Opinion of the Economic and Social Committee on the 'Proposal for a Council Decision concerning a multiannual programme for the promotion of renewable energy sources in the Community (Altener II)` () (98/C 19/09)

On 25 June 1997 the Council decided to consult the Economic and Social Committee, under Articles 198 and 130s (1) of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Energy, Nuclear Questions and Research, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 19 September 1997. The rapporteur was Mr Bernabei.

At its 349th plenary session (meeting of 29 October 1997) the Economic and Social Committee adopted the following opinion by 112 votes to two.

1. Introduction

1.1. The Altener II multiannual programme for the promotion of renewable energy resources (RES) was tabled by the Commission on 12 March 1997 (), and falls within the Commission's broader strategy for Community energy policy. It follows on from Altener I (1993-1997) () which comes to an end this year, and which the Committee endorsed on 24 November 1992 (), with some reservations about the limited financial resources provided and the need for assessment and monitoring procedures.

1.2. The Commission is using the Altener programme to bridge the gap between technical development, demonstration and release onto the market. It stresses the need for expansion of capacity, information networks and better targeted training, and for Europe-wide technical standards and regulations. The total funding for Altener I over its five year span was ECU 43,7 million, including the additional funding made available after the enlargement of the EU and the extension of the programme to the EEA.

1.3. The aims of the programme were to help achieve the Community's energy policy targets for reducing CO2 emissions, boosting renewable resources' share of energy production, reducing the Community's dependence on imported energy, security of supply, economic and social development and local and regional development.

1.4. According to the Commission's report on the impact of the Altener programme (), presented in conjunction with Altener II, the programme has through information measures and a network approach 'played an important role in raising awareness about the role of renewable energy sources in the Community`. A number of reports and studies contribute to 'filling the gap between research and commercial application of renewable sources of energy, but it has proved difficult to draw conclusions from the pilot projects, since few have been completed`. The report concludes that 'this part of the programme is seriously underfunded as less than half of the proposed projects ... could be funded under the current budgetary provisions`.

1.5. On this subject, the Committee feels it important that the final report should fully detail past experiences in order to enable errors and shortcomings to be corrected, based on the actual results of Altener-funded projects. For the purposes of the 1998-2002 multiannual programme, it would be useful for this report to be completed over the programme's final year so as to allow appropriate changes to be made.

1.6. Moreover, it should be noted that a report compiled by independent experts in 1996 () endorsed the programme, with the proviso that funding was insufficient to achieve the declared objectives. Moreover, the proposal comes in the wake of the report on 'TERES II - the prospects for renewable energy in 30 European countries from 1995 to 2020`, funded under Altener I.

1.7. In its opinion of 24 April 1997, the Committee commented comprehensively on the Commission Green Paper on 'Energy for the future: renewable sources of energy` (), asserting, in particular, that 'strengthened actions under Altener II could create a competitive market for the renewables industry and thereby reduce costs and create jobs in the sector. The TERES II Report has underlined the need for further technological development if renewables are to achieve significant market penetration. Action at Community level would be targeted at certain well-defined areas such as photovoltaic roofs and cladding, solar thermal heating for sport, tourism and health facilities, active and passive solar architecture, production of bio-methane from municipal biodegradable solid waste, stand-alone facilities etc. with the Community support as low as possible to avoid market distortion and calculated to take into account the external cost avoided` ().

1.8. Moreover, in its opinion on the draft Council decision concerning the organization of cooperation around agreed Community energy objectives (), adopted on 23 April 1997 (), the Committee reiterated its endorsement of the objectives concerning measures to promote use of renewable energy resources and to increase energy efficiency; 'these objectives can make a significant contribution to achieving a healthier environment and, in conjunction with the development of indigenous resources, reduce the Community's dependence on external energy resources, thereby boosting economic growth and employment`, the Committee said.

2. The Commission proposal

2.1. The draft decision singles out six areas for action and measures in the field of renewable energy. Four of these extend Altener I initiatives, whilst the other two aim to promote the market penetration of RES, and to carry out proper strategic monitoring and control.

2.2. In particular, intervention will include:

- studies and other actions to implement or complement Community measures taken to develop the potential of various renewable energy sources, such as sectoral and market strategies, the development of norms and standards, procurement and legislation, with up to 100 % Commission funding. For these actions, a budget of ECU 4 million has been earmarked for the two year period (13,3 %);

- pilot actions designed to create or extend infrastructures and local and regional planning instruments, design, evaluation, information, education and training, and new financial and market instruments, with between 30 % and 50 % of total cost funded by the Commission. For these actions, a budget of ECU 9,4 million has been earmarked for the two year period (31,3 %);

- measures for the exchange of experience and know-how, for improved coordination between international, Community, national, regional and local activities, and the establishment of a centralized system for compiling and circulating information, with Commission financial support of up to 100 %. For these actions, a budget of ECU 3 million has been earmarked for the two year period (10 %);

- measures for the exchange of experience and know-how proposed by an entity other than the European Commission, with between 30 % and 50 % Commission funding. For these actions, a budget of ECU 2,8 million has been earmarked for the two year period (9,3 %);

- actions to facilitate the penetration of RES and encourage investment by providing access to specialist advice, analysis of market prospects, choice of location of projects, establishment of financing plans in the following fields: biomass, thermal and photovoltaic solar systems, passive and active solar systems in buildings, small scale hydroelectric projects, wind power, geothermal energy. The Commission intends to define the level of financial support for these actions on an annual basis. For these actions, a budget of ECU 8 million has been earmarked for the two year period (26,6 %);

- actions intended to monitor the implementation of the strategy and action plan for the development of RES; to evaluate the impact and cost effectiveness of measures undertaken under the programme; and to monitor the progress achieved by the Community and its Member States with regard to the development of RES, funded up to 100 % by the Commission. For these actions, a budget of ECU 2,8 million has been earmarked for the two year period (9,3 %).

2.3. The Commission also intends to frame the indicative programme's priorities and guidelines on an annual basis; these will, however, be submitted for opinion to the advisory committee composed of Member State representatives provided for under Article 5.

2.4. In addition to general anti-fraud measures, the programme explicitly provides for funding for the new RES penetration actions (Article 2e) to be subject to the actual results of the proposed projects.

2.5. When the programme has been running for two years, the Commission will also submit a programme assessment report to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions; this will be followed by a final report at the end of the programme.

2.6. The programme is open to the associated central and eastern European countries and to Cyprus, under the rules governing EFTA participation and on the basis of existing association agreements.

2.7. Since the EU's post-1999 financial perspective is not yet available, the proposed budget only covers the first two years of the programme, and comes to ECU 30 million. The proposal's declared strategy must be properly incorporated within a systematic, long-term energy policy, with valid arguments for increasing the budget headings and bringing them under Title III (other policies) of the financial perspective for 2000-2004.

3. General comments

3.1. The Committee is fully aware of the key strategic role which the development of RES will play in future Community sustainable development policy, quality of life for citizens, and the need to create new jobs and boost economic and social cohesion. In line with some of its more recent opinions, the Committee thus reiterates its support for a strengthened Altener programme.

3.2. The Committee feels that it is essential, in the light of the declared indicative target of the Green Paper on renewable energy sources (), to double the share of RES in European energy consumption from 6 % to 12 % by 2010, to strengthen the activities of the European Community and the Member States in order to speed up - by coordinating all relevant Community instruments, particularly the RTD Framework Programme - RES penetration in the internal and global markets, in EU border markets, and, more generally, in terms of competitiveness in the global market.

3.3. Despite the regrettable absence of a full assessment of Altener I's effectiveness and consistency with the declared objectives, experience with the programme has shown that the challenges facing RES in terms of technology, industry, competitiveness and market penetration require much greater resources than those made available in the first five-year period, and probably greater than those proposed by the Commission for Altener II, if RES are to win a sizeable share of Community energy consumption, and achieve the economies of scale needed for the industry to be able to compete globally.

3.4. The Committee therefore endorses the conclusions of the first report on the results of the Altener programme (), which called for future actions to focus on particular strategic aspects, such as solving market penetration problems, whilst avoiding unwarranted distortions of competition.

3.5. In this respect, the two new actions aiming to facilitate RES market penetration, encourage investment, and control, monitor and constantly assess the programme's compliance with these objectives, are of particular strategic importance, whilst the fact that financial support is contingent on the actual results of the proposed projects could ensure better targeted selection. Hence, the Committee would particularly like to see a further increase in the percentage of funding devoted by Altener II to these objectives.

3.6. Nevertheless, the Commission's declared intention to define objectives, criteria and access procedures for this type of action on an annual basis does not allow a full assessment; nor does it allow the creation of stable, predictable market conditions for firms which provide energy products and services, or for investors and customers.

3.7. The Committee feels that the objectives, criteria and access procedures should be defined immediately, whilst keeping the intervention levels flexible and within predetermined limits in order to avoid distortions of competition.

3.8. The Committee feels that this action should place more emphasis on projects which are accompanied by a cost-benefit analysis, including an environmental balance sheet, carried out according to fixed criteria and objectives, to encourage local authorities and citizens to exploit RES directly in specific areas, such as those outlined in point 1.7. Direct involvement of the public could, in itself, speed up public awareness of the potential of renewable energy sources.

3.9. Moreover, the Committee believes that the advisory committee provided for under Article 5 should be accompanied by sectoral mechanisms for permanent dialogue with the representatives of energy producers and energy service providers, the energy industry, technicians and professionals (architects, engineers, builders, etc.) and end-users, in order to ensure that the programme's measures are consistent with and interact with market trends, in terms both of supply and demand, giving greater priority to European interregional cooperation.

3.10. Standardization via CEN and Cenelec is an important area which should receive more adequate funding under Altener II, both for the positive impact on the single market and accompanying economies of scale, and for the penetration of renewable energy technologies into third country markets, particularly those of central and eastern Europe and the Euro-Mediterranean area. The Committee believes that the creation of pan-European standards is an important factor in promoting renewable energy sources and would ensure lower manufacturing costs for customers and interested parties, particularly in a global market perspective.

3.11. The Green Paper on energy for the future: renewable sources of energy, recognizes the strategic priority of international cooperation on RES, both to bolster Community industry in the sector (), via actions to promote exports, and to mitigate any damage to the global environment by virtue of growth in developing countries being based solely on traditional energy sources. In this respect, the Altener programme, which is restricted to associated CEECs and to Cyprus, should promote cooperation with international cooperation programmes such as MEDA, Phare, Tacis, the EDF and the ALA countries, and focus primarily on the promotion of RES.

Moreover, within the framework of the Euro-Mediterranean partnership in the field of energy, the recently-established Euro-Mediterranean Energy Forum and its joint medium-term action plan, should include arrangements for cooperation and coordination with Altener. As with the EU-Turkey Joint Consultative Committee, the ESC-Third Country Joint Consultative Committees should also strive to cooperate on RES. Similarly, the programme should play a suitable role in preparing European strategy to stimulate discussion at the third UN conference on climate change to be held in Kyoto in December. The Committee is currently preparing an opinion on the subject.

3.12. RES play a very important role in the development of local energy, since installation and operation often rely less on infrastructure and networks, and this makes them particularly suitable for the more isolated regions of the Community, where infrastructure is inadequate. These peripheral regions have considerable resources for producing renewable energy.

3.13. The development of RES is directly linked to the existing situations in the different areas of the Community which have developed different approaches depending on their structural, climatic and environmental features. Community action, and consequently Altener II, must be developed in accordance with the subsidiarity principle, in order to incorporate and complement existing local projects, providing them with added input and renewed vigour. Full coordination with national and regional programmes, as a step towards a common strategy, would ensure resources were pooled and allow effective dissemination of best practice at the various regional, national and Community levels, under a bottom-up procedure.

3.14. The emergence of new energy technologies, to be further developed via priority RTDD actions under the 5th Framework Programme, will open up great potential for decentralized cleaner energy production, as long as research and demonstration activities are consistent and focus on cutting costs and addressing the problem of reliable, low-cost decentralized energy storage which will be safe and have a minimum impact on the environment.

3.15. With a view to greater economic and social cohesion, structural fund and cohesion fund intervention should focus on supporting these initiatives. The EIB, the EIF and the EBRD for the CEECs should fund RES-related projects, and in this context, co-financing techniques should be developed.

3.16. In particular, difficulties in securing funding - due to credit institutions' limited awareness of RES potential - could be smoothed out via the quality guarantees provided for under Article 2e. These certify that the project complies with national and Community regulations, and vouch for its technical feasibility and profitability.

3.17. Whilst the Committee deplores the failure to include a specific title on energy policy in the Treaty on European Union, as it had strongly advocated, it feels that, in accordance with the Energy Council Resolution of 27 May 1997, RES support actions should be included in a strategic framework programme of consistent, transparent Community actions and instruments in the energy field, which should be coordinated with other relevant Community policies and Member States' policies.

3.18. In particular, a coherent framework of this kind would include the Thermie programme (management and application), Save II and Synergy alongside Altener, thus avoiding operational sub-division and duplication, and should make it possible to link up with relevant RTD programmes such as Joule/Thermie and Flair, and with the relevant policy areas on external relations, the environment, competition, the single market, the regions and agriculture.

3.19. Moreover, an 'ad hoc` institute for RES within the framework of the JRC - as recommended by the Committee in its opinion on the Green Paper on renewable sources of energy () - could provide coordination, promotion and forward-studies services.

4. Specific comments

4.1. Article 1(1)a: add the following:

'within the framework of a future integrated Community energy policy, coordinating all up-and-running actions and programmes in the field, and the relevant aspects of agricultural, environmental, RTDD, cohesion and external relations policies.`

4.2. Article 2(1)e: add the following:

'and providing quality guarantees which vouch for the economic, social and environmental feasibility of the project, and affording greater access - particularly for SMEs - to public and private finance. The projects must be grouped in sufficiently broad clusters as to be cost-effective.`

4.3. Article 2(1)c: add the following:

'by creating a database using harmonized statistics, and providing access to it via a dedicated, open web site.`

4.4. Article 2(2): add the following:

'energy storage`.

4.5. Article 4(2): amend to read as follows:

'The conditions and guidelines applicable to funding for the actions and measures referred to in Article 2(1) shall be defined at the beginning of the programme and appended to this decision, and reviewed annually, regard being had to: ...`

4.6. Article 4(2), second indent: add the following:

'via a comprehensive, global cost-benefit assessment based on predetermined criteria and objectives.`

4.7. Article 4, last sentence: amend to read as follows:

'The Committee referred to in Article 5, and sectoral instruments for permanent dialogue, comprising representatives of end-users, technicians and professionals, energy producers and energy service providers and the energy industry, shall assist ...`.

4.8. Article 6(2): amend to read as follows:

'During the final year of the programme, and prior to the formal presentation of a new proposal for a programme...`.

4.9. Article 7, add the following:

'Moreover, the Commission shall promote exchanges of information, dissemination of best practice, and coordination between projects and with international cooperation programmes which focus primarily on developing renewable energy sources.`

Brussels, 29 October 1997.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 192, 24. 6. 1997, p. 16.

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() OJ C 19, 25. 1. 1993, p. 7.

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() According to the European Council for the Export of Renewable Energy Sources, 75 % of the Community's energy industry is export-dependent. Cf. Teres II, November 1996, p.12.