COM/81/356andCOM/80/322
11COM/80/539 -

-10-
inthedollarhasincreasedconsiderably thecostoftheCommunity'simportedoil.
TheCommunitywouldbefailinginitstaskifitdidnotmanifestsolidarity
inthefaceofsuchdifficulties .Thissolidarity wouldbemoredifficultto
achieveifitwerenotestablished beforehandinaperiodofcalm.Amechanism
alreadyexiststodealwithserioussupplydifficulties .Butitisvitalthat
theCommunityshouldarmitselfaheadoftimewithprocedures andmeansto
softentheimpactofanyfutureoilsupplyshortfalls,especially onprices.
20.TheCommission hasaccordingly proposed aproceduretohandlesituations *
.oflimitedshortfalls ontheoilmarket,togetherwithaseriesofmeasures
fromwhichtheCouncilcouldchoosethemostappropriate inthelightofcircumstances .
Tobeeffectivethesetofactionsproposedwouldhavetobecloselycoordinated
inawiderframeworkinvolvingtheUSAandJapan.Butasthepreparation of
WesternEconomicSummitshasshown-andespecially thoseinTokyoin1979and
Venicein1980-theCommunity canhelpfullygivealeadtotheothermajoroil
consumers byvirtueofitspositionascollectively thesinglelargestbuyer
onworldmarkets..
TheCommunityismorevulnerable thanotherconsuminggroupsaffarasexternal
oilsuppliesareconcerned.Itmustthereforeprotectitselfaqainsttherisk
offortuitous tensionontheworldoilmarket.Evenifmeasurestothatend
aretakenonlyonacontingency basis,agreement ontheconditions and
procedures underwhichtheywouldbeapplied,withoutprejudicestotheprecise
decisionsrequiredbyparticular circumstances ,wouldbeproofofthecredibility
oftheCommunitystrategy.
Civ)Researchanddevelopment ;technological demonstration '
BS5£3rch_and_deve].ogment
21.ThelogicofactionatCommunitylevelonenergyresearchanddevelopment is
self-evident .ItenablestheCommunitytosupportlarge-scaleactivities beyond
thefinancialreachofindividual MemberStates(e.g.thedevelopment of

controlledthermo-nuclear fusion);itavoidscostlymultiplication .ofeffort;
anditworksasacatalystinpromotingthecross-fertilisation ofideasand
themorerapiddiffusionofresults.Ineachoftheseways,ithelpsthe
CommunitytomakeupforthenaturalbenefitsenjoyedbytheUSAaridJapan.
22,TheCommunityhasbeeninvolvedinsupportforenergyR8Dsinceitsinception,
firstincoalundertheECSCTreaty,theninnuclearfissionandfusionunder
theEuratomTreaty,finallyinenergyconservation andnewenergysourcesunder
thesimulusofthefirst"oilcrisis"of1973/4.
ÎT
Theresultisthatenergyalreadyabsorbssome70%oftotalfundsintheCommunity'
R&0budget.ThetableatAnnex ■showshowmuchhasbeencommittedunder-
thevariousheads.TheCommunitybudgetprovidestherebytheequivalent
ofsome10%oftotalpublicsupport(MemberStatesandCommunity)forthefinancingof
R&0intheenergyandrelatedfields,andtheoveralleffortcoordinated
withintheCommunityframeworkisstillgreater.
23..Anincreasedresearcheffortisneededtohelpreduce ,morerapidlytheCommunity's
dependenceonoil(energysavingandsubstitutes )andtomakeiteasierfor
Communityindustrytoadapttochangesintheenergymarket.Thiswillmeana
needfor'increasedfinancialresources.Communityintervention'will enable
expenditure toproducethemaximumpossiblebenefit,toavoidwasteof
resources andtoensurethewidestdissemination ofresearchresults.
AgainstthisbackgroundtheCommissionhasbeguntoreorganiseitsservices
involvedinresearchandisexaminingthedifferentprogrammes..Itwillmake
proposalstointensifyresearchonthemorerationaluseofenergyandrenewable
.energysources,notonly.initsowninterestsbutsoastomeet$heneedsof
theLDCs. "",
I^wiltdothesame'inthefieldofcoalresearchtoreflectthegrowingimportance
.• ofcoal
lechnolog^cal.demonst ration >. 1
24.TheinvolvementoftheCommunityincoordinating andfinancingsupportfor
projectstodemonstrate theindustrial andcommercialviabilityofnewmethods
andtechnologies ismoremodestthanthatinR&Dandnowrequiresrenewed
attention.Thedemonstration' phaseprovidestheessentialbridgetothefull-
scalecommercialisation ofnewtechniques,therebysupportingindustrialas-well
asenergypolicyinencouragingthelaunchingofnewindustries,processes
andproducts.

-12-
Ithasbeen clear forsome time that theCommunity 'spluriannual programmes of
support forsuch projects inenergy saving andinalternative energy sources
which began TI1979 would beinsufficient tomeet demand .In1980 therefore theCommission
madeprecise proposals totheCouncil involving adoubling ofthefinancial ceilings ^
TheCommission 'sReports ontheexisting programmes underline thepositive
experience oftheoperation oftheexisting Regulations todate .TheCommission
will take allthe steps necessary toensure effective dissemination ofthe results
oftheprogrammes soastomaximise thebenefits throughout Community industry .
25.Asafurther element intheencouragement ofinnovation inandthrough the
energy sector ,the Commission intends also tohelp ensure that those involved in
the development andexploitation ofnewenergy technologies are able tosecure
the full benefits ofthe common market ,and inparticular that markets for
high performance butrelatively high cost equipment canbefully developed .
Particular attention will bepaid tothedevelopment ofcommon standards soas
toavoid the creation ofnon-tariff barriers totrade .
Innovation isanecessary part ofenergy strategy .Financial action and
coordination atthe level oftheCommunity arevital tothe achievement of
the most effective results inresearch anddevelopment and intechnological
demonstration .Thepotential inthis field must bebetter exploited and
exploited tothe full .
(v)Externat relations
26.Community energy strategy must inevitably bepursued within awider international
framework involving theother main consuming nations ,theenergy exporting -and
especially theoil-exporting countries ,andtheoilimporting developing
countries .The Communi ty^alone offers acredible basis for theexpression of
,the interests ofMember States vis-a-viseach ofthese groups ,developing
relations with each asfar aspossible inabalanced way andmaking useof
avariety ofmethods and frameworks foraction .
Thebenefits ofCommunity coordination have already been amply demonstrated
inthepreparation ofWestern Economic Summits ,meetings ofthe International
Energy Agency (IEA )and most recently inthe UNConference onNew andRenewable
Energy Sources .TheCommunity must build onthis experience ,both toenhance
1COM(80)567 final .

r*13-
Communitycooperation inthefieldsofhydrocarbon supplies,theinternational
coaltradeandsuppliesofnuclearfuels,and,mostimportantly,"cooperation
withthedeveloping world.
27.Cooperation amongMemberStatesinsecuringsuppliesofnaturalgasfrom
outsidehasbeenlessthansatisfactory inthepast.'Itcanandshouldbe
enhanced.Thenegotiation andconclusionofnewcontractsshouldbepursued
withintheframeworkofacommonapproachtoCommunityrequirements and
objectives andtheCommission hasputforwardtotheCouncilspecificproposals
13tothisend. .
28..InthefieldsofcoalandnuclearfuelstheaimoftheCommunitymustbeto
developaframeworkofrelationswiththeexportingcountrieswhichcan.
likewiseensurestableandsecuresupplies.Thiscannotbeachievedsatisfactorily
byindividual MemberStatesactingalone.TheessentialneedforCommunity
actioninsecuringsuppliesofnuclearfuelsisalreadywellestablished and
hasledtothesatisfactory conclusionofcooperation agreementswithirhemain
suppliers,notablyAustralia,CanadaandtheUnitedStates.Thispositionmust
bemaintained anddeveloped sothatnewnegotiations orrenegotiations that
mayprovenecessaryinthelightof.changingcircumstances canfollowasimilar
course.
29.TheCommunity anc'itsMemberStateshavealreadymadeasubstantial contribution
tothedevelopment ofenergyresourcesinthedeveloping world,withtotalaid
(grantsandloans)amountingtoover700mECUin1980alone.Ofthistotal
inearlyonethird(over200mECU)wasaccountedforbyloansfromtheEuropean
»
Inv«stment BankwhichisoneofthemainsourcesaftertheWorldBankinthe
provisionofloanfinanceforenergydevelopment .Inadditiontodirect
supportforthefinancingofenergyinvestmentbythismeans,/theCommunity
*hasalsohelpedwiththeevaluation andplanningofenergysupplyanddemand
inalargepumberofdeveloping countries.
30..TheCommission proposesthefollowingapproachtointensifyenergycooperation
withdevelopingcountries.Firstly,theremustbeclosercoordination between
theaidprogrammesofMemberStatesandthoseoftheCommunity.Secondly,more
usemustbemadeofthespecificmeansavailabletotheCommunitybothby
virtueoftheLom6IIConvention andofagreementswithnon-associated countries.
C0M(81)530final.

-14-
Itshouldbenoted'inthisrespectthatLomeIIemphasizesprojectsinvolving
regionalcooperation andincreasestheaidavailabletoprojectsdeveloping
alternative energysourcesintheassociated countries.
31.Theremustbeaglobalapproachtoenergycooperation withdeveloping countries,
takingfullaccounthoweveroftheparticularsituation andpriorities ofeach
countryconcernedandofthenatureofitsrelationswiththeCommunity.This
approachshouldcoverthefollowingareasinparticular :
%
(a)development ofguidelinesforaidinenergyprogramming (theevaluation
ofresources andrequirements );
<b)assistance intheformofinformation requiredforinvestment decision-
making(projectevaluation;specialised techniques,forexampleinprospecting ;
R&D,including morerecoursetotheJointResearchCentreandassociation
betweenresearchcentresintheMemberStates;accesstoc|atabanks);.
(c)technical andprofessional education;
(d)exchangesofinformation ontechniques thatmightbe-appliedindeveloping
countries,especially asregardstherationaluseofenergy,andtheencouragement
oftheiruseinthesecountries;
(e)extensionofthepracticeofco-financing whichhasalreadybeenused
withotherinstitutions suchasOPEC,theArabFunds,the-WorldBank,etc;
(f)encouraging industrytoadaptaconstructive investmentpolicytowards
LDCs,withrecourseasnecessarytothepossibilities offeredbyLomeII
inthisrespect;
(g)encouraging theuseofnewandrenewablesources,especially linkedto
programmesofruraldevelopment andenvironmental protection .
TheCommissionwillpresentproposalstotheCouncilcoveringthewholeof
thisapproach..

-15-
TheCommunityaloneprovidesthenecessarydimensionfortheexpressionof
theinterestsofMemberStatesontheworldstage.Itmustestablish,with
thosecountrieswhichsupplyitsenergyimports,aframeworkofrelations
i
whichensurestablesupplies,particularly ofcoalandnaturalgas,justas
ithasalreadydoneinthenuclearfieldingeneral.Prioritymustalso
begiventoenergycooperation withthedevelopingcountriesbothtomeet
theirownneedsandtol^elpreducepressureonworldoilsupplies.To.
thatendthepossibilities OfferedbytheLomeConvention mustbefully;
exploited andeffortsmustbeincreasedtowardstheotherdeveloping ••
countries,especially thosewithwhomtheCommunityhascontractual relations.
CONCLUSIONS
32.(a)Theadoptionofcommonobjectives,the.pursuitof_theseobjectives by
meansofcoordinated actionbyMemberStatesandtheacceptance ofcollective
.discipline arethebasisfortheCommunitypolicyproposedabove.Inthe
absenceofsuchanapproachtheCommunitywillnotbeina;posi-tiontomeet
theenergychallenge.
TheessenceofthisapproachliesineffortsatCommunityleveltoanticipate
developments .Insteadofsimplyreactingtoeventsintheenergyfieldwe
mustpreparetheway,inthebestpossibleconditions,forthechangesthat
.v
aremostlikelytoberequired byfuturedevelopments ontheenergymarkets,
whileminimising theeconomicandsocialconsequences ofthosedevelopments .
Suchaforwardlookingapproachhastheaddedadvantageofsupporting the
objectiveofeconomicrevivalandincreasing' employment .
(b)Energyobjectives havealreadybeenadoptedbytheCommunity.This
developmentwillremainofuseonlyiftheobjectives areconstantly' brought
uptodateandiftherecanbearegularexamination ofhowfartheyare
reflectedinnationalpolicies,followedasnecessarybyanadjustmentof~.
thosepolicies.Thefirstr8lefortheCommissionindeveloping energy
strategyisthereforeoneofguidanceandmonitoring .

TheCommission canalsotakeactiononitsownaccountincertainfields:
thoseprescribed bytheTreaties;thosewherenoothermeansexisttomeet
commonobjectives;andthosewheretoexploittheCommunitydimensionis
likelytobringresultsthatgobeyondthosethatcanbeachievedby
/ ' "
MemberStatesactingaloneorevenincoordination .
InsomecasesCommunityactionwillrequirefinancialresources.Thesemust
beadequateforthetasksinvolved.Varibusinstruments alreadyexistwhichneed
toberefinedordevelopedinthelightoftheCommunity'sneedsandother
objectives .
(c)Therearefivepriorities "inwhatmustbe.donetoreducetheCommunity's
dependence onoilbyabetteruseofallavailableresources andabroader
diversification ofsupplies.Theseare:investment;pricingandtaxation
policy;stabilityofsupply;development ofthepotentialfortechnological
innovation;andrelationswitfithirdcountries.TheMemberStatesandthe
Communityhavetake.nanumberofstepsinsomeofthesefields.Butthesehave
beeninadequate oruncoordinated .The
Commission hasalreadymadeanumberofproposalstoincreasetheCommunity
commitment .Otherswillfollow.Suchanincreased commitment wouldbea
»
majorstepforwardinthedevelopmentofourcommonstrategy.
(d)TheCommission requeststheCounciltoapprovethestrategydescribed
above;toagreeontheobjectives;and,onthatbasis,tostateitsposition
onthevariousproposalsalreadyputtoitandonthosethatwillfollow.

ANNEX
Five tables follow setting out theCommunity 'sfinancial interventions
intheenergy sector .
Tables 1,2and 3show the loans granted totheenergy sector between 1974
and 1980 bythe Community 'svarious financial instruments .
Table 4shows the amounts committed toenergy inthe Budget for 1978
to1981 .
Table 5shows budgetary resources insupport ofenergy development projects
for 1978 to1981 .

Table1:Distribution ofloanssignedbyenergysector
(EIB,EURATOM,NCI)
EUR-9 (%)
19741975197619771970197919eo!
ELECTRICITY 271,8lil,9183*7.'392,19622,241092,6967,24
Nuclear 125.3XSáf5*
1*>*•Ui,3366,59322,44453.4
•618,14
Thermalpower
stations 29,4V:V.«
■·.V
•·.·M--·.30,4*
'·12,8.«
128,71
241,0I25.4
Hydro,geo.
powerstations,_
etc.
Distribution
transport/
.99,«
19.5φ
«·' ·.»ι
.« *
1ï
'35®442,0
*i
i.*
«'
12e8
«64,8
Í06,53I3.O
185,2180,2'
43,5
SOLIDFUELS ,24,&3,31e
*
j11,726,6
HYDROCARBONS 128,7107,0
y189,5^39,2189,3
!167,5
Production 41,gδ80,554,2 .5f,025,7f}2,3
Transport 07.1'Kté,5i*M'•'·':«r¿3^.5
.Ι4ΐ»βiyi,7
Refining »», 62,9j
ENERGYSAVING épSy·
*··.>P
5*5
,·20,9134,5
Urbanheating .•ÍÍ;
'. 11,459»2
Rational useof
energyin
industry6»2*
-5,59,575,5
TOAL 406,7373,5376,31431,39808,041292,71405,24
TOTALLENDING BYECSC
• 197419751976197719761979 1980
« ;·*73.45160,87179,85216,85297.56275,33323,22
1

Table 2:Percentage breakdown ofthedistribution ofloans signed by ~
• energy sector <
(EIB,EURATOM ,NCI )
. ' y • ' ' ' • ■ '
(EUR-9 ) <%)
ι·■■■■· 4 '
1974 1975 1976 1977 1978 1979 1900 Ι
ELECTRICITY 66,B 43,3 :'48,8 . .$0,9 .77,0 84,3γ,β
Nuclear 30,3 * 29,6 - 85,0 39,9 35,1 f4,0
Thermal power
stations 7,2.·
·■">·:' ....
•Î»··V
!«·*··.4
β..-ι
8,rΦ
:4|θΛ*'
15,9■Φ ■
10,9
< ·ç , ·
8,9
Hydro ,geo .ι·""· ·
*..
power stations
etc. χ .24β5y'
•
*·"
•u,a .'Μ
./ ¥24,2 12,3
Distribution
Transport ^ 4a®\, ·
::9051 , »
ι ..ν•
'W 14,3 3,1
SOLID FUELS '·■« »
'M -- 0,9 «; 0,9'1,9'
HYDROCARBONS
.31,6'5O0is 50,y ·9·ν 22,3 13,0 '19,7
Production10,2 .SXρ6. 14,4
•*12,0 3,0
Transport ':.ai,4 -'28,5
«\.35·9♦ " I' ·'
•V1*-.Ί6,1 -.11,0 12,2
Refining'V'\:. U
·.* .·
!* · <
• t -.•·■.' *».· .·
»
.·' '■*«
'4,5 '
ENERGY SAVING :'!;-w■'Λ ,*
•»·''
• * *
.Γ·' :''!
'*. 'ι*« -Α.
0,7'· 1,6 9,6
Urban heating» ..-·+% è.»«'·
t>*-".»■♦
•/' 4 .·■
* 4
•ι«^
.' · *0,9 4,2 .
Rational usé-^ ■i ··" ',•/·" '·,
ofenergy in
industry 1,5
'I.0,7 0,7 5,4
TOTAL 100,0 100,0 100,0 100,0 100,0 ιοο,ο J00.0

Table3:Loanstotheenergysectorbythefinancialorgansofthe
Community
"EUR-9 '. '"■(mECU)
.1974 19751976 1977 19781979 1980
EIB ·., 406,7 .373,5376,3338,5737,1991,61115,9
ÜIVMATOM . 92,9 70,S151ν61β1»3
HCl 149,5100,0
ECSC 73,5160,9179,9216,9 ?07_r?'·/1Î*>275,3 323c2
– –~
Total 490,2534»4556„2640?31105?61566J01720μ4
U-ΜβΤ-Λ– -_ .„J

TABLE4
CommitmentstoenergyresearchfromtheCommunitybudget.
, .u(2)Directandindirectaction Coalresearch
(mECU)
1978 1979<3>
1980<33
1981
*'
1581
205';323228
(1) 'Generalbudget
(2) -< - .,,,ECSCbudget -.\jy •• «O'<Ann*ilii-,<•él*^mm< M,Themajorincreasein1980followedbyafallin1981reflects
principally thelaunchofthe2ndprogrammeofindirectaction.
TABLE5'
AmountscommittedfromthegeneralCommunitybudgettothesupportof.
energydevelopmentprojects.
Thiscoverstechnological developmentin'thehydrocarbons sector,demonstration
projectsinenergysavingandnewsources ,ofenergyanduraniumprospecting
withintheCommunity.
(mECU)
19781979 1980 1981
,55..5796106