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DOCUMENTS "COM"
COM(79)527
Vol.1979/0181

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(79)527 final
Brussels .4October 1979
THE ENERGY PROGRAMME OFTHE EUROPEAN COMMUNITIES
COM (79)527 final

THEENERGYPROGRAMME OPTHEEUROPEAN COMMUNITY
CONTENTS ! paras.pasre
I.THECOMMUNITY'SENERGYSITUATION 1-111-3
.Short-term:oilsupplies , 1–4 ,1
Thelongerterm 5–6 2
' I
Thestrategicimportanceofenergy 7–8 2
TheCommunity 1sexternalvulnerability 9 3
Theeconomicburdenofenergysupplies 10–11 3
II.COMMUNITY ENERGYGOALSANDACHIEVEMENTS 12-233-5
The1974/75Resolutions 12–15 3
AdditionalCommunityobjectives 16 4
Progresstowards1985objectives 17–22 5
III.EXISTINGANDPROPOSEDMEASURES ' 23-906-26
MainelementsintheCommission *swork 23–24 6
Forecasting,analysis,objectives 25-27 7■
Pricesandinvestment 28–.29 8
Energysaving 30–36 9
R&D,newsources 37–44 11
Demonstration projects 45–47 13
Eleotricityandnuclearpower 48-61 14
Coal ( 62-7218
Oil 73-80 21
Cas 81-84 23
International relations 85–90 24
IV.CONCLUSIONS / 91-92.26
Annexes
I.Communityenergybalances,1973-90
II.Marginsofuncertainty andflexibility
III.EnergyinvestmentaidsbyCommunityinstitutions '^
IV.Communitymeasuresalreadyadoptedinthefieldofenergysaving

HfKFTT-H^RCYPROGRAM?.:!?OPTT{?]TftlROPEANCCIMTTrrTY
'fllignWTWim'H T'jinîHGYSITUATION
Shorttcrmï'oiltnmpli.en
»■»>*■■–mm,»mm ■«m**i» .-,f
1 v-
1.TheCominunityfs immediateproblemintheenergysectoristoovercomethe
«
recentdifficultiesintheoilmarket*'Thei'eisanurgentneedtotackletlie
problemsofsupplies,demand,andstocklevelssothatfurtherpressureonoil
pricesmaybemoderatedandthatadequatesuppliesofalloilproductsshould "be
availableinthecomingwinter.
\
2.Thedifficulties whicharosointhefirsthalfof1979wereduetothe
unforeseeninterruption inoilsuppliesfromIran,coupledwithaseverswinter
andphi^hunderlyingenergydemandduetorelativelyhigheconomicgrowth.The
&hort3gcsoccurredinspiteoftotaloilsuppliestotheCoraraunityinthefirst
halfof1979about6$higherthaninthesameperiodin1978.Netimportsof
ν
■crudeandproductstogetherincreasedbyabout1.5$(netimportsofcrudeoilalone
increasedby4*0$)anddomesticcrudeproductionincreasedby40$.Nevertheless ,
afterallowingforclimatic,seasonalandcyclicalfactors5,totalCora-.unitysupplio
inthefirsthalfof1979ar©calculatedtohavebeen3«0$abortoftheoretical
potentialconsumption.Thisshortfallwasnotevenlydistributedbetweenall
memberstatesjandmainlyaffectedgasolineanddomesticfueloil.Inthethird
quarter'ofthisyear,allmemberdtat.esexceptItalyareexpectedtoshowav
surpluscalculatedonthesamebasis.AttheendofSeptember1979»oilstocksiri
theCcmiifluiityareexpectedtobeaboutthesameasayearpreviously.
3.TheworldpriceofcrudeoilhasincreaseddramaticallysinceDecember1976.
Withofficialpricesnowat^18-23.50perbarrel,therehasbeenanaverage
increaseintheprice,ofimportedcrv.deof5T?otinthefirsthalfof1979»
equivalentto37.5$onanannualbasis.BytheendofAugust1979»consumer
prices(netoftaxandduty)foroilproductshadonaverageincreasedby52$i
whereasaveragepricesonthespotmarkethadincreasedby9^$»
4.Theshorttermprospectsinraid1979are"thatiftherecentincreasein
SaudiArabianproductionismaintained,andowingtothegradualeffectof
demandrestraintandtoprudentstockmanagement,itshouldbepossiblefor
suppliestoEieetdemandfortherestofthisyear.Nevertheless,thesituation
remainsvulnerabletosuddenchange;inspiteofthepresenteasingofpressure *
ontheinaxkei.fi,suppliesmaycontinuetobetightoratleastunpredictable over
thenexttwelvemonths..

The lon /'crterm
5.Concern with these immediate difficulties should notobscure themore serious
longer term problems .Current oilsupply questions should beexamined within this
broader context ;short andlong term policies should form part ofacoherent
approach .
6.Conventional analysis before theevents oflast winter suggested that inthe
mid orlater eighties oildemand would grow until incremental supplies could no
longer keep pace with extra demand .According tothis analysis theCommunity (and
other consuming countries )haduptotenyears inwhich toeffect structural changes
inthepattern ofenergy consumption ,involving greater efficiency inenergy use ,
andmajor investments tobring about atransition away from oil .Although oilwill
continue toplay animportant part inoverall energy supplies ,itsshare would
decline and itwould increasingly beconfined tospecialised uses .Theessence
ofthis analysis hasnotbeen altered bytheevents ofthis year but itisnow
clear that there will bemuch less time inwhich tobring about thenecessary
changes than wasthought . Itis •nowestimated that world demand for
OPEC oilin1985 could besome 3-4mbdinexcess ofOF£C ,sproduction .
Inthose circumstances ,strong upwards pressure canbeexpected onprices .This
pressure will bemoderated bythesuccess ofconsumer countries inlimiting
demand ,but ,since major newcontributions from other oilsources orfrom other
fuels cannot beexpected before 1985 *"theability orwillingness ofthose
countries with spare oilcapacity toraise production above the level dictated
byrevenuo requirements orbyother considerations isofcrucial importance .
The ntratp"ic importance ofener /ry
7.Itisbecause adequate andreasonably –priced energy supplies aresofundamental
tothefunctioning oftheeconomy andtothestability ofsociety that energy
questions intime ofactual orthreatened difficulty become charged with the
highest political significance both domestically andinthefield offoreign
relations .Asrecent events have shown ,thewestern public isextremely sensitive
totheeffects ofeven minor andtemporary energy shortages .More fundamentally ,
thestandards ofpublic services and thelevel ofbusiness activity andhence
employment candecline orremain atanunacceptably lowlevel iftheenergy
situation issuch astojeopardise world trade andeconomic growth .Inthese
circumstances social tensions canappear orbeexacerbated ,andpolitical and
social norms canbochallenged .

8.These dangers arereilccted intheexternal field .Governments ,whatever
thevirtues ofinternational collaboration onenergy matters ,maytend intimes
ofstress toconsult their ownimmediate interests first .There isthus adanger
ofanaggressive andcompetitive scramble forscarce world energy supplies ;the
reduction ofthis danger must beaprime policy objective .Closer understanding
andcooperation with theCommunity 'sOECD partners particularly theUSAand
Japan –isimportant inthis respect .. - >
The Community 'sexternal vulnerability
9.From this description ofthebroader nature oftheenergy problem ,itwill
beclear that theCommunity isinavulnerable position .Despite thestrategic
significance ofsecure energy supplies ,the'Community allowed itself tobecome
dependent onimports for 63?ooftotal consumption by'1973 ;ofthat total
consumption oilaccounted' for61$ ,almost allofwhich wasimported .Amajor
effort isrequired toreduce this external dependence .
Theeconomic burden ofenergy sunplies 1 '1 -1 1
10.TheCommunity 'senergy dependence also hasaheavy economic significance .
Whereas in1973 oilimports of580tonnes cost about $15billion ,imports of
472m.tonnes in1978 cost about ^50billion ,andimports atthesame level
in1979 could cost about ^70billion .At .thesame time ,energy investments are
.expected torunatuptojt$0billion peryear inthecoming decade .
Expenditure onenergy imports andinvestments isexpected totake about 5%of
Community GDPover thesame period .While diversion ofresources onthis scale
totheenergy sector isnecessary ,itnevertheless decreases theresources available
forprivate consumption ,other productive investment ,orforsocial services .The
need to'minimise this economic burden isaprime motive for .thereduction of^
energy demand through energy saving .
11.However heavy theburden ofenergy investment andimport expenditure maybe
onth6Community 'seconomy ,theeffect iseven more marked inmany developing .
countries with fewenergy resources .-Anincreasing share oftheir CNPisbeing
pre-empted bythe .cost ofenergy imports andbythecost ofservicing theloans
which finance their deteriorating balance ofpayments .
1
II.CORi"TniTY ETORCY COALS AND ACHIEVEMENTS . ,
The197^/75resolutions
12.Thedevelopment andimplementation ofenergy policy atCommunity andnational
levelisagradiial process .Thefoundationj^for acommon European energy policy
have already been laid down inresponse totheinitiatives taken attheEuropean

Councils ofOctober 1972 and .December 1973 •Three Council Resolutions were passed
inlate1974andearly 1975^^which together provided comprehensive guidelines
forCommunity policy ,andspecified sectoral objectives for1985 *
13*Thefirst Resolution defined theexpression "Community energy policy "as
moaning thepreparation ofjoint target figures asguidelines fornational policy
and asindicators forCommunity energy producers and consumers ;theclose
coordination ofthepositions o£themember states toenable theCommunity to
express acommon viewpoint onexternal energy questions ;Community participation
incooperation with other consumer countries ,andbetween them andtheproducer
countries .TheResolution went on -tostate .that thereduction ofthegrowth of
enorgy demand andtheimprovement ofthesecurity ofsupply bydevelopment of
domestic resources andbydiversifying external sources ofsupply ,should bethe
guidelines ofCommunity energy policy .
14.Thesecond resolution stated specific objectives for 1985»Dependence onimported •
energy wastobereduced to50/*»or40%ifpossible ;target shares andproduction
objoctives were setforeach fuel inthetotal energy balance ;energy consumption
wastoboreduced by15%from the1973 forecast for1985 (i«e.1450 mtoeinstead
of1700 mtoe). '
15*Thethird resolution ,ofFebruary 19751outlined particular policies and
measures required toachieve theobjectives already agreed .These included the
useofCommunity financial aids ,economic pricing policies toencourage investment ,
coal support measures ,acommon nuclear fuel supply policy ,andgreater transparency
oftheCommunity oilmarket .
Additional Community objectives
16.These resolutions remain theformal foundations ofCommunity policy .Much
detailed Community legislation andaction hasfollowed from them andthese are
mentioned infollowing paragraphs .Since 1973/74»however ,several further
objectives have been added .AttheEuropean Council inBremen in1978 itwas
decided toreduce theratio ofgrowth inenergy demand tothegrowth inCommunity
(1)Council Resolution of17«9»74 concerning anewenergy policy strategy for
theCommunity ;O.J. C153/1,9»7«75 * *
Council Resolution of17*12.74 concerning Community energy policy objectives
for1975 }O.J. C153/2,9.7.75 .
Council Resolution of13.2.75 concerning measures tobeimplemented to
achieve theCommunity ^energy policy objectives ;O.J. C153/6,9*7.75«

GDPto0.0by 19&'jtbytheimplementation ofstrong energy saving measures .The
target of l)0r/odependence "by1985wasreaffirmed .TheEuropean Council inParis
inKarch 1979 agreed that oilconsumption this year should beheld at500mtonner ;,
implying areduction from forecast conEumption ofslightly more than the5$agreed
tobyIEAcountries asawhole .AttheEuropean Council inStrasbourg inJune
1979 »itwasfurther agreed that Community oilimports should beheld ator"below
their 1978 level until 1985 »provided that other industrialised countries made
equivalent efforts .Satisfactory indications totliia endwere forthcoming at
theWestern £conomio Suuuiiit atTokyo later inJune .
Fro /ro^ïï towardr .1935 objcctivos
17,Detailed commentary cnprogress towards the19^5 targets maybefo\md in
documents C0I-;(77)395 final^^andC0j.l(' /8)613 final^\ Theresults sofarshow
amixture ofencouraging anddisappointing features , >
\ , '
18.Forecasts ofenergy consumption in19°5 have declined steadily .Compared
with theforecast of .1700 mtoemade in1973 »andthetarget of1450 mtoesetin
1974 »total consumption isnowexpected tcbeonly 1237 ®'toe.Part ofthis decline
hasbeen duototheslowdown ineconomic growth « .Atthesame time ,however
itir>calculated thatenergy saving hasreduced consumption by7-8$ from what itwould
otherwise have been ineach oftheyears between 1975 a^d 1977 •-
19*"Fair progress is ,being made inreducing external dependence andtheshare of
imported oil.Imports accounted for ,63$ofenergy consumption in1973 ;the
Community 'sdependence onimports in1978 was55$andthe50$maywell beachieved
in1985 *Theshare ofoilintotal energy consumption hasdeclined from 61$in
1973 to55/*in1978 ,Itshould decrease further to50$in1985 and -perhaps 47$
/
in1990 .I"absolute terms ,between 1973and1978Community oilconsumption fellby
!>omtonpt:S |andoilimports fell by109mtonnes .
20.Thepicture ontheproduction side has some encouraging andsome disturbing
features .Coal production andtotal consumption have continued todecline since
1973 although imports have inoreased .Thelatest forecasts arethat theproduction
andconsumption levels setas1985 objectives will notbeachieved bythen ,
although they maybeby1990 .Oilproduction islikely tofall well short ofthe
target of380mtons andiftheimport limit istobeassured ,production may
have tobetowards thetopendoftheforecast "range (115–165mtonnes ).The
picture fornatural gasisbetter '– supplies seem assured well into the
(l)Second report ontheachievement ofCommunity energy policy objectives
for1985 * '
(2)Energy objoctives for 1990andprogrammes ofmeraber states .

-6-
'1990s f°r811increasing level ofconsumption ,provided that contracts already
signed arerespected .Asdomestic production reaches aplateau andthen declines ,
imports ,already contracted ,will take anincreasing share .Prom their 1978 level ,
they areexpected almost totreble by1985 andtoquadruple "by1990 *Thebuild up
ofnuclear capacity hasbeen subject toconsiderable delay .Itisnow likely that
there will beinstalled capacity in1985 ofonly 70-80 GWe ,compared with the
objective of160-200 GWe }there isuncertainty about capacity in1990 ,butitcould
beaslittle as127GWe .This decline intheforecast nuclear contribution implies
anextra call onfossil fuels forelectricity generation .Itisessential that coal
rather than oilorgasshould fill this gap .
ν
21.Such arethecurrent trends intheCommunity ^energy demand and supply
(neeAnnex Ifordetailed figures ).Thesupply picture ismarked ,byexternal
.*uncertainties ,andbyinternal difficulties crlack ofmargin tomanoeuvre in
thecoal ,nuclear andoilsectors .Theevolution -ofdemand caneither exacerbate
ormoderate these supply problems anddepends onfuture economic growth andon
theeffectiveness ofourefforts toussenergy more effectively .
22.Avariation of1$intheaverage annual growth rate ofCommunity GDPbetween
1978-1 990could lead toupto100mtoeperannum more orless energy demand by
1990 ,given thepresent relationship between economic growth andenergy demand .
Theaverage -Community economic growth rate of3.0^assumed intheforecasts
'for theperiod 1978-1990 ,while insufficient from thepoint ofview oftackling
unemployment ,isrelatively high compared with growth recently achieved .Further
uncertainty isinherent intheforecasts themselves .TheCommissions ownanalysis
ofmember states *forecasts shows that in1935 there isamargin ofuncertainty or
flexibility of80mtoearound theforecast demand ,andin1990 amargin of212m
toe (seeAnnex II).However ,thedamage incurred from anenergy supply constraint
oneconomic growth 'would bemuch greater than thecost ofmaking over–provision ;it
isprudent toassume that thesituation will continue tobetight ,andtoinsure ,
orover–insure ,accordingly .
III .m .STI :IOATf!)FPOPOSTC )KBASIJPJS
olcr:?r.tr' .j.nthe Comnir.r;ion*s work
23.Thefollowing paragraphs explain what policies andmeasures ineach sector
orarea ofactivities theCommunity hasalready orisproposing toputinplace
todeal with theproblems arising from thesituation described insections IandII
above .Itisimportant toremember ,however ,that many components ofCommunity
t

energypolicyare,asthe1975resolutionmakesclear,executedatnational
ratherthanCommunitylevel. ,
24.TheCommiesioil'sworkconsistsoffourmainelementsdesignedtopromote
theemergenceofa.commonenergypolicyandtheconvergenceoftheenergy
policiesandsituationsofthememberstates.Ithasaconstanttaskof
analysisandpresentation oftrendsintheinternalandexternalenergysituation
oftheCommunitya3awhole.TheCommissionisalsoengagedinacriticalanalysis
ofnationalenergyprogrammestoidentifyGtrongandweakpointsandtohelp
ensurethattheyaremutuallyconsistent.Thethirdmainactivityisthe
preparationofCommunitylegislation wheretherearegapsinnationalprogrammes
orwherejointCommunityactionisbyitsnatureessentialorclearlymore
effectivethandisparatenationalefforts.Finally,inseveralfields "theCommissioi
hasresponsibility forexecutiveactionbyvirtueeitheroftheTreaties(the
EuratoinandECSCTreatiesinparticular)orofspecificCommunitylegislation.'
/
Forocar;f.in/:;anal.yr.in;objectives
25.TheCommissionpublishesregular "statementsoftheshorttermenergy
situationshowingresultsforthepreviousyearandforecastsforthenext.
TheCommissionalsocarriesoutexaminations ofnationalprogrammes,withaview
tomonitoringprogresstowardsthe1985objectives,andlatterly,establishing new
objectivesfor1990.Thesesurveys,based011information frommemberstateswhich
issubjectedtocriticalcommentarybytheCommission,alsbprovidethebasic
dataonCommunityenergytrendsandonthedirectionandconvergence ofmember
states*programmes.Theresults(andbroadconclusionsoftheCommission)ofthe
(1)1970exercisearegivenindocumentCOLl(78)6l3final*,andmoreprecise
recommendations fornew1990objectives,coupledwithastudyoftheconvergence'(2)ofnationalprogrammes,isgivenindocumentC0M(79)316final.Discussionof
theseproposalswillformanimportantpartoftheCouncilsworkinthelatter
partof1979*
(1)"Knergyobjectivesfor1990andprogrammesoftheMemberStates".
(2)"EnergyobjectivesoftheCommunityfor1990andconvergenceofpolicies
oftheMemberStates".

–o–
-.' . . .- - χ - ·
2o»Thomain recommendations fornew 1990 objectives are :
(i)thereduction "below 0.7ofthoratio between thegrowth ofenergy
consumption andeconomio growth ;
(ii)tolimit theCommunity 1sdependence onenergy imports to50&
(iii)toextend to1990 "theexisting 19S5 objective tolimit oilimports
to470 >ntonnes ;
(iv)toincroaso theuseofsolid fuels andnuclear power sothat together
they cover 70-75$ electricity generation ;
(v)torestore Community coal production toits1973 level of250mtoe
(i.e. theoriginal target for1985 )» "toincrease coal imports ;to
increase correspondingly theCommunity 'scapacity toconsume solid
fuels ; .
(vi)themaximisation ofCommunity oilandgasproduction within the
forecast ranges ; ' '
(vii)the"development ofeconomic andtransparent energy pricing policies .
27.Inaddition totheshort term forecasting andmedium terra planning described
abovo ,theCommission isalso engaged ontheconstruction ofenergy scenarios ,by
means ofmathematical modelling techniques ,fortheyears 2000 and2025 .
Preliminary results forthe2000 scenarios have been received ,andwork is
continuing .Aquantitative study uptotheyear 2025 ("Crucial choices forthe
enorgy transition ")ha3just been completed bytheCommission andwill bepublished
Gocn .
Prices nnd investment ,
28.Pricing policy isseen asacrucial factor affecting energy saving andthe
creation ofsatisfactory conditions forenergy investment .Current andexpected
price levels arekeysignals toboth consumers andproducers ofenergy ,and
important determinants ofarational allocation ofresources .Subject tothe
general provisions intheEECTreaty concerning pricing practices asthey affect
competition ,pricing policy –andrelated fiscal questions –are ,inpractice ,
largely matters fornational governments . 1TheCommission 'spresent work isaimed
atbringing together comparative information fortheCommunity asawhole ,andto
indicate thebasis onwhich national pricing policies maybebrought into acloser
alignment ,'consistent with theaims ofenergy policy .Particular attention hasbeen
given inrecent Commission studies togasandelectricity tariffs .Clearly ,aclose
alignment ofprices andtaxation onaCommunity basis must belinked with progress
towards broader economic convergence within theCommunity .

-9-
29«LoanfinancefromCommunitysourcesisausefulsupplementtonationaland
commercialsources,sinceitisobtained ,andre-lentontermsreflectingthe
ratingofthoCommunityasawholeininternational markets.Itenablesthe
CommunitytocoordinateandtosupportprojectsofspecificCommunityinterest
andalf>otoreducetheeffectsofenergyinvestmentasafactorfordivergence
betweentheeconomiesofmemberstates.Atpresent,Communitysourcesplaya
relativelymodestroleprovidingonlyabouty/>ofthetotalannualrequirement
forinvestmentfinance,butinviewofthosuccessofrecentschemessuchasthe
EuratomloanschemeandthenewCommunityinvestmentfacility,andthecontinuing
pressureofdemandonEIBandEC3Cfacilities,furthergrowthinCommunitylending
totheenergysectorisprobable.TheCommissionisconsidering thopossibility
ofanewCommunityfinancialfacilitygearedsolelytomeetenergyinvestment
requirements .Existingsourcesandapplications ofCommunityinvestmentand
otherfinanceareshowninAnnexIII.
.•
PVier.^ysaving 'i ' •
30.Intheshortand'mediumtermgreaterenergysavingcanprobablymakea
larger(andcheaper)contributiontotheequilibriumofsupplyanddemand
thancanactiontoincreasesupplies–sincesuchactionnormallyhasalonglead
time.Thereisalsoscopeforfurthersubstantialsavingsthroughstructural
andbehavioural changetowardsamoreenergy-efficient economyandsociety,
althoughtheadaptationwillnotboeasy."Energysaving"policiesfallunder
threemainheads: ■. *
(i)mandatoryreductionsinenergyuseachievedbytheeliminationor
rationingofcertainactivities.Suchmeasuresareusuallydesigned
fortheshorttermonlyandassociatedwithanemergency;
(ii)reductionsinenergyconsumptionachievedbytheuseofmoreefficientplj'jit
andequipmentorbythemoreefficientuseofexistingequipment.Theaim
hereistoobtainthesamequantityofusefulenergyatthepointoffinal
consumptionwithasmallerinputofprimaryenergy.Thisi3theareain
■whichmostconventional energysavingeffortshavebeenandarebeingmade,
andforwhichgreatscoperemains.Initialcapitalexpenditurebyindustry
orthoindividual-whichissometimesanobstacle-isusuallyrequired;
(iii)thethirdcategoryofenergysavingpolicyisnecessarilylongerterm
undinvolvestherestructuring oftheeconomyonalessenergyintensive
?
basis.aMtheencouragement ofmodesoflivingwhicharolesswasteful
ofresourcesingeneral,inoludingenerrjr.In1978,theCommissionasked
anindependentteamofdistinguished expertstostudytheprospectsfora

newrelationship between economic growth andenergy consumption .Their
first report ("Infavotir ofanenergy efficient society ")waspublished
inJuly .Itwill "bestudied anddiscussed inthecoming months ,andshould
provide thebasis foracomprehensive strategy forenergy efficiency in
theCommunity . -
%
31.Member states have putmhand avariety ofnewshort term oilsaving '
measures designed tomeet theStrasbourg commitment tolimit oilconsumption to
500mtonnes this year .Itistooearly tosaywith precision what theeffect
ofther,e measures will be,buttheindications arethat thelimit maybeexceeded .
Inanyevent ,themeasures will have tocontinue into next year .
32.Member states have invarying degrees introduced basic medium term energy
saving measures ofthetype described inpara .30(ii)above .Inaddition tothese ,
tneawures have been introduced atCommunity level ,andthese arelisted inAnnex IV..
In1979 »"theCommission will beproposing further Community measures ,including a
draft directive ontheperformance ,regulation andinspection ofheat generators ,
andthree more implementing directives ontheenergy labelling ofdomestic
applictnceo .
33»TheCommission will beworking onavariety ofother energy Baving questions
with aview tobringing forward proposals later .These aredescribed in .
•documents 0015(79)312 and0011(79)313 TheCommission hasalso proposed that
volun tary indicative targets forthereduction offuel consumption bymotor cars
andlight vans should benegotiated with theindustry atCommunity level . x
1 / ,
34.Asasound basis foraction atnational level which would ensure that
equivalent (ifnotidentical )efforts were being made byallmember states ,and
which would help theCommunity toachieve itsenergy saving goals ,theCommission
proposes that member states should commit themselves totheintroduction ofa
minimum basic programme .Such aprogramme should include theestablishment of
fully economic andtransparent pricing systems ,theuseoftaxation toensure that
energy prices &tleast reflect thelong term scarcity ofresources ,tighter space
heating andairconditioning standards inhomes ,offices andindustry ,better
(1)"Newlines ofaction bytheEuropean Community inthefield ofenergy
saving ",
(2)"Third report ontheCommunity 'sprogramme forenergy saving ".

performance andinspection standards forspace heating equipment ,energy
audits andfinancial incentives forenergy saving private investment by
industry ,information campaigns andinstruction onenergy matters inschools ,
andtargets forincreased fuel economy inmotor cars *Some ofthese arein
existence incomemember states already ;all,adapted tolocal conditions ,are
capable ofintroduction now ,andnono involves anynewtechnology *
35-Ashtated inpara .18above ,itincalculated that thetotal effect of
Community andnational energy saving measures ineach ofthelast three years
hasbeen toreduce energy consumption byabout 7-8$ ,equivalent toabout '70m-tonne a
ofoilperyearworth about #10billion in1979prices .In1978 ,total energy
consumption wasroughly equal tothat in1973-yettheCommunity 1sCDPhad
increased by12$inreal terms .
3C:.Valuable asthese achievements are,they areonly abeginning ..Iftoday*s
best practice andcost effective technologies anddesigns were generalised throughout
theCommunity ,itwould bepossible tosavo ,inthelonger term ,15-30$ ofenergy
useinindustry ,20-35$ intransport andupto50$inthedomestic andtertiary
Gectors ,compared topresent practice .More immediately ,itisrealistic toaim
for 11ratio of0.8between energy andeconomic .growth by19&5 ,inwhich case there
would beasaving of190 1.1toeperannum by1985»of**hich 20mtoewould bein
addition tothesavings presently forecast bythemember states .With the
accelerated diffusion ofbest practice inenergy saving equipment andindesign ,
thetorget ratio of0.7could beachieved by1990 bringing anadditional annual
saving of100mtoe bythat date .
Enerp,' research and f'oveloprr.pnt ;new sources ofenergy
37.TheCommunity energy research programme has three main -objectives :improved
knowledge ofnuclear technology andimproved techniques andstandards forsafe
operations inthenuclear field ^reactors ,thefuel cycle )*improvements inenergy
saving techniques ;andimproved knowledge ofnewenergy sources '(particularly
solar ,geothermal ,andnuclear fusion ).
38.TheCommunity hasanimportant role inthepromotion ,thecommissioning and
thecarrying outofresearch into newenergy techniques andsystems .Thehigh
cost ofsome large projects (e.g.JET),thenecessity foreconomies ofscale ,
theneed toavoid overlap orduplication byseparate national programmes ,the
common interest ofmember Gtates insolutions tocertain problems ,andthe
inherently transnational nature ofothers ,mean that theCommunity must initiate
orcarry outorcoordinate anappreciable part ofthework .

-12-
39.In1978about8$oftotalpublicexpenditureofover2000millionEUAon
energyresearchintheCommunitywasprovidedfromCommunityfunds.OfaCommunity
HtDbudgetfor1978cf254millionIXJA,175millionEUAwasdevotedtoenergy.
40.CommunityR&Disicarriedoutthrough:
' - '
(i)Directar-ion,consistingofworkcommissionedbytheCommunityand
carried.<*utentirelyinthefourestablishments makinguptheCommunity's
Joir«v^searchCentre,TheJRCstotalbudgetfor1977-80was390
rc?*xionEUA,ofwhichsome250millionEUA(64$)wasdevotedtoenergy
.including84millionEUAonreactorsafety.
(i4/Indirectandconcertedaction,consistingofworkdecidedbythe
,>Communitybutcarriedoutinnational,academic,industrialorother
institutions.Themainelementsofindirectactionsare(a)coal
research,(b)thenewfour–yearprogrammeonsolarandgeothermal
energy,thehydrogenenergysector,energysaving,andsystemsanalysis,
(c)severalnuclearenergyprogrammes,thelargestofwhichbeingthaton
controlledfusion,whichincludesaJointUndertaking,undertheEuratom *
Treaty,fortheconstruction andoperationoftheJointEuropeanTorus
("JET"). -
i•
ThoCommunityalsocollaborates withtheIEAinabroadrangeofenergyRAD
projects,includingnuclearfusionandsolarenergy.
41.Coalresearchdealswithsafetyinmines,newminingtechniques,andthe
upgradingofproducts;thebudgetedamountforthisworkisabout20millionEUA
p.a.
42.'fliesecondfouryearprogrammefornewsourcesandenergyconservation has
beenallocated105millionEUAfortheperiod1979-83,roughlydoublethe
allocationof59millionEUAfor1976-79*Thefirstprogrammeinvolvedabout
650rerourchcontractuforavarietyofsmallandlargescalelaboratoryand
industrialprojects.Thesecondprogrammeconcentratesparticularly onsolar
energyandenergyconservation.Earlierthisyear,theCommissionmounteda
largeinternational conferenceonphotovoltaicsolarenergy,andwillstagetwo
moreinternational conferencesin1979»oneonenergysystemsanalysisand
thootheronnewenergysavingtechniques.
43.i&ichnuclearresearchthroughindirectactionconcernsthefuelcycleandthe
safetyofdesignandoperations.Programmesunderwayhavereceivedbudgetary
allocationsof35millionEUAintheperiod197&-1984?theCommissionisproposing
furtherprogrammes,torunto1983/841v/hichwillcost80millionEUA.Themain
areascoveredortobecoveredareplutoniumrecycling,themanagementand.
storageofradioactivewaste,thesafetyoflightwaterreactors,codesand
standardsforfastbreederreactors,andthedecommissioning ofnuclearpower

stations .TheCommunity 'swork onnuclear funion consists ofthefourth
programme oncontrolled therrao-nuclear fusion (124million EUAf1976-1980)andthe
JETproject (towhich nomonon-Community countries have .also adhered )forwhich
148million LUAhas "been allocated fortheperiod 1978-83 .TheCommission has
proposed afurther programme oncontrolled thermo-nuolear fusion ,costing 217
million EUAbetween 1979-"' 983.These programmes embrace all v/orkcmfusion •
carriod outinthemember states ,andtheCommunity expects toremain abreast
oftheUSA findJapan ,particularly inthefield ofelectromagnetic confinement .
Considerable international cooperation takes place ;theCommunity isparticipating
under IAEA auspices inthedefinition ofapost-JET Tokamak ,possibly for
construction onaworld scale . -
44.Theadvancement oftechnology for theexploitation ofnewsources isa
matter ofurgency ;butowing tothelengthy work which must bedone before any
technology maybecommercially applied ,andtothescale ofsubstitution which
must take place thereafter ,thegrowth inthecontribution ofnewenergy supplies
isbound toberelatively slow .The Commission calculates that new sources of
energy could beproviding 4-7% oftotal Community energy supplies by2000 .This
would boequivalent to70-120 million tonnes ofoilperyear –aconsiderable
amount inabsolute terms . -
Dononntrrvtion projects
45. ,TheCommission ,recognising that thegapbetween atechnique 'ssuccess on
alaboratory scale anditsfull commercial application wasoften partly dueto
difficulty inobtaining financial credit during thelaunching period ,proposed a
Community scheme ofgrants fordemonstration projects inthefield ofnewenergy
sources andofenergy saving technology .Ascheme wa3agreed bytheCouncil
in1978 ,providing 95mEUAover five years fornewenergy sources ,and55mEUA
over four years forenergy saving .Theresponse tothefirst calls fortender
wasvery ctrong andgenerally ofahigh quality .Itindicated theneed forthis
sort ofaid ,andthewaytheCommunity could play auseful role inanarea not
fully covered bythebanks orbynational Governments .Over 500applications were
received ,andi* *>eenpossible tosupport 83projects sofar.
46.Thefirst round ofsolar ,coalandgeotheiraal energy projects hasalready
been chosen .Further solar energy projects willbedecided thisyear .50m
EUAhasbeen allocated tocoalgasification ancliquefaction ;fourprojects
have 60farbeen selected ,representing atotal investment of107mEUA,
andfurther decisions will bemade later .TheJommission isconsulting member
states onitsintention tosupport around ofwjveenergy projects in1980 or1981 ,

-14'
47*Contracts arealso being concluded forthefirst round ofenergy saving
projects –including 13projects forcombined heat andpower schemes .Acall
ffortenders forasecond round ofenergy saving projects will bemade in
September 1979 * !
Electricity andnuclear power
48.Theflexibility ofthemeans ofelectricity generation isimportant when
theCommunity istrying toreduce itsdependence onimported oil.Totheextent
that newcapacity isbased oncoal ,nuclear ornewsources ,theCommission sees
advantage inpromoting theuseofelectricity forsuitable purposes .Theaverage
cost ofelectrioity generated from oilisabout 20$higher than inthecase of
coal and30-40$ higher than inthecase ofnuclear ,including construction of
power stations ,fuel cycle ,operating anddecommissioning costs#
49*Ever since 1973 ,therate ofgrowth inelectricity demand hasbeen
considerably higher than therate ofgrowth inenergy demand asawhole .But
whereas electricity demand hadbeen growing atover 7$perannum before 1973 ,
member states forecast that itwill grow atabout 5$Perannum between now'and
1990 ,compared with aforecast rate ofgrowth inenergy demand of3$perannum
forthesame period .Itisexpected that electricity demand in1990 will be
about 480 ratoe (2096 TWhor35$ total energy demand )compared with 264mtoe
•(1150 TWhor29$oftotal demand )in1977 *Th®Community will therefore need
asmuch electricity from nuclear andcoal asitcanget ;butitisunlikely
that the desirable maximum will beavailable from either source .The Commission
isproposing that by1990 70-75$ ofelectrioity should begenerated from coal
ornuclear power ,compared with52$in1977 *Paras .50-53 65-66 below deal
with these aspects .
,50.In1975 ,"twoCommunity regulations were passed prohibiting theconstruction
ofnewoilorgas-fired power stations ,except inexceptional andspecified
circumstances .However ,considerable oilandgasfired capacity hadbeen
ordered before this date ,andisstill coming onstreamj since then ,orders for
coal fired power station shaveincreased ,butthecapaoity will notcome onstream
until later inthe1980s .Much capaoity nowtinder construction orinplanning
isdesigned tobedual fired *Asmuah as34*5 0Weoould beoilburning and19*2
OWeofthis will burn only oil f27*2 OWeooule beooal burning ,ofwhich 10.7 GWe
will burn only ooal . \

15-
51.Therisk remains ,however ,that limitations onoilsupply ,insufficient
coal burn anddelays innuclear programmes will significantly constrain electri­
city production inthe1980s .TheCommission thinks that thenational forecasts
fornuclear areoptimistic andthat itisunlikely that more than 127GWewill
"beinplace by1990 .Installed capacity inAugust 1979 was 29GWewith 40GWe
under construction .Therefore ,toachieve even theCommission *sexpectation
of127GWeby1990 ,15GWeperannum ofconstruction starts between 1979 and
1982 would berequired .Construction starts have been much lower than this in
recent years ,andtheachievement ofahigher rate ,which intheCommission 's
view isfeasible ,would nevertheless beamajor challenge .
%
52,Thelowrate ofordering ,completing andcommissioning inrecent years has
been duetodelayy infinding suitable sites ,ingetting thenecessary authorizations
andplanning consents ,inresolving technical problems ,inmaking design changes
and ovt:r finance .Inthis last respect ,theEuratoia loan scheme tohelp the
construction ofnuclear power stations waslaunched in1977 *with afirst
■branch 0of500million EUA .Asecond tranche of1000 million EUAhasjust been
proposed . .
■53.Another factor isthebody ofopinion which onavariety ofgrounds is
opposed totheuseofnuclear power ,andwhich hasacted ,todelay existing
programmes .While decisions onnuclear programmes arefornational governments
andlocal planning authorities ,theCommission hassought tomeet this public
disquiet byproviding information andencouraging rational ,discussion ofthe
issues .In1977 and1978 ,theCommission held auseful series ofopen debates
onnuclear questions .TheCommission considers that thenecessity of
\
nuclear power issuch "thai ;political leaders have aduty fin "thepublic
interest ,toexplain thefacts ofthecase ,including thegood safety
record ofthenuolear industry compared with other industries andtominimize
theemotive andsubjective elements ofthearguments .TheCommission endorsed the
(1 1gigawatt ofelectrical oapacity isassumed tobeequal onaverage
to1.316 mtoe peryear .

-16-
declarations oftheBonn andTokyo Western Economic Summits of1978 and1979 that
"thefurther development ofnuclear energy isindispensable andtheslippage in
theexecution ofnuclear power programmes must "bereversed ",andthat "without
theexpansion ofnuclear power generating capacity inthecoming decades ,economic
growth andhigher employment will "behard toachieve .This will bedone under
conditions guaranteeing people 'ssafety ".TheCommission also endorsed theTokyo
Summit ,sdeclaration ontheimportance ofcoal intheelectricity sector .
Policies and measures ' /
(a)Klectrici tyfrcnei'ation andpower stations
54.TheCommission isanxious topromote greater grid interconnexion "between
electricity utilities andahigher level ofelectricity imports andexports ,to
ensure theoptimum useofgenerating p].ant {and "Uiebest use ,ofavailable fuels .
TheCommicrion will beproposing arecommendation onelectricity tariff structures
later this year .TheCommission 'splan foraCommnity consultative group onthe
siting ofpower stations hasnowbeen accepted ,andtheCommission hasasked the
Council toresume discussion onitsproposal onprocedures tobefollowed in
planning power stations infrontier areas .
(b)Pu<-'1cycle questions
55.Nuclear energy offers the prrospect ofgreatly induced dependence on
imported energy .Inthis context itisimportant toreduce theCommunity 's
dependence onimported nuclear fuel andtodiversify thesources ofsupply .The
Community' r,uranium reserves are3~5$ world reserves and80$oftheConuiunity *?.
present supplies ofnatural uranium areimported ,from only afewcountries .For
enriched uranium also ,the Coiirounity isstill dependent onimports .Currently ,
alarge part ofenrichment services areprovided bytheUSAandUSSR .This dependence
which enables suppliers toimpose conditions ontheCommunity ,will decline as
thetwoenrichment plants intheCommunity (Urenco andEurodif )increase their
capacity rapidly inthenext fewyears .
56.Inorder tobuild updomestic supplies ,theCommission hasbeen issuing grants ?
foruranium exploration within theCommunity tinder Article 70oftheEuratom
Treaty .Abudget of16million IUUAwasavailable intheperiod 1977-1979 a
nev <budget isbeing prepared .The scheme hasbeen successful inidentifying new
reserves ,particularly inGreenland andItaly .Promising results have also been
obtained inIreland .Aproposal foraCoiwnuti:j|y aidscheme foruranium exploration
overseas isbeing prepared .TheCommission ialso considering proposing the
establishment ofuranium stocks onaCommunity basis ,managed bytheEuratom
Supply Agenoy .

57.Nuclear fuel cycle questions ,particularly those relating toreprocessing
andwnstt ?management ,must bediscussed andsettled' internationally sothat
common solutions may "befound ,-Forexample ,theCommission hasparticipated
actively intheInternational Fuel Cycle Evaluation (ilIFCE ),theconclusions of
which should beavailable inthefirst half of1980 .
58.Inview ofthe >international implications ofaction inallstages ofthe
fuel cycle ,ofthe ,need foracoherent Community policy andofthe "benefits of
common action and,pooled resources inthese complex fields ,theCommission has
madeproposals ^oraCommunity policy onthereprocessing ofnuclear fuel^,
< .(2) , ...... ' .V>thefast V't-eder reactor V'andthemanagement anddisposal ofnuclear waste v
yv
TheCo'v^i 1hassofarbeen unable toaccept these proposals ,which date from 1977
evey "though Parliament hadgiven afavourable opinion .Discussion onthese three
^pers xdll resume later this year .TheCommission 'sview isthat thedevelopment
/ofreprocessing .could inthelater 1980s substantially reduce theCommunity *s
uranium import retirements andtheenrichment workload *Inthelonger term ,
thefast breeder ,reactor inwide–scale useinconjunction with reprocessing
could make theCommunity almost entirely free from dependence onexternal uranium
supplies ,andreduce thequantity ofdangerous substances tobedisposed of
permanently aswaste .The Commission therefore wants work tocontinue sothat
thefast breeder reactor isavailable asacommercial option inthefuture when
theneed arises .TheCommission *sresearch work onnuclear safety ,which is
parallel toitspolicy proposals fornuclear development ,isdescribed inpara .43
above . '
(c)Euratom questions
59*TheEuratom Treaty lays important responsibilities ontheCommunity in
thenuclear field ,including :
(i)theduty oftheCommission (through theEuratom Safeguards Inspectorate )to
satisfy itsalf tfc*t intheterritories ofmember states nuclear materials
arenotdiverted from their declared uses ,andthat theconditions relating to
supply andinternational safeguard obligations arecomplied with }
(ii)thetask ofensuring ,through theEuratom Supply Agency ,that allusers in
the ..Community receive aregular andequitable supply ofores andnuclear
Υ
fuels bymeans ofacommon supply policy ontheprinciple ofequal access
tosources ofsupply ,aslaid down inchapter VIoftheEuratom Treaty }
(iij)the'conclusion onbehalf oftheCommunity ofagreements with nuclear fuel .
suppliers concerning supply andsafeguards .- '
(1)0015(77)331 final ,2.7.1977 .'T
(2)COM(77)361final ,28.7-1977 - '
(3)COM(77)397final ,24.8.1977 .

60.InpracticestheinabilityinsomeinstancestoagreeonhowEuratomshould
carryoutitsresponsibilities hasmeantthattheCommunityhasnotalways "been
ablefullytocarryoutitsproperoreffectiveroleininternational nuclear
affairs#Forexample,theSupplyAgencyhasnotcompletelyplayedthepart
accordedtoitundertheTreaty.Successiveattemptshavebeenmadetoclarify
theapplicationofChapterVI;anewattemptisnowunderwayandthdCouncil
willdiscussthematterfurtherthisautumn.ItisessentialthattheCommunity
isfullyabletoperformitsfunctionsininternational nuclearnegotiations .
Disunityonaninternal *questionofinstitutional competencehasalreadydelayed
thenegotiationofafullEEC-Australia agreementonnuclearfuelsuppliesand
hanobligedtheCommunitytodelaytlieworkoftheInternational Conventionon
PhysicalProtection.Itisimportantthattheimminentre-negotiation ofthe
EEO-Canadaagreementonnuclearfuelsupplie.3andtheopeningofdiscussions
"abouttheEEC-USAagreementbelaunchedontimeandbroughttoasuccessful
conclusion. •
61.TheEuratomSafeguardsInspectorate ,nowinexistenceforovertwentyyears,
wasthe-world*sfirstmultinational nuclearsafeguardssystem.Itoperates
independently inallMemberStatesandhaswidepowers,includingtherightto
sendInspectorstoestablishments ontheterritoriesofmemberstates.Ithas
anexperiencedandhi^ilyqualifiedteamofabouteightyInspectors,whichworks
inclosecfcllaboration withtheInspectorate oftheInternational AtomioEnergy
Authority.. -
Con.1
l
62.CoalistheCommunity'smostabundantenergyresource,andwillbecome
increasingly importantasoilbecomesscarcer.YettheCommunityindustryfinds
itdifficulttomaintainproduction,letaloneincreaseit,,andthenecessary
capacitytoconsumecoal,whetherimportedorexported,isnotbeingbuilt.
63.Duringthe1960swhenoilwascheap,Communitycoalproductionofsolidfuel
wasdeliberatelyrundown,reachingalevelof200mtoe^in1973*Sincethen,
inspiteoftheoilpriceincreasesajndthepolicycommitmentstocoal,Community
(1);1mtoe–1»43tonnescoalequivalente

-1*-
productionhasdeclinedto173ni*toe(1978)andconsumptionfron222mtoe(1973)
to204eitoo.Onlycoalimportshaveremained "buoyant–increasingfrom19min
1973"to26mtoein197C.
64*Thereareseveralreasonsforthisunsatisfactory evolution.Kostcoal
in"theCommunityisinrelativelydeepandthinseamsandisthereforeexpensive
tomine.ThecostofEuropeansteamcoal,exceptforsomeintheUK,isabouttwice
thatofcompetingimportsfromthirdcountries.Inaddition,therecessionin
theEuropeansteelindustryhasseriouslyreducedthedemandforcokingcoal.
65.Itislikelythatthelevelsofproductionofanddemandforligniteandpeat
willremainconstantattheir1977levelsofabout25mtoeupto1990,as
forecastbyueraberstates.Someuncertainty surroundstheprospectsforhard
coal.Fatior.alforecastsofproductionandimportstotalling22210toein1990
dependcruciallyondependreachingthoselevels.Itisdoubtful,however,whether
newinvestments andtheapplications ofnewtechnologyforcoalusewilloccuronthe
scalorequired.TheCommissionforeseesdemandforstearacoalof104Qtoein
1990,compr-redwiththememberstates*forecastof117mtoe.Takingaccountalso
ofthelikelihoodofstabledemandforcoalincokeovensandofadeclinein
depvondforotheruses,theCommissionforeseesatotaldemandforhardcoalof
185mtoein1990~37ratoelessthaninmemberstates*forecasts.
66.Thisshortfallofdemandcouldbereducedbyupto16mtoebyastrong
andurgentpolicytoincreasecoaluse.Fewerproblemssurroundthephysical
possibilityofsuppliesonthescalesuggestedbyKemberStates;production
of176mtoeofhardcoalshouldbepossiblein1990,asshouldtheincreased
levelofimports(55mtoe).Butthispotentialofsupplyisatpresentlikely
toberestrictedbyinadequatedemand.
Con.1policier :
67.Thepoliciesforcoalsetoutinthe1974and1975resolutionsremain
valid.TheCommunity^aimswerereiteratedbytheEuropeanCouncilat
StrasbourginJune1979asfollows:"InViewofthenecessarychangein
oilimports,theuseofcoalinpowerstationsmustbesteppedupwithoutdelay;
it3useinindustrymustalsobeencouraged.Specialattentionwillbegivento
technologicalprogrammestodevisenewprocessesfortheextraction,transportand
■processingofcoal'V
>

-20-
60.Inpractice,themainobjectivenowistoincreasecoalburningcapacity
ofallkinds,sothatasthoneedforextracoal"becomesgreater,theCommunity
will"beablotoexploitthisabundantenergysource.
9
CoalmearrurcB i
69.AgreementonspecificCommunitymeasurestosupportthecoalindustry
hasbeendifficult;onlytwomemberstatesproduce88%oftheCommunity1scoal,
andthesamememberstatesaccountfor71$oftheCommunity'scoalconsumption.
Muchfinancialsupportistherefore -givenonanationalbasis.In1970*total
operatingaidof2.7billionEUAwasgivenbyfourmemberstates#
70.TheCommunityprovidesfinanceoutoftheECSCbudgetforcapitalinvestment
andotherexpenditure programmesbynationalcoalundertakings .Thetotalof
interestrelief,cokingcoalaid,researchaids,andsocialpaymentsfromthis
sourcein1970was46millionEUA.ECSCloansofabout300millionEUA,on
commercialterms,weremadeavailableforcapitalinvestments .Theonlysupport
schemeinoperationatCoronnuiitylevelisforCommunityproductionofcoking
(1)coal.Aproposalv'hasalreadybeenmadeforanewschemetoreplacethepresent
one.Thescopewouldbeenlarged,andthefinancialburdenreallocated.
71.ThoCommissionhasproposedaseriesofmeasurestoencouragecoaluseand
production,andtocreatesolidarity,throughequaladvantage,amongstthe
Community's' coalproducersandcoalconsumers.Themeasurescoveraidforthe
(2)construction ofnewcoal-burning powerstationsx,subsidiesforintra–
Communitycoaltradetoprovidenewoutletsforotherv;iseuncompetitive
CommunitycoalandCommunityaidforthefinancingofcyclicalcoalstocks^^.
NoneoftheseproposalshasyetbeenacceptedbytheCouncil.
I
72.TheCommunity'saidtodemonstration projectsforcoalgasification and
liquefactionisdescribedinpara.46.Worknowforthelongertermonthese
\
twotechnologiesisessentialiftheirgreatpotentialistobefullyrealised
whenitisneeded.
(1)C0K(78)516final:"Draftdecisionconcerningcoalandcokefortheironand
cteelindustryintheCommunity".
(2)COM(76)640final/2:"ProposalonCommunityfinancialmeasurestopromote
theuseofcoalforelectricitygeneration".
(3)001^(78)364final:"ProposalforaCommunityaidsystemforintra-Community
tradempowerstationcoal".
(4)C0M(77)77final:"ProposalconcerningCommunityaidforfinancingcyclical
stocksofhardcoal,cokeandpatentfuel".

-21-/
Oil
73.Th<3Commission sview of "theshort andmedium "term oilsituation is
{liven inparagraphs 1--6above .Thestability ofworld oilsupplies depends ona
variety ofexternal political andeconomic factors .From nowon,there isso
little flexibility intheCommunity 'soilsupply pattern that asignificant and
unfavourable development ofproduction policy inanyofthemajor producer
countries would rapidly bring supply anddemand into imbalance .
74•However ,theCommunity isnotwithout itsownresources ofoil ;production
intheConuiiunity was 63mtonnes in1978»or12/5ofdemand .85^ofthis production
wasbytheUK,which estimates itstotal possible reserves atupto million
tonnes .UKproduction could peak atbetween 100–150million tonnes inthe1930s ;
even atthis level itwill cover only 20–25/aofComimnity demand .Hydrocarbon
production intheterritory ofmember states orinwaters under their jurisdiction
comes under ifegulation ofthecoastal state concerned ,towhom thefiscal benefits
from production accrue .Katters such astherate anddestination ofproduction
arotherefore notsubject toCommunity control ,except insofarasgeneral
provisions oftheTreaty apply .Inthecase oftheUK,46/0ofitsoilproduction
in1978 wasexported ,ofwhich about half came toother EECcountries .
Policier ?.norcarrurer ;
75.Fortholonger term ,themain aims ofpolicy must be:(i)todiversify
theCommunity 'ssources ofcrude oilimports andtoimprove security bybuilding
good relations with existing suppliers ;(ii)toincrease exploration andproduction
intheCoi.uTunity -sothat thodecline inCommunity production by1990now
forecast mybeavoided ;(iii)toencourage exploration andproduction
innewoilareas oftheworld ;and (iv)toconfine thegrowth inoiluse
andtosubstitute other fuels ,asdescribed inearlier paragraphs .
76.0510Community 'sgeneral policy of1974 toreduce itsdependence on
imported oilhasbeen given greater urgency andprecision bythecommitment
attheStrasbourg meeting oftheEuropean Council inJune tolimit oil
imports between 1980and1985 atorbelow their 1978 level .This was
endorsed byparallel action bytheother participants intheTokyo Summit
tolimit thoir oilimports .TheCommission isnowworking ondetailed
proposals fortheallocation oftheimport target amongst allmember
States ,including those whowerenotpresent atTokyo .

-22-
77•MuchCommunitylegislationhasalready "beenenacted,fortheoilsector.A
directiveofJuly1973requiresallmemberstatestoensurethattheyareable
andhavethenecessarypowerstodrawonandmanageoilstocks(withCommunity
coordination)torestrictoilconsumption,toallocatesuppliesandtoregulate
oilprices*Communitylegislationalsoobligesmemberstatestomaintaina
minimumof90days*stockofoiloroilproducts,andprovidesforthemandatory
reductionofconsumptioninanoilsupplycrisisandforthereallocation of
availablesuppliesonaCommunitybasis.Theadministrative machineryforthese
contingencies hasbeensetupinsuchawayastobecompatiblewiththeparallel
IEAmachinery.
70.ITuchoftheCommission *sworkinresponsetotheoilcrisishasbeento
increaseknowledgeofthenatureofoiltransactions intheEEC.Thisproblem
ofmarkettransparencyisnotnew;memberstatesarealreadyrequiredtoreport
onthepricesandquantitiesofcrudeoilimportsand.ofoilproductsinthe
Community.Therehasbeenlong-standing concernwiththesometimesmisleadingly
hi$iorlowpricequotationsontheRotterdamspotmarket.TheCommission
carriedoutafirst"checkrun"onRotterdamquotationsin1978;ithasnow
startedasecond"checkrun",thistimeincludingtheGcnoanquotationsfor
theMediterranean trade.
79.Sinceearlyin1979»"theCommissionhasbeenreceiving
information Otvcorlsumer-prices foroilproducts "bnaWeeklybasis-.".'
Anabstractofthinisnowbeingpublishedweekly.Followingthedecisionof
theStrasbourgEuropeanCounciltheCommunityhasalreadyagreedaframework
regulationsettinguparegisterofalloiltransactions withtheCommunity.
Theregisterwilldetail(withsafeguardsforcommercialconfidentiality )types
ofoil,quantity,price,specialconditionsofpurchase,etc.Thisinitiative
wasbackedupbyotherparticipantsattheTokyosummit,andtheywillenact
similarmeasures.DetailedCommunitylegislation implementingthissystemwill
beintroducedassoonaspossible.TheCommissionisalsostudyingproposals
forasystemofquotationsforlong-termcontractsforoilproductsupplies,for
asystemforthereportingofthedetailsofunloadingdocumentsforoilcargoes,
andfortheestablishment ofanoilexchange.
" ' -I
j•• ;
A
* I
'\' .'
.!* ' '
!i ' .:
• . I
•': 1

-23-
80.AspartoftheattempttoopenuptheCommunity *sownhydrocarbon
resources,theCommissionadministersaschemeofCommunityfinancial
aidforthedeveloptaentofnewtechnologyforhydrocarbonproduction.
Thisstartedin 1974andhasbeenverysuccessful;thefifthround
has"beenconcludedandthesixthwillopensoon.Budgetrequirements
"between1974and.1979havetotalled183m.MJA.Inaddition,the
Communityhasjustagreedtogivefinancialaidtopreliminaryexploration
forhydrocarbons inoffshoreGreenland^itispossiblethattheschememay
beextended.
Cas
81.TheCommunityhascommercially recoverablereservesofgas
1Oestimatedat3«210m(4»5$oftheworldtotal).53$oftheseare
intheNetherlands,and27$intheUKpartoftheContinentalshelf.
Productionin1978was135mtoe,14$oftheCommunity'senergyconsumption
However,productionintheNetherlandswillreachapeaknextyear,andUK
productionisexpectedtopeakin1985°rshortlyafterwards.Ifgas
istoholdi-fcspresentshareofenergyconsumption (17$)largeincreases
ingasimportsarenecessary;by19851importsareexpectedtohaveabout
trebledfromtheir1978level,andalmostquadrupledby1990.Contracts
forthesequantitieshavealreadybeenconcluded;theCommunity'sgas
suppliesthereforeseemassureduntil1990atleast,providedthatexisting
contractsareimplemented.
82.Evenlargersuppliescouldbeavailableifadditionalcommercial
reservesarefoundinEurope,ifimportcontractsundernegotiation
aresuccessfully concluded,ifconditionsofsupplyandpricebring
morenaturalgasoutsideEuropeontothemarketforexport,andif
recoveryfromsmallreservesintheNorthSeaismadeeconomically
possible.Inthelongerterm,thegasificationofcoalcouldmake
asignificantcontributiontosupplies.Inall,theCommissionconsiders
thatCommunitysuppliesin1990oouldbe30mtoemorethanforecast.
bymemberstates.

i
'-24-. f
83.Gasproductionydistributionandmarketingistheconcernofalargenumber [
ofcompaniesthroughout ,theCommunity,somelarge,somesnail/inboththeprivate\j
andpublicsectors.Whiletheindustry'srecordhasbeengood,andtheprospects f
i ....... (
upto1990seemsatisfactory,theCommunitywantstopromotealonger-termattitude j
towardstheroleoftheindustrybasedonexpansion,rationalization and j
coordination betweengridsandthemaximization ofeconomically andpolitically j
soundimportopportunities .Toavoidthedeclineindomesticproductionafter1985/
itisessentialthatexploration beincreasednow,thatexistingreservesbe
recoveredwherevereconomically andtechnicallypossible,andthatgaspricesbeput
onarealisticfooting. • • s
84.TheCommissionwillbepresentingearly,nextyearapaperonthenaturalgas- .
situationintheCommunity,withpolicyrecommendations .Aseparatepaperwith
>
proposalsongaspricingpolicywillgototheCouncilattheendof1979.
International "relations ;, v ■I
85.Thethreattoworldpeaceposedbycompetitionforenergysuppliescanonlybe
removedbyunitedeffortstoovercomedifficulties affectingallcountries.For j
theCommunity,theestablishment ofgoodrelationswithoverseassuppliersisalso
animportantwayofincreasingthesecurityofsupplies.Butinternational relations I
"alsoincludecooperationandconsultation withotherindustrialised countrieson
commonenergyproblems,andattemptstoworkwiththedevelopingcountriessothat
theirgrowingenergyproblemsmaybesolvedtomutualadvantage.
Cooperation withnon-oildevelopingcountries j
* !
86.Thenon-oildevelopingcountrieshavebeenhardhitbyrisingoilcosts,which■<
haveaddedtotheiralreadylargedebtburdenandhaveretardedtheirdevelopment j
plans.Yettheirenergydemandswillgrowdisproportionately fast,anditis
importantthattheyexploittheirownresourcestothefullariduseenergy. J
efficiently. i
87.TheCommissionproposedin1978aprogrammeforhelpingdevelopingcountries,j
consistingofspecialist -adviceindrawingupinventoriesofenergyresourcesand
<
requirements,technicalandfinancialassistanceonprojectsandtrainingfacilities.Any:
Communityinitiativewhichismademustcomplementfatherthanduplicateexisting r
>
measuresandinstitutions,suchastheFED,theEuropeanInvestmentBank/theWorldj
Bankar.dtheUnitedNations.TheCommissionspent110millionEUAonenergy \
. M ' !
- •':. . . ' . !
■ ;,• -•■ *i
■.* •/••# î
V -• •. t
;M. . ;
M
' ■ N . }

projectsintheACPcountries/undertheLom6Convention,andexpenditurewill
continueunderthenewConvention whichwilltakeitsplace.TheCommission
supportsthemovesbeingmadebytheUnitedNationstopromotetheuseofnew
energysourcesindevelopingcountries.TheCommission heldasuccessful
conferenceearlierthisyearon"Solarenergyfordevelopment".Eighty-countries/
mostdevelopingcountries,wererepresented .TheCommunityisengagedinbilateral
energyassistance (training,aidforexploration andnewenergysources)inEcuador,
withOLADE(theLatinAmericanOrganizationforEnergyDevelopment),andinTurkey(
andTunisia. s
\Relationswithenergyproducers
88.Paragraph 60abovereferstothenegotiations anddiscussions inhandor
anticipated withtheCommunity'smainsuppliersofnuclearfuel.Relationswith
theoilproducersexistatmanylevels.RecentlytheCommunityhasestablished
contactswithOPECandOAPEC.TheCommission wantstoincreaseinderstanding of
theconsumers *andproducers'oilandrelatedeconomicproblemssothatpolicy
makingonbothsidescanbebetterInformedandmoreconstructive .Contactswhich
havetakenplacehavebeeninformalandconfinedtotechnical andlonger-term
economicandenergyprospects;theyhavenottouchedonquestionsofoilpriceand
productionlevels.TheCommission hopesthattheseusefulbeginningswillbe
developedtothebenefitofallconcerned.TalksbetweentheCommunitycountries
andtheArabGulfStateshavealsobeenproposed.
Cooperation withindustrialised countries
89.Themainforumforcooperation withotherindustrialised consumercountries
i
onenergymattersistheInternational EnergyAgency,inwhoseworktheCommission
participates .ThefocusonenergyattheTokyoSummitandthecommitments made
therebyallcountriestoworkoutparallelandequivalentpoliciesincertain
fields,andtomonitorprogress,hasmadethiscooperationallthemoreimportant.
Unfortunately ,theprocessiscomplicated bythefactthatoneMemberStatedoes
notbelongtotheIEAandtheCommission hopesthatthisinstitutional difficulty
maybesolved-italsonecessitated specialarrangements foremergencymeasuresin
anoilcrisis. '

Other Initiatives
90..TheComnission isconsidering with
discussions onenergy with the Eastern
CONCLUSIONS
91.TheCommunity remains dangerously dependent onexternal energy supplies ,
particularly oil .Energy supply difficulties could become apermanent constraint
oneconomic growth unless greater efforts aremade toincrease domestic production
from allconventional andnewsources ,toimprove theefficiency ofenergy useand
asfar aspossible toreplace ,oilbyalternative fuels . -Thelikely limitations
onoilsupplies mean that theCommunity must increase thecapacity toconsume coal /
especially inpower stations ,andtheavailability ofnuclear power andthe
collaboration endmutual understanding between theCommunity ,itsoverseas energy
suppliers ,thenon-oil developing countries andtheother industrialised nations
areessential toasolution oftheworld energy problem .
92.More specifically ,thefollowing should beseen astheCommunity 'smain ■
policy objectives :
(i)Shôrt-term
Thestabilization andincreased transparency oftheEuropean oilmarket ,the
minimization ofoilconsumption beyond the500mtonne limit for1979 bymeans
ofthenecessary oilsaving measures . '
(ii)Lonper-term \
"on . ■;
Improved relations with producer countries ;diversification ofexternal
supplies ;increased exploration intheCommunity toprevent aproduction
decline after 1990 ;continued oilsaving andsubstitution ;restriction of
oiltospecialised uses ;limitation ofimports to470mtonnes upto1990 .
Coal • '
• ♦ ■'
Increased coal consumption and .production }commercialization ofcoal
gasification andliquefaction techniques .interest theproposal tobroaden
European Countries within the ECE .

27-
Electricity andnuclear
Avoidanceoffurtherslippageinnuclearconstruction programmessothatcapacity
in1990beasnearnationalforecastsaspossible;maximization ofshareofcoal
andnuclearinelectricitygeneration;agreementonCommunitypolicyfor
reprocessing,thefastbreederreactorandwa'stedisposal;agreementonpolicy
concerningChapterVIoftheEuratomTreaty;satisfactory outcomesof
negotiations withAustraliaandCanadaandofdiscussions withUSAonnuclear
fuelsupplies;'reductionofexternaldependencefornuclearfuels.
General
Agreementonhew1990objectives;progresstowardsaneconomicand
transparent energypricingsystemthroughouttheCommunity;availability of
adequatecommercial,corporate,governmental andCommunityfinanceforenergy
investment,includingdemonstration projects.'
Energysaving I
Achievement of0.8and0.7energygrowth/economicgrowthratiosby1985and
1990respectively ;implementation throughouttheCommunityofalleconomic
best-practice techniquesforenergysaving;researchintoandapplication of
newenergysavingtechnology. <
Researchandnewsources " „
Pursuitofresearch,development anddemonstration ofnewsourcessothatthey
contribute onanincreasingly significantscale.
External
Improvement ofrelationsandcooperation withoverseasenergysuppliers,other
industrialised oilconsumingcountriesandthenon-oildevelopingcountries.

COMMUNITY ENERGYBALANCES 1973-1990AnnexI
ι ■ : I1^973 I1978 iI 1985! !
ί1990
I
i •[Objectives (1974)IMemberStates'
iforecasts(1978)
_____
ICoalMtoe
j7.Mtoe i
i*
ijMtoe (
!|.%Mtoe-% iMtoe X
Production 200i
I21'*174 18 ,210 !
i14 187 15 194"14
!Netimports 19 26I
!340 3 43 3 57 4
IConsumption 222 23'204 jI21|-250 |
! l17 228 18 251
I
I
iou
jProduction12lv163 4 180 12115-165 1187-147 8
jNetimports589 61 472 44 ■!515I36462-522 41j497-572 38
IConsumption .593 61 535 55 695 !
I44625-635 j51 !1644-659 44
Gasi
I
I.Ii.!
; iI■■■■ ■-■ |
I
i
iI
ι ι
! ;
I
Production 114,II12 I
I135 I!™ II175j12138-148 j12115-130I9"
{Netimports |3 31! i
i.3!!95.i7 82 7 121I9
|Consumption '118 12
ιI164!
i15 !i270-1|18 j220-230 j18236-251 19
Nuclear I
■ - lI\I'-i"■– I[ ;
I |
! I> I
:l i
' IH i
'!!
i
IProduction I14 2 ■29 3 II190 13111I!9I
; I20415!
»
Netimports j-i ii
!■-iί-!ι
,•Ii
i! '!j
jConsumction j14I229'|3'!190 !!13 :
i' i111 i!9!204|
\15 i
{Others|
\I
I.i ;; ι' I
I-II
ι
II i
i'II
I
|Production
l i25 3 Ii"32I
i3 iI ■I
i45j!.3■!3i
I I39!3
!Netimports
I!2I-
I:"3ii i
:■ 1i
!I-I
1!-I
!*
jConsumption .i
:27i
!3; i
■35i4 !45 |3!38i
I!3!43|3
!TOTALCONSUMPTION
I1973 00 967100 I1450 100 1232 1
j100
' '1393j
, t100
Source:StatisticsoftheCommissionoftheEEC(provisionalfor1978),programmesoftheMemberStates

ANNEXE M
MARGINS OFUNCERTAINTY ANDFLEXIBILITY
ThetablebelowshowstheCommission'sassessments ofthepossiblevariations in
outturnfromtheforecastsfor1985and1990madebymemberStatesin1978:
anoutturnbetterthanforecastisshownasanoutturnworseas
Thetotalareaofuncertainty istherangebetweenthetotalofnegativeandthe.
totalofpositiveoutturns.
i mtoe
1985 .1990·
ι
Possibleadditional (+)orreduceo<-)
-supplies : '
Solidfuels -18/+2 -17/-3.7
Oil 0 +15
Hùturalgns +30 +30
Nuclearenergy -10 -30
Additional energysaving +20 +100
"Totalnegativeoutturns -28 -47/~67
Totalpositiveoutturns +52- ,+145
Totalareaofuncertainty 80 2i2

ANNEXEIII
ENERGYINVESTMENT AIDSBYCOMMUNITY INSTITUTIONS
Sourceof
finance
Art.70
(Euratom
Euratom
ECSC
EIB
NewCommunity
financialfaci*
lity
Hydrocarbon
explorâtion
Hydrocarbon
technology
Démonstration
Projects
LOMEI
ERDFTypeofAmountm.EUA
financeTotal .p.a.
Grants 16
Loans 1500
Loans
Loansand
guarantees -
Loansand
guarantees
300
Grants
Grants*3.5
163
Grants*
a)newsources
95
b)conservation
.55
Grants 110
Grants 37c.5
c.300
c.400
(20-50)Duration
orlimit
1977-1979
Firsttrancheof500m.almost
exhausted;secondtrancheof1000
m.EUAnowproposed,
open
open
Overalllimit-includingnon-ener
gyprospects)of1000m.EUA
Greenlandprojectonly
Since1974
reviewedannually
1978-1983
1978-1982
tobereplacedbyLOMEII
opBn
*Grantsrepayableinspecifiedcircumstances

Annex rv r
i
·' ι
List ofCommunity Guidelines and Specifio Measures ' i
ι
already adopted inthefield ofQiergy Saving •
14
■
A.CUIDI'I /TNES ,
Conclusions ofthemeeting ofHeads ofState andofGovernment ofthe
European Community ,Paris 12-13 March 1979 an<*Strasbourg 21and22June 1979
Conclusions ofthemeeting ofHeads ofState andofGovernment ofthe
Europoan Community ,Bremen 6and7July 1978
O.J. C289/19.12.1975
Council Resolution concerning th?fixing ofashort-term objective for
cncrcy savings in19/6/7 :
O.J. C15V9 9.7.1975
Council Resolution concerning thefixing ofashort-term objective for
reducing oilconsumption
O.J. C153/59-7.1975
Council Resolution of17December 1974 onaCommunity action programme
Ontherational utilization ofenergy
B.SPHCIFIC MEASURES
O.J. L1^5 13.6.1979
Council Directive of14May 1979 ontheindication "bylabelling ofthe
energy consumption ofhousehold appliances
O.J. L1^513.6.1979
Council Directive of14May1979 applying toelectric ovens directive
79A30 /EBContheindication bylabelling oftheenergy consumption
ofhousehold appliances
O.J. L37,79/167/BCSC ,EEC,Euratom
Council Recommendation of5February 1979 »onthereduction ofenergy
requirements forbuildings intheCommunity
O.J. L158
Council Regulation (EEC)No1303/78ofJune 1978 onthegranting of
financial support fordemonstration projects inthefield ofenergy saving
O.J. LS2f7O/170/EEC
Council Directive of13February 1978 ontheperformance ofheat generators
forBpace heating and theproduction ofhotwater inneworexisting non­
industrial buildings andontheinsulation ofheat anddomestic hotwater
distribution innewnon-industrial buildings
••/••

ÂamJv
-2-
O.J.L295,77/712/EEG
CouncilRecommendation of25October1977ontheregulatingofspace
hoaling,theproductionofdomestichotwaterandthemeteringofheat
innowbuildings
O.J.L29:.77/71-VEEG
CouncilRecommendation of25October1977ontherationaluseofenergy
inindustrialundertakings
O.J.L29'),77/714/EEC
CouncilRecommendation of25October1977onthecreationintheMember
Statesofadvisorybodiesorcommitteestopromotecombinedheatand
powerproductionandtheexploitation ofresidualheat
O.J.L140,76/492/EEC
CouncilRecommendation ofMay197bontherationaluseofenergyby
promotingthethermalinsulationofbuildings
O.J.L140,76/493/EEC
CouncilRecommendation of4May1976ontherationaluseofenergyin
theheatingsystemsofexistingbuildings
O.J.L140,76/494/EEC
CouncilRecommendation ofMay1976ontherationaluse,throughbetter
habits,ofenergyconsumedbyroadvehicles ,
O.J.L140,76/495/EEC
CouncilRecommendation of4May1976ontherationaluseofenergyin
urbanpassengertransport
O.J.L140,76/496/EEC' •
CouncilRecommendation of4May1976ontherationaluseofenergyfor
electrical householdappliances
O.J.L231/1,75/510/EEC
CouncilDecisionof22Augus+1973adoptinganenergyresearohand
development programme