No C 248/8 Official  Journal  of the  European  Communities 29.10.  75 
Community  tariff  quotas  of 30 000 head  of heifers 
and cows,  not  intended  for  slaughter,  of certain 
mountain  breeds,  and  of 5 000 head  of bulls,  cows 
and heifers,  not  intended  for  slaughter,  of certain 
Alpine  breeds,  falling  within  subheading  ex 01.02 
A II b) 2 of the Common  Customs  Tariff  — merely 
seek to extend  Council  Regulation  (EEC)  No 
1844/74  and  (EEC)  No 1845/74  of 15 July  1974  H, 
on which  the  Committee  previously  delivered  an 
Opinion  (2). 
2. In  that  Opinion  the  Committee  asked  the 
Community  authorities,  in view  of the  strained 
situation  on  the  meat  market,  to keep  to the 
commitments  entered  into  under  GATT  and  revert  to 
the original  quota  of 20 000 head  at a tariff  duty  of 
6 % instead  of the 4 % proposed  by the Commission. 
(!) OJ  No L 194,  17. 7. 1974. 
(2) OJ  No C 125,  16. 10. 1974. For the  same  reason,  it also  stated  that  the period 
during  which  imported  animals  may  not  be 
slaughtered  should  be increased  from  two  to six 
months. 
3. The  Committee  notes  that  the  Council  went 
some  way  to meeting  the  second  request,  and 
increased  the period  in question  to four  months. 
4. However,  as the situation  on the beef  and  veal 
market  on the  whole  has  not  improved  from  last 
year,  the Committee  still  believes  that  opening  the 
tariff  quotas  as proposed  could  threaten  the already 
precarious  balance  of supply  and  demand  on that 
market.  The  Committee  therefore  asks  for the strict 
application  of the Regulations  as amended,  to ensure 
that the cattle  imported  are used  strictly  for breeding 
purposes. 
Done  at Brussels,  23 April  1975. 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
Opinion  on the draft  Council  Decision  empowering  the Commission  to issue  Euratom 
loans  with  a view  to a Community  contribution  towards  the financing  of nuclear  power 
stations 
The text  referred  to the  Committee  was  published  in the  Official  Journal  of.  the 
European  Communities  No  C 35 of 14 February  1975,  page  6. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 3 February  1975,  the Council  referred  the abovementioned  draft  Decision  to the 
Economic  and  Social  Committee  under  Article  170  of the  Treaty  establishing  the 
European  Atomic  Energy  Community. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  drew  up its Opinion  at its 129th  plenary  session, 
held in Brussels  on 23 and 24 April  1975. 
The Opinion  is published  below: 
29. 10. 75 Official  Journal  of the  European  Communities No C 248/9 
THE  ECONOMIC  AND  SOCIAL.  COMMITTEE, 
Having  regard  to the referral  on 4 February  1975  by 
the Council  of the  European  Communities  of the 
draft  Council  Decision  empowering  the Commission 
to issue  Euratom  loans  with  a view  to a Community 
contribution  towards  the financing  of nuclear  power 
stations; 
Having  regard  to  the  Treaty  establishing  the 
European  Atomic  Energy  Community,  and  in 
particular  Article  170  thereof; 
Having  regard  to the decision  taken  by its Bureau  on 
28 January  1975,  instructing  the Section  for Energy 
and Nuclear  Questions  to draw  up an Opinion  and  a 
report  on the matter; 
Having  regard  to the Opinion  adopted  by the Section 
for Energy  and  Nuclear  Questions  at its meeting  on 
7 March  1975; 
Having  regard  to the  report  submitted  by  the 
Rapporteur,  Mr O'Ceallaigh; 
Having  regard  to the discussions  at its 129th  plenary 
session  held  on 23 and  24 April  1975  (sitting  of 24 
April); 
Whereas  the  targets  approved  by the  Council  of 
Ministers  on 17 December  1974  for a new  energy 
strategy  designed  to reduce  the Community's  external 
energy  dependence  will  require  substantial 
development  of nuclear  capacity  between  now  and 
1985; 
Whereas  such  development  will  place  a considerable 
burden  on utilities  engaged  in the nuclear  sector  in 
financing  this investment; 
Whereas  the Community  can  play  an important  role 
by making  long-term  finance  available  under  suitable 
conditions, (from  63  % to  50  %) in  the  Community's 
dependence  on supplies  of imported  energy  by 1985 
(although  the  Council  also  acknowledged  the 
Commission's  desire  to achieve  a reduction  to 40 %). 
1.2. The  Council  recognized  that  this  strategy 
required  that,  by 1985,  about  45 % of the electricity 
needs  of the  Community  would  be generated  by 
nuclear  energy.  This  corresponds  to the  figures  of 
16 % and  35 % respectively  for the share  of nuclear 
electricity  and  the  share  of total  electricity  of the 
Community's  overall  energy  requirements  in that 
year. 
1.3. The  present  draft  Council  Decision  is 
designed  solely  to deal  with  certain  financing 
difficulties  which  are  likely  to  arise  in  the 
implementation  of an accelerated  programme  for 
nuclear  energy  in the Community. 
1.4. It  must  be stressed  that  the present  Opinion 
relates  solely  to these  financing  proposals.  It does 
not, therefore,  in any  way  prejudice  the Committee's 
views  on the overall  policy  and  general  principles  of 
the rapid  transition  to  nuclear  generation  of 
electricity  which  underlie  these  proposals.  The 
Committee  would  have  wished  and  still  wishes  to 
have  the opportunity  of discussing  this  overall  policy. 
Indeed,  it hopes  to deal  with  this  question  in the 
additional  Opinion  which  it is currently  preparing  on 
the Communication  and  proposals  from  the 
Commisson  to the Council  entitled  'Towards  a new 
energy  policy  strategy  for the European  Community'. 
1.5. The  provision  of one-half  of electricity  needs 
by nuclear  energy  will,  according  to the Commission, 
require  the installation  of 180  GWe  between  now  and 
1985  over  and  above  the 20 GWe  to be installed  by 
the end of 1975. 
1.6. Investment  in nuclear  stations  is of the order 
of 350  million  u.a./GWe.  Consequently  to achieve 
the Commission's  objective  it would  be necessary  to 
have  annual  expenditure  commitments  on  the 
following  lines: 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 75 votes  to 14 with  9 abstentions: 
1. GeAeral  comments 
1.1. On  17  December  1974,  the  Council  of 
Ministers  approved  a resolution  setting  out a series  of 
targets  for a future  energy  policy  for the Community. 
Central  to these  proposals  was  a planned  reduction 1975:  5 285 million  u.a; 
1976:  4 410 million  u.a; 
1977:  7 455 million  u.a; 
1978:  8 750 million  u.a; 
1979:  9 450 million  u.a; 
1980:  10 850 million  u.a. 
1.7. Typically,  construction  takes  six  years:  the 
above  commitments  then  can  be transferred  into  the 
No C 248/10 Official  Journal  of the  European  Communities 29.10.  75 
following  actual  expenditure  for  nuclear 
construction: 
1975:  2 600 million  u.a; 
1976:  3 500 million  u.a; 
1977:  5 000  million  u.a; 
1978:  7 000 million  u.a; 
1979:  8 650 million  u.a; 
1980:  10 100 million  u.a; 
1981:  11 150 million  u.a; 
1982:  12 600 million  u.a; 
1983:  13 700 million  u.a; 
1984:  14 800 million  u.a; 
1985:  15 750 million  u.a. 
1.8. ~ For the  nuclear  fuels  sector,  the Commission 
envisages  the following  investment  requirements: 
Mines:  1 500 million  u.a; 
Enrichment:  5 000 million  u.a; 
Reprocessing:  1 000 million  u.a. 
The Committee  believes  that  it is essential  that  the 
expansion  of nuclear  capacity  should  be matched  by 
a corresponding  growth  expansion  of fuel  cycle 
installations.  One  must  recognize  that  there  is a clear 
leeway  to be made  up here,  so that  the Commission 
should,  with  the  same  priority,  if not  with  heavy 
emphasis,  help  to finance  industrial  fuel  cycle 
installations.  When  financing  these  installations,  the 
criteria  to be applied  concerning  the security  to be 
provided  should  reflect  the particular  characteristics 
of the  fuel  cycle.  It should  also  be possible,  where 
appropriate,  to use  the installation  itself  as security 
for loans  granted.  Besides  offering  favourable  interest 
rates,  the Commission  should  seek  to allow  longer 
term  financing  (e.g.  prolongation  clauses).  Fuel  cycle 
installations  have  a long  lead  time,  in some  cases  up 
to 10 years,  and  are therefore  particularly  dependent 
6n longer-term  financing. 
1.9. The  Committee  also  suggests  that  in the case 
of fuel  cycle  installations,  as well  as for  power 
stations,  it should  be possible  to waive  the limitation 
of loans  to 30 % of the  total  amount  which  is 
envisaged  by the Commission  as a rule  of thumb. 
1.10.  Financing  in the area  of the fuel  cycle  would 
be limited  to a few  undertakings  with  demonstrable 
financing  difficulties  of a serious  nature.  The  present 
document  is seen  as one  concentrating  in particular on the  financing  problems  of electricity  producers 
and a justification  for the  solutions  proposed.  The 
Committee  would,  however,  have  also  welcomed 
from  the Commission  a more  detailed  analysis  of the 
financing  problems  of the fuel  cycle  installations. 
1.11.  It  is claimed  that  the financing  difficulties  for 
electricity  producers  arise  because  of the  classic 
pincer-effect  of rising  raw  materials'  prices  combined 
with  statutory  regulation  of electricity  pricing.  The 
result,  in some  cases,  has  been  to  rule  out 
self-financing  of further  investment  and,  indeed,  even 
to push  some  utilities  into  a loss-making  situation. 
The normal  strategy  under  such  circumstances  is 
recourse  to the  capital  markets.  However,  for  a 
variety  of reasons  (elaboration  of which  is beyond 
the scope  of this  opinion)  both  the  cost  and 
availability  of funds  on the national  and  international 
capital  markets  have  rendered  such  recourse 
inappropriate  for  the  majority  of enterprises  in the 
recent  past:  while  improvements  in cost  of funds  and 
in the  structure  of the  capital  markets  can  be 
anticipated,  the  ongoing  impact  of inflation  on 
overall  costs  is unlikely  to permit  a significant  easing 
in the financing  problem  for the foreseeable  future. 
1.12.  If  the suggestion  of the Council  of Ministers 
is accepted  that,  in the current  situation,  a rapid  shift 
from  conventional  power  to nuclear  power  is correct 
in principle  (that  is a shift  from  oil to uranium),  the 
two dominant  questions  are: 
— how  much  finance  is needed, 
— how  can  the financing  best  be carried  out bearing 
in mind  the needs  of the utilities. 
2. Specific  comments 
2.1. Article  1 
2.1.1.  The  Commission  proposes  that  an annual 
amount  of 500  million  units  of account  would  be a 
significant  contribution  in assisting  the financing  of 
nuclear  energy:  this  might  be applied  as supplementary 
loans  not  normally  exceeding  30 % of other  funds 
borrowed  from  that  particular  project.  (It should  be 
pointed  out  that  this  constraint  is not  specifically 
mentioned  in the  draft  Decision).  However,  the 
Committee  considers  that  an annual  funding  of 500 
million  units  of account  falls  well  short  of the size  of 
programme  which  the Community  must  undertake  if 
it is to make  a significant  contribution  towards  the 
financing  of the target  of installed  nuclear  capacity  of 
160 GWe  to 200  GWe  which  the  Council  of 
Ministers  has already  adopted  for 1985. 
29.10.  75 Official  Journal  of the  European  Communities No C 248/11 
2.1.2.  When  the  impact  of inflation  on costs  is 
added  in  together  with  the  parallel  mining, 
enrichment  and  reprocessing  costs,  the  environ-
mental  factors,  and  the  expenditures  necessary 
to ensure  the  safety  of  plant,  it  remains 
possible  to cast  further  doubt  on the adequacy  of the 
volume  of funds  proposed  by the  Commission.  Of 
course,  it may  be possible  for electricity  utilities  to 
have  recourse  to traditional  markets  if economic 
circumstances  so warrant,  with  these  supplementary 
funds  being  raised  from  sources  to which  Euratom, 
but not  the  utilities,  would  normally  have  access. 
Inevitably,  however,  a question-mark  remains,  and 
the figure  of 500  million  units  of account  should  be 
considered  a preliminary  guideline  susceptible  to 
subsequent  amendments  as experience  dictates. 
2.1.3.  The  loans  would  be raised  under  Article 
172 (4) of the Euratom  Treaty;  the Commission  has 
confirmed  that  legally  this  permits  borrowing  on 
international  capital  markets  both  outside  and  within 
the Community  (except  in cases  where  this  would 
cause  unwarranted  distortion  of the  national  capital 
market  of a Member  State). 
2.2. Article  2 
2.2.1.  Because  it has not got the same  reserve  ratio 
requirements  as other  institutions  such  as the  EIB, 
Euratom  would  be able  to lend  the  funds  at very 
keen  rates.  There  is  a deliberate  vagueness 
concerning  these  rates  in view  of the intention  to take 
maximum  advantage  of changes  in the  capital 
markets. 
2.2.2.  Certain  issues,  however,  must  be borne  in 
mind.  Typically  no cash  flows  are generated  by the 
investment  in  nuclear  plant  until  after  the 
commissioning  of  the  facilities  —  hence  a 
moratorium,  or grace-period,  is required  during 
which  no capital  or interest  repayments  would  be 
made.  This  suggests  that  long  term  (15  to 20 years) 
funds  are required. 
2.3. Article  3 
2.3.1,  Although  the  Commission  proposes  (as for 
ECSC  loans)  that  the  loans  will  be secured  by 
guarantees,  mortgages,  or  liens  on  the  real 
estate/installations,  it is clear  that  this  will  not appeal 
to certain  public  authorities.  In those  circumstances 
the criterion  to be used  would  have  to be 'the  use of 
Done  at Brussels,  24 April  1975. resources  in the  most  profitable  conditions  using 
installations  of optimum  size'.  It must  surely  be 
conceded  that  the evaluation  of relative  profitability 
and optimum  size  is quite  impracticable  under  a 
system  of regulated  pricing  — the  latter  being  one 
of the  Commission's  major  justifications  for  this 
supplementary  financing.  The  Committee  is of the 
opinion  that  the Commission  should,  firstly,  draw  up 
a set of purely  financial  criteria  which  would  take 
account  of regulated  prices,  overall  cost  to the 
economy,  the  reduction  of  external  energy 
dependence  and  the degree  to which  the Community 
market  is opened  up.  At  the  same  time,  the 
Commission  should  also  establish  a second  set of 
criteria  designed  to evaluate  the  costs  of measures 
dealing  with  public  health  and  environmental 
protection,  in particular,  the  problems  of reactor 
safety,  large-scale  installations  and  the  transport  of 
fissile  materials. 
2.4. Article  4 
2.4.1.  The  Committee  supports  the  view  that  the 
proposed  funding  should  be  shown  in  the 
Community  budget  under  the  heading  for  research 
and investment  expenditure  since  this  would  offer  a 
form  of guarantee  acceptable  to financing  institutions 
which  would  considerably  alleviate  the problems  of 
financing  nuclear  installations.  At the same  time  the 
Committee  would  not  wish  to see  the  expenditure 
lost in the  aggregate  figure  for  research  and 
investment  expenditure  in the  Community  budget 
and accordingly  proposes  that  it should  be shown  as 
a separate  item  within  this  budgetary  heading. 
2.5. Article  5 
2.5.1.  The  procedure  used  for the commitment  of 
funds  should  ensure  continuity  and  should  not  be 
liable  to have  its effectiveness  jeopardized  at a later 
date by fluctuating  attitudes  within  the Community 
decision-making  institutions. 
2.5.2.  The  provisions  of the  proposal  should  not 
exclude  the  possibility  of external  financing  other 
than  the  capital  markets  (e.g.  EXIMBANK). 
Furthermore,  implementation  of the fund  should  not 
be subject  to the  exigencies  of national  industrial 
policy  but  should  conform  with  the concept  of the 
opening  up of markets  within  the Community.  Both 
these  features  would  increase  competitiveness  in the 
energy  sector. 
The Chairman 
of the (Economic  and  Social  Committee 
Henri  CANONGE