Opinion on the Green Paper 'For a European Union Energy Policy'

(95/C 256/10)

On 24 January 1995 the Commission decided to consult the Economic and Social Committee, under Article 198(2) of the Treaty establishing the European Community, on the Green Paper 'For a European Union Energy Policy'.

The Section for Energy, Nuclear Questions and Research, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 22 June 1995. The Rapporteur was Mr von der Decken.

At its 327th Plenary Session held on 5/6 July (meeting of 5 July), the Economic and Social Committee adopted the following Opinion by a majority with three abstentions.

1. Introduction

1.1. The Green Paper 'For a European Energy Policy' was adopted in January 1995 after months of intense discussion with the national authorities and relevant socio-economic organizations.

1.2. In the course of these discussions the Commission received numerous written contributions, some in response to the preparatory document which it had drawn up.

1.3. The Commission collected together this preparatory document and all of the contributions in a document dated November 1994 and entitled 'Preparatory material for the Green Paper on new guidelines on energy policy'.

1.4. According to the Commission, the main purpose of the Green Paper is to provide the European institutions with the basis for evaluating whether or not the Community has a greater role to play in energy.

1.5. The Green Paper is intended to stimulate debate on the energy issue among all those with concerns, responsibilities and interests in the field. It is not therefore a political document. Basically its aim is (i) to take stock of the present energy situation and prospects for the next twenty years and accepting that the energy sector is entering a period of far-reaching changes, taking into account

- environmental demands,

- liberalization of the markets,

- energy-efficiency proposals,

- increased energy consumption,

- geopolitical changes affecting both the Community's security of supply and consumption patterns,

and (ii) to enable the Commission to specify, in a future White Paper, what it considers are the main challenges and their implications for the European Union and hence to define the main principles of a Community energy policy.

1.6. The Commission hopes that this first stage will culminate in the adoption by the Council of conclusions setting out some political guidelines for further work; the Commission will then prepare a White Paper to be presented at the end of 1995 at the latest.

1.7. The ESC decided as far back as March 1993 to draw up an Own-initiative Opinion on Community Energy Policy (), which was adopted on 14 September 1994 by a large majority.

1.7.1. As part of its preparatory work the Section organized two hearings to gather the opinions of independent experts and the main socio-economic organizations working in the energy sector.

1.8. The ESC Opinion on Community Energy Policy was drafted at more or less the same time as the Commission Green Paper. This meant that it was not possible fully to incorporate the contents of the ESC Opinion in the Commission Green Paper.

1.9. The Own-initiative Opinion on Community Energy Policy is still representative of the ESC's current view, and should therefore be seen as an integral part of this present Opinion; the two must be read in tandem.

1.10. In order to avoid repetition, the present Opinion will merely raise a number of additional points that were touched on in the Green Paper.

1.11. The purpose of this Opinion's critical comments on the Green Paper is to provide a stimulus for the Commission's work in drafting the White Paper.

2. General comments

2.1. The ESC shares the Commission's view that there is an urgent need to address the issue of energy policy and to hold a comprehensive debate on it. That is also why the ESC started work on an Own-initiative Opinion as long ago as 1993. The present Opinion is intended as a supplement to that.

2.2. The ESC welcomes the Commission's intention to use the Green Paper as a means of opening a wide-ranging debate which will 'enable the Community to set new energy policy goals which will serve as a frame of reference for the actions of the Community and of its Member States' and recognizes that 'the Green Paper aims to provide the European institutions with the basis for evaluating whether or not the Community has a greater role to play in energy.'

2.3. However, the ESC feels that the present Commission Green Paper does not live up to these aspirations. It is not possible, nor is it intended, for this Green Paper to formulate a longer-term strategic energy policy, as will be done in the White Paper which the Commission is due to publish in the autumn. But the Commission should at least present some clear considerations as a first step towards a recognizable Community energy policy, over and above the policies of individual states and their convergence. The Green Paper could have provided an opportunity to illustrate why it is necessary to have a longer-term strategy for a Community energy policy which is complementary to national energy policies and which pinpoints responsibilities.

2.4. The division of responsibility between the Community and individual states, i.e. subsidiarity (institutional questions) is extremely important, not only when formulating long-term energy policy objectives, but also when implementing energy policy in practical terms. The Commission has therefore devoted a good deal of the Green Paper to these institutional questions.

2.5. Unfortunately, even on these questions, the Green Paper only makes very general comments. Statements like 'The Community has responsibilities concerning energy' are not very helpful, and the following is too vague:

'The role of the Community is to place all its horizontal and/or sectoral instruments at the disposal of these objectives. This will ensure that the integration of the market can proceed while taking due account of the general interest. The Community dimension should also add value to actions and policies taken at the national level.'

(Point 67)

The issue of instruments will be dealt with under 'Specific comments'.

2.6. In any event there is no recognizable attempt at a clear and systematic division of powers. From the Green Paper it is therefore impossible to evaluate whether or not the European Union must play a more active role in the energy sector on the basis of an assessment of the division of powers between Community, Member State and region and between public authorities and companies, especially as energy policy in general is being influenced more and more by internationally active businesses.

2.7. The ESC does not wish to comment at this time on the information about the energy context and trends (scenarios) contained in the Annexes as the Commission intends to give a detailed and up-to-date picture in its White Paper.

2.8. The ESC regrets that the Commission has not yet published the proposed Communication on the Illustrative Nuclear Programme for the Community (PINC), as the ESC sees this Communication as the essential basis for preparation of the White Paper. The ESC would point out that it is the Commission's responsibility under Article 40 of the Euratom Treaty to publish such programmes periodically.

3. Specific comments

3.1. Future energy policy objectives

3.1.1. In the introduction to the Green Paper, the Commission states, under the heading 'The Essentials of Energy Policy':

'The energy policy objectives for the Community are appraised in terms of the challenges identified.

These objectives are readily apparent involving, as they do, the management of policy to ensure the satisfaction of all users needs at the least cost while meeting the requirements of security of supply and environmental protection.

But these objectives are contradictory. The difficulty will be to balance the different elements in such a way that the essential objectives can be satisfied. What the Green Paper proposes for debate therefore is how to attain these objectives within the framework of an integrated European market.'

3.1.2. Meanwhile, in Chapter II, the following future energy policy objectives are described in detail: overall competitiveness, security of supply and environment.

3.1.3. Chapter III then lists security of supply and environmental protection as essentials again.

3.1.4. This lack of clear definition continues through Chapter II in the description of 'energy policy objectives'. It is generally unclear whether the Commission is formulating objectives or presenting problems. The 'overall competitiveness' objective is particularly diffuse. Does it mean the competitiveness of energy producers (some of which are multinational companies and others are State-owned monopolies), or the competitiveness of consumers, i.e. European industry, or is it basically referring to the functioning of the liberalized internal market with a minimum of regulation?

3.1.5. If it were possible to derive or distil real objectives from this description of overall competitiveness, these objectives would have to be prioritized in relation to a far-sighted, long-term policy to ensure security of supply.

3.1.5.1. Where do the priorities lie when, for example, the energy market is liberalized and there is a move towards a particular source of energy which may lead to problems with the diversification of supply for security reasons?

3.1.6. It is necessary to evolve a procedure for fixing and coordinating the priorities to be given to general interest tasks in relation to liberalization.

3.1.7. The Commission states: 'Synergies between the objectives of competitiveness, energy security and environmental protection need to be developed; in the case of conflicts between objectives, flanking measures need to be devised'. (Section 2.3. 'Environment' - second paragraph). What synergies are these? Will they be adequate, and what flanking measures are meant here? Here, too, the fixing of priorities will have to be coordinated.

3.1.8. Reconciling the internalization of external costs with the goal of overall competitiveness also poses problems.

3.1.8.1. The ESC commented in detail on the internalization of external costs in its Opinion of 27 April 1995 on the Commission Communication on Economic Growth and the Environment (). Further discussion in this Opinion is unnecessary.

3.1.9. The Commission has set itself two goals, namely:

- limiting regulation as the liberalized internal market is introduced

and

- moving back towards making greater use of economic instruments (taxes, charges, technical regulations).

Reconciling these two goals is particularly problematic, because it means fixing and coordinating priorities between the various classical aspects of energy policy and the future tasks of energy policy.

3.1.10. The ESC feels that it is clear from these few examples that Chapter II of the Green Paper is not a first step towards formulating energy policy objectives, but rather a description of the issues involved. Above all, the Commission largely leaves open the question of priorities among the objectives, although it seems to give precedence to the internal market. The ESC thinks that the requirements of a future energy policy can only be satisfied if these priorities are held in constant balance.

3.1.11. The ESC wishes to point out as a matter of urgency that apart from the three objectives referred to in Chapter II of the Green Paper (overall competitiveness, security of supply, environment), there are two important objectives:

3.1.11.1. First, economic and social cohesion on which the ESC produced a detailed Opinion (). It is surprised that the Commission does not list this objective in its Green Paper and does not acknowledge its Communication of February 1994 on this matter and the ESC Opinion.

3.1.11.2. Second, the creation of employment opportunities through energy policy. This objective must be an integral part of any scenario which should be detailed in the White Paper.

3.1.12. The ESC thinks that these two objectives must also be dealt with in the White Paper.

3.2. The instruments

3.2.1. As well as the definition of long-term strategic energy policy objectives, the practical implementation of these objectives is crucial for energy policy, as are the economic and regulatory instruments required to implement them.

3.2.2. When applying these instruments it is particularly important to define the responsibilities and powers of the Community and the Member States as clearly as possible.

3.2.3. In the Commission's view, the Green Paper is intended to be a contribution towards laying down a new regulatory framework for the energy sector. It highlights the large number of economic and regulatory instruments and the fact that they are necessary for energy policy. However, there is no attempt to give a clear definition of responsibilities and powers with regard to these instruments.

3.2.4. Despite the Commission's fundamental position that regulation should be kept to a minimum as the internal market is opened up, and the view that intervention by public authorities, including the Community, is only justified in a few cases, there are plenty of indications in the Green Paper that the Commission sees economic and regulatory instruments playing a central role, while there is no mention of defining responsibilities and powers.

3.2.5. When considering the gaps and shortcomings in the current situation the Commission reaches the following conclusion:

'As far as the Community framework is concerned, the analysis reveals that the coherent development of policy instruments is hindered by the absence of clear responsibilities for energy policy at Community level.'

(Introduction, 'Policy Directions', point 3)

3.2.6. Furthermore:

'The Community has many instruments which directly or indirectly influence energy policy and which have therefore to be used in a way consistent with common energy objectives.'

(Point 24)

and:

'The role of the Community is to place all its horizontal and/or sectoral instruments at the disposal of these objectives. This will ensure that the integration of the market can proceed while taking due account of the general interest.'

(Point 67)

and:

'Clearly, these policies have to be well devised by balancing the costs and benefits and taking account of these criteria in selecting policy instruments. In general, this will imply a reorientation towards a greater use of economic instruments as such instruments allow least cost solutions to be reached. There is a variety of economic instruments each of which is characterized by specifics such as: taxes and charges, tradeable permits, deposit-refund systems, technical regulations on consumption products and under certain circumstances, voluntary agreements.'

(Point 78)

3.2.7. The ESC regards such instruments and the way they are used to implement energy policy objectives as a central problem in any energy policy, which raises the following questions:

3.2.7.1. What are the Community's 'many instruments' which directly or indirectly influence energy policy? For reasons of transparency, the ESC feels it is essential to draw up a list of these instruments with an indication of the responsibilities and powers involved.

3.2.7.2. What additional instruments are planned or considered necessary, such as the strengthening of economic and social cohesion?

3.2.7.3. To deploy the various instruments there must be an energy policy concept which is coordinated with the various EU policies. This in turn requires a clearly-defined division of responsibilities between the EU and the Member States in line with the subsidiarity principle.

3.2.7.4. In particular, there must be a clear statement as to who determines priorities among the various policies and who is authorized to deploy the various instruments.

3.2.7.5. Steps must also be taken to ensure that the different policies are coordinated within the Commission.

3.2.8. The ESC thinks that, in the interests of a transparent energy policy and subsidiarity, there is an urgent need to find a solution to these problems. This would also help to prepare for the decisions to be taken at the Intergovernmental Conference on the need for additional instruments and/or a coherent institutional framework for energy policy.

Done at Brussels, 5 July 1995.

The Chairman

of the Economic and Social Committee

Carlos FERRER

() OJ No C 393, 31. 12. 1994.

() OJ No C 155, 21. 6. 1995, p. 1.

() OJ No C 393, 31. 12. 1994.