Opinion of the Committee of the Regions on the 'Commission White Paper: Energy for the future: renewable sources of energy - White Paper for a Community Strategy and Action Plan` (98/C 315/02)

THE COMMITTEE OF THE REGIONS,

having regard to the Commission communication entitled: 'Energy for the Future: renewable sources of energy - White Paper for a Community Strategy and Action Plan` ();

having regard to the Commission decision of 19 December 1997 asking the Economic and Social Committee to draw up an opinion on this subject;

having regard to the COR Bureau decision of 12 March 1998, taken in accordance with the third paragraph of Article 198c of the Treaty establishing the European Community, to draw up an opinion and to ask Commission 4 on Spatial planning, urban issues, energy and the environment, to prepare the work;

having regard to the draft opinion (CdR 57/98 rev.) adopted by Commission 4 on 22 April 1998. The rapporteur was Mr Jo Leinen,

adopted the following opinion at its 24th plenary session of 15 and 16 July 1998 (meeting of 16 July) by a majority.

1. Introduction

1.1. The Committee of the Regions welcomes the White Paper and approves the instruments proposed therein. It particularly supports the European Commission's intention of promoting renewable energies more intensively in the future, above all by improving the legal framework, introducing commercialization programmes, and providing economic incentives to mobilize private capital.

1.2. The Committee of the Regions regards the Commission's intention of doubling the share of renewables in the European Union's energy balance to at least 12 % by the year 2010 as an ambitious but realistic objective. The COR believes that this share could be raised to 15 % if greater efforts were made in the meantime to simultaneously improve energy efficiency and the rational use of energy.

1.3. The Committee of the Regions believes that local and regional players have a particularly important role to play in furthering the market penetration of renewables since such energy resources are found locally and are used locally. Local and regional incentives, supported by European aid programmes, can make a key contribution to improving the share of renewables in the energy balance.

1.4. The Committee supports the ideas set out in the Commission's White Paper explaining why it is thought necessary to actively and intensively promote renewables:

- to protect the environment and reduce greenhouse gas emissions (particularly CO2);

- to reduce growing EU dependency on energy imports by developing domestic renewables and thereby saving on foreign exchange and fuel costs;

- to promote regional development and job-creation, particularly in structurally weak regions, remote areas, islands and in agriculture;

- to open up export opportunities for European industry on world markets, particularly in developing and emerging countries with their rapidly rising energy needs;

- to gain clear acceptance by the general public in Europe of the need to make increasing use of renewables in preference to all other energy supply options.

1.5. The Committee of the Regions shares the Commission's view that renewable energies cannot be viewed in isolation from other policy areas. In implementing the White Paper's proposals, particular attention should therefore be paid to integrating renewable energies more closely into other policies (i.e. policies on external trade, employment, industry, competition, agriculture, development, the internal market, research and development, taxation, transport, the environment, structural policy, regional policy and tourism).

1.6. The Committee of the Regions would also underline the importance of renewables in relation to security of supply. Conflicts over the distribution of dwindling reserves of fossil fuels, particularly oil and natural gas, are already threatening the stability of whole regions across the globe. Armed conflicts and the military protection of conventional energy sources give rise to macroeconomic costs which are not reflected in energy prices. Renewables are therefore an essential instrument for guaranteeing peace in the 21st century.

1.7. The Committee of the Regions shares the view taken in the White Paper that the use of renewables has a remarkable effect on employment, with up to five times as many jobs being created - given the same installed capacity - as in the case of traditional energy technologies. The Danish wind power industry for example already employs more people than the country's traditional fishing industry.

1.8. The Committee of the Regions shares the view expressed in the White Paper that the use of renewable energies creates jobs in regions where there is no industrial development. Many less developed areas of the Community may lack traditional energy sources but they have considerable potential in terms of renewables and this potential must be utilized to the full. The COR would point out that renewables will have a much greater role to play in future not only in rural but also in urban areas. For example, in the construction industry, there are wonderful opportunities for using active and passive solar designs.

2. Action Plan for renewable energies

2.1. Internal market measures

2.1.1. The Committee of the Regions supports the Commission's intention to create fair market opportunities for renewables without this leading to disproportionately high financial burdens. The many different benefits to be derived from implementing the Action Plan justify greater efforts at all levels, starting with local and regional authorities but also involving Member States and the European Union.

2.1.2. Like the Commission, the Committee of the Regions believes that the commercialization of renewables must not be hindered by the creation of a single electricity market in the EC. Liberalization of the market may - if not backed up by relevant measures - lead to a situation where renewables are placed at a disadvantage. Such measures should in all instances be based on 'positive discrimination` both in terms of access to networks and payment for the renewables exported to these networks. In the view of the COR the optional provisions on the promotion of domestic renewables, to be found in the Directive on the single market, should be transformed into mandatory provisions. This is particularly true of Articles 8(3) and 11(3) of the Directive (containing provisions on preferential treatment for renewables).

2.1.3. The White Paper rightly points out the importance of fair access of renewables to the electricity market. The Committee of the Regions shares the Commission's view that network operators should give preference to electricity from renewables sources and that the price paid for such electricity should be based on minimum European-wide rates. Rules on higher financial payments could be based on Article 3(2) of the Directive on the internal electricity market.

2.1.4. Inadequate payments for the supply of electricity to the network frequently constitute an insurmountable obstacle in terms of market access for renewables. In most cases the actual value of electricity from renewable energy sources is not reflected in the prices paid to renewable electricity generators by network suppliers. The COR accordingly supports the Commission's idea of setting minimum legal European rates. The advantages of renewables - including their social and ecological benefits - would then be clearly recognized and reflected in the level of payments. Last but not least, the high level of acceptance of renewables should be turned to good use by applying the principle of cost-covering payments at local and regional levels. This so-called 'Aachen model` is already operating in several local areas of Germany and Austria.

2.1.5. The Committee of the Regions would also point out that the general tax system currently in operation hinders the optimum distribution of resources, particularly in the energy field. The internalization of some external costs - as already called for in the Green Paper - is an important factor in increasing the market share of renewables. The Committee of the Regions therefore calls upon the Council to reach agreement without delay on a European energy tax/environmental protection levy. Social and ecological costs must in future be an integral element of energy prices.

2.1.6. In addition to more favourable regulations governing payment for electricity from renewables, tax incentives are needed to facilitate the financing of, investment into and use of renewables. The Committee of the Regions therefore calls for the development of special credit institutions, e.g. the so-called solar credit line, which would reflect the advantages and specific characteristics of renewable energy sources.

2.1.7. The Committee of the Regions welcomes the Commission statement that the system of 'green tariffs` operated by a number of energy suppliers in some Member States has not always been adequate or appropriate. Indeed, regulations governing legally-guaranteed prices for electricity from renewables have proved to be a far more effective instrument for achieving market penetration and the installation of plant for the utilization of renewable energies.

2.2. Reinforcing Community policies

2.2.1. In accordance with the polluter-pays principle enshrined in Article 130r(2) of the EU Treaty, all additional costs arising out of higher electricity network supply prices for renewables should be fully incorporated in the tariffs paid by all electricity consumers. The COR likewise recommends that national or Community mechanisms, e.g. an equalization fund for energy suppliers, be used to rectify possible regional imbalances.

2.2.2. Implementation of the measures proposed in the White Paper can make a vital contribution to growth, competitiveness and employment. The example of wind energy utilization in Denmark and Germany, alongside the increasing use of biomass in Austria and Scandinavia, show how quickly renewable energies can expand when they are able to rely on private initiatives and on an appropriate framework provided by the state. Similar examples can be found in the use of solar energy in various regions of the European Union, e.g. in Greece.

2.2.3. The Committee of the Regions believes that, from the point of view of competition law, top priority should be given to the rapid commercialization and market penetration of renewable energies - at least for the commercialization phase of the next few years. Long-term rules on payment for the purchase of electricity from renewables should not in future be assessed according to the usual aid criteria. The crucial criterion should be whether there has been a high level of market penetration achieved as speedily as possible - in other words the establishment of a maximum number of installations. Another criterion which must be taken into consideration is the closeness of renewable energy plant to the threshold of competitiveness.

2.2.4. Research policy must aim to remove existing imbalances in the promotion of different energy technologies. Research expenditure on renewable energies must in future be increased substantially and geared more to applied research - which basically means the optimization of production processes. Fundamental research by contrast should be focused on supporting those technologies which are still in their infancy and are not as yet marketable (e.g. certain biomass technologies, tidal and wave energy, solar power stations).

2.2.5. The place of renewables in the regional policy of the European Union needs to be improved. The COR accordingly proposes that, in view of what has been said earlier about the importance of structural policy, specific aid should be allocated within the framework of Community regional programmes and structural and cohesion fund guidelines to the construction of production sites where renewable energy plant is developed. Such funds could also be used to set up energy agencies and a network of local and regional institutions for the purpose of offering support to investors and operators in the funding and development of renewable energy projects.

2.2.6. Tourism also offers opportunities for expanding the use of renewable energies since the latter are generally viewed with more favour by the consumer than any other energy source. Some regions and enterprises are already using renewable energies in their advertising campaigns. Renewables can also help cope with peak demand during the high season. By adopting such an approach, the creation of additional power station capacity becomes unnecessary. This is particularly true in the case of solar energy in southern Member States.

2.2.7. Local and regional authorities have a key role to play in drawing up legislation in the construction industry and in protecting nature and the environment. The Committee calls upon the appropriate administrative authorities to create an environment which is conducive to preferential treatment for renewable energies. Preferential treatment must also be enshrined in European environmental legislation so that conflicts between nature protection lobbies and users of renewable energies are avoided. The global, ecological use of renewable energies must, where possible, be properly balanced with local concerns. Furthermore, local authorities are carrying out model projects for the use of renewable energy especially in the transport sector ('clean` buses). Such good practice must be encouraged and publicized.

2.2.8. The Committee of the Regions underlines the importance of renewable energies for future Community agricultural and forestry policies which would be applicable everywhere in Europe and which would be committed to the principle of sustainability. The COR is accordingly aware of the enormous employment and structural potential of such a policy. Agenda 2000 must open up new prospects for European agriculture by allowing it to also play a leading role in the supply of environmentally-friendly energy. Calculations by the European biomass association (AEBIOM) show that up to a million new jobs might be created in agriculture and forestry by the year 2010. In realizing this enormous potential (the Committee on Agriculture and Rural Development of the European Parliament estimates that biomass is likely to account for 10 % of the European Union's energy needs by the year 2010) new income opportunities will be opened up in the agricultural sector. Plans and measures for sustainable rural development must be developed and answered for by regions and municipalities to a greater extent than hitherto.

2.2.9. The Committee of the Regions calls upon the Commission to argue the case in the WTO for a more generous treatment of agricultural and forestry raw materials insofar as they are used for energy production purposes. Fiscal measures designed to support the production and use of renewable energies in agriculture and forestry are a further requirement if renewables are to achieve greater market penetration. Tax exemptions and allowances, credit facilities and soft loans, may also help to turn this potential into reality.

2.2.10. Foreign policy considerations are also of special importance for renewable energies. This is not only for energy- and environmental-policy reasons, but also and above all for the sake of the future competitiveness of Europe. The Committee of the Regions is firmly convinced that the Synergy programme, the new Mediterranean programme MEDA, and the Community Phare and Tacis programmes for central and eastern Europe and the countries of the former Soviet Union, should be geared increasingly to the promotion of renewable energies. The COR also proposes the creation of a European Agency for Renewable Energies with the aim of facilitating a more rapid transfer of renewable energy technologies, particularly to developing countries and emerging economies.

2.2.11. European enterprises wishing to export renewable energy plant to third countries, or which are investing to help build up production capacity in developing countries and emerging economies, deserve to be given adequate support in the form of information, advice, export backing and export guarantees. The European Export Council for Renewable Energies set up in 1996 also needs to be given adequate personnel, financial and political support, as do national organizations with similar objectives.

2.3. Improvement of cooperation between the Member States

2.3.1. The White Paper points up the differences between Member States in terms of availability of information, range of experience and level of awareness of the players involved, stating that they constitute a further barrier to market penetration. Differing regulations and diverging, rapidly changing national and regional aid programmes also contribute to unstable and unpredictable markets for renewables. The Committee of the Regions agrees with this assessment and supports the Commission's call for a Community framework that is stable, ensures continuity, and encourages cooperation between the Member States with the aim of promoting renewables.

2.3.2. A Task Force needs to be set up immediately within the Commission to improve the coordination of current and future activities carried out by individual Directorates-General in the field of renewables.

2.3.3. The Committee of the Regions emphasizes the point made in the White Paper that cooperation between the Member States in the field of renewable energies must be intensified since most implementing measures are taken at national, regional and local level. The COR accordingly proposes the creation of a European Agency for Renewable Energies which would operate along the lines of the European Environment Agency and have as its task the observation and analysis of developments in the field of renewable energies. This would constitute a way of improving cooperation between all the players concerned.

2.3.4. The Committee of the Regions would reiterate the proposal made in its opinion on the Commission's Green Paper () to the effect that the promotion of renewable energies should be enshrined in the EU Treaty along the lines of the Community aid instruments available under the ECSC and Euratom Treaties and which have existed for decades. This is the only way to ensure an adequate legal basis for an ambitious Community renewables strategy in the 21st century, establishing, as a matter of urgency, environmental legislation which is compatible with the use of renewables.

2.4. Accompanying measures

2.4.1. The Committee of the Regions supports the Commission proposal that all Community financial instruments should in future contain specific incentives for investment in renewable energies. This is particularly true of credit and investment support from the European Investment Bank (EIB) and from the European Bank for Reconstruction and Redevelopment (EBRD). The provision of support for renewable energies should also be improved in the structural and cohesion funds, as well as in the Mediterranean programme (MEDA) and development programmes for third countries.

2.4.2. The Committee of the Regions suggests that more funds be allocated to Altener II. The activities carried out under this programme are extremely important from the point of view of the marketing and commercial exploitation of renewable energies.

3. Campaign for take-off

3.1. The Committee of the Regions welcomes the Commission statement that the cost of renewable energy technologies falls rapidly once commercial exploitation has got underway. As experiences have shown with wind energy - but also with photovoltaic systems and solar energy - the substantial cost reductions of the last few years can basically be attributed to steadily rising demand and to the further technological progress indirectly triggered thereby. The Committee of the Regions accordingly supports the Commission's proposed 'campaign for take-off`, with its uniform European-wide market penetration strategy for renewable energies. The measures spelt out in the campaign (1 000 000 photovoltaic systems, 10 000 MW of large wind farms, 10 000 MWth of biomass installations, and the integration of renewable energies in 100 communities) are wholeheartedly supported by the COR. However, the Commission proposal fails to adequately expound the strategy for producing energy crops. This strategy merits further detail. In the 'campaign for take-off` the importance of renewable energy sources for the heat energy market should be stressed and their use imposed in this sector too. Decentralized biomass plant with low output (up to 50 Kw) should play a major part here.

3.2. The Committee of the Regions takes the view that, in addition to an appropriate legal framework for renewables (e.g. advantageous conditions governing access to networks and electricity supply grids), it is essential to set up long-term, broad-based market penetration programmes and to provide stronger support for applied research. At the same time there is a need for appropriate technical legislation widening access to the energy market and encouraging research into energy storage.

3.3. The Committee of the Regions welcomes the proposal to set up a network to promote renewable energies. All key players in the field should be represented on this advisory forum - European, national, regional and local authorities, manufacturers and operators of renewable energy plant; umbrella organizations for individual, renewable energy sources; representatives of consumer organizations and energy supply enterprises. This advisory forum could offer support to the Commission in devising and implementing an Action Plan for renewables. In this connection the COR proposes the setting up of a programme to support associations active in the field of renewable energies.

Brussels, 16 July 1998.

The Chairman of the Committee of the Regions

Manfred DAMMEYER

() COM(97) 599 final.

() OJ C 244, 11.8.1997, p. 1.