Opinion on the Green Paper for a European Union energy policy (96/C 100/15)

On 13 March 1995, the Committee of the Regions decided to draw up, under Article 198c of the Treaty establishing the European Community, an Opinion on the above-mentioned Green Paper.

The Committee's Commission 5 for Land-use Planning, Environment and Energy adopted its Opinion unanimously on 29 May 1995.

At its 8th Plenary Session held on 19 and 20 July 1995 (meeting of 20 July), the Committee of the Regions adopted the following Opinion of Commission 5 for Land-use Planning, Environment and Energy, drawn up by the Rapporteur, Mr Penttilä.

1. Introduction

1.1. The Commission approved the document (Green Paper for a European Union energy policy) in January 1995.

1.2. The aim of the document is to provide material for debate on whether a stronger EU role is needed in energy policy, i.e. an EU energy policy.

1.3. The document outlines the main challenges that the EU will have to meet in coming years and analyses the EU's present obligations in the energy field. The Green Paper is based on an analysis of the present situation and future prospects.

1.4. The main targets for EU energy policy, in the Commission's view, are to meet user needs at the least cost, and to ensure security of supply and environmental protection.

1.5. The Commission identifies the following four directions for Union energy policy:

- the need to reinforce the level of concerted action and cooperation;

- national and Community energy policies should be approached in a comprehensive way;

- the coherent development of policy instruments is hindered because of the absence of clear responsibilities for energy policy at Community level;

- in the case of the environment, there are two types of challenge, those connected with the classical form of pollution, and those connected with the risk of climate change.

1.6. The Commission hopes to be able to draft a White Paper on Community energy policy, based on the debate on the Green Paper, in autumn 1995.

1.7. In what follows, the Committee of the Regions concentrates primarily on presenting key comments and viewpoints in terms of regional and local government.

2. The principle of subsidiarity in a European energy policy

2.1. At its meeting on 21 April 1995, the Committee of the Regions proposed as its Opinion on the revision of the Maastricht Treaty a new formulation of the principle of subsidiarity as laid down in the second paragraph of Article 3b of the Treaty establishing the European Union to be worded as follows:

'The Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of proposed action cannot be sufficiently achieved by the Member States, or by the regional and local authorities endowed with powers under the domestic legislation of the Member State in question.`2.2. Listing the powers of the Union and of Member States will make it easier to apply the principle of subsidiarity. The Committee also calls upon Member States to apply the principle of subsidiarity domestically, i.e. with regard to their regions and local authorities. The principle also introduces the concept of gradation; the higher levels of government act only when the lower levels cannot do so satisfactorily.

2.3. The Committee of the Regions considers it essential and useful to apply the subsidiarity principle to EU energy policy. In order to outline the main tasks of Community energy policy and of Member States, the Committee states the following as its Opinion on the energy-policy functions of regional and local government.

Integrated energy policy

2.4. Energy is produced and consumed locally. Transfer and distribution of energy also have local consequences. Energy policy always has a local and regional impact. Improving living conditions in towns and rural areas often means taking well-planned energy-policy measures. An integrated energy policy taking account of the impact of energy decisions on local development needs, employment, environmental protection and social factors can be implemented most effectively at the local and regional level. This approach is also consistent with the ideas contained in the UN's Agenda 21.

2.5. Local and regional government are the levels of administration closest to citizens. In several Member States local and regional bodies also perform functions related to the production, distribution and proper use of energy and to energy conservation. Local organizations have made it possible to implement a highly integrated and extremely rational kind of energy policy (using cogeneration, which produces both heat and electricity).

2.6. The EU must promote cross-border cooperation in this area as part of its strategy for economic development and European integration, by giving priority to joint action by different regions both in energy networks and energy generation.

Energy production

2.7. In some parts of the Union, energy production is of major importance for employment. In particular, decisions about the role of coal production in certain Member States have demonstrated the impact of social and regional policy on energy policy. Decisions about energy production must always recognize and assess their effects on social and regional development.

2.8. It is the common goal of the European Union to secure reliable energy supply by decentralizing energy product at a regional and local level, in terms of both raw materials and production plants. To this end, it makes sense to support local and regional producers that produce heat and power with a high degree of energy efficiency, especially in combined heat and power plants. This would mean producing energy at the most local level possible, thus avoiding unnecessary wastage in the areas of transport and distribution, which is costly both economically and environmentally.

2.9. The investment costs of local power plants producing combined heat and power are often substantial. As a counterbalance, these same plants save fuel, and have lower running costs and less environmental impact. Heat energy from renewable sources and industrial waste could also be used in urban heating networks. Investment may make it difficult for the energy produced by such plants to compete in the short term. A common Union energy policy should therefore ensure some alleviation in these investment costs, e.g. through interest subsidies and taxation.

2.10. Using renewable natural resources in energy production is usually feasible for local and regional producers. Such local plants often using new technology are best able to win support among local people. Thus, EU support for the use of renewable energy resources should go primarily to local and regional production units.

2.11. The important aspects of energy production in peripheral parts of the Union and in rural areas are to take local conditions into account and to utilize renewable energy resources. It is particularly important in such areas to integrate energy production and energy policy into local and regional development as a whole.

Energy transmission and distribution

2.12. Energy transmission networks are already the object of EU attention. Developing these networks will greatly promote balanced regional development in the Union and help integrate peripheral areas into the Community.

2.13. Ensuring true competition requires special action from the Union in order to watch over any energy transmission monopolies. The Union must ensure that all networks, including those linking up different countries, are open to the energy produced by local and regional power plants.

2.14. Energy networks always have a local and regional impact. In most Member States, local and regional government decides where these networks shall be located. Special local features and the relationship between energy networks and other land use can then be taken into account. In the same connection, detailed regional environmental impact assessments can be made.

2.15. Plans for European energy networks should also survey regional and local government opinion as far as necessary before taking any final decisions. Consultation with the Committee of the Regions is also needed.

2.16. Energy distribution networks are part of the basic community infrastructure. Local and regional levels must also play a key role in decision-making concerning the need for and location of distribution networks, and to some extent their technical character. Another important question is that of relocating networks in the event of changes in the housing and spatial planning situation.

Energy consumption

2.17. The aim of a common European Union energy policy must be to use and conserve energy as efficiently as possible. A community structure deriving from decisions at the local and regional level defines most of society's future energy requirements. The role of local and regional government is therefore crucial in achieving the goals of efficient energy use and conservation.

2.18. About 80 % of the Union's citizens live in towns, where energy consumption can be greatly influenced by local planning and decision-making. The Union should also formulate its own urban policy as a means to achieving its energy policy goals. This means creating better opportunities to develop a Community structure and building stock that will conserve energy and reduce consumption. The EU should introduce high standards for the rational use of energy for buildings and amenities. It will then be essential to bring about improvements in urban centres and the existing urban environment if the process of urban dispersion so wasteful in terms of energy is to be halted.

2.19. The importance of the community structure is particularly great in deciding the energy needed by traffic. The trend towards a more mixed urban structure comprising housing, workplaces and services, and the goal of reducing the need for movement can only be achieved through determined action by local and regional government. The importance of this goal is underlined by the fact that the energy needs of traffic have risen rapidly in Union Member States, and in the case of private motoring, especially, traffic is practically solely dependent on oil as an energy source.

2.20. One goal of EU action in advancing the information society must be to reduce the amount of physical traffic. The Union should consistently work for information networks that are open to all. Union research and development should promote applications of communications networks connected with community planning.

2.21. Community planning should consistently promote conditions favourable to pedestrians and cyclists. As well as providing special walking and cycling paths, it is essential to make towns into such safe, attractive places to move around in, that people are tempted to walk or cycle there. Here, too, the possible action can only be taken by local authorities. DG XVII should pursue joint initiatives with DG VII.

2.22. In European towns, providing public transport always demands action by regional and local government. Financing a basic public transport infrastructure is an urgent task throughout Europe. Environment taxes on traffic should be used specifically to safeguard operating conditions for public transport. Cooperation between European regions and cities would have a beneficial impact on public transport planning, information systems and the quality of fleets and rolling stock.

2.23. Ultimately, it is the decisions of individuals that affect energy consumption. Opinion polls tell us that people are strongly in favour of energy conservation. Often, it is information on sufficiently concrete opportunities for action that is lacking. Local government is the best level at which to produce the concrete information needed to back up the right consumption decisions by various groupings and categories of the population.

2.24. Local energy counselling influences individual decisions on energy consumption. Gauging energy consumption and specifying billing to identify different types of consumption will help people to make the relevant decisions on conservation. Locally, a linear tariff promoting efficient use of energy has been adopted, in which charges are highest during consumption peaks. This example, too, demonstrates local government's potential for generating energy-policy innovations.

2.25. Regional and local government is a major energy consumer as such. Conservation programmes here can also be used as models and pilot projects. Experiences of these activities as such, and also of their effectiveness as a means of public education, are excellent.

3. General comments

3.1. The Committee of the Regions considers the Green Paper for a European energy policy a comprehensive document providing a basis for broader discussion. The document effectively substantiates the need for a common energy policy, especially with a view to the competitiveness of energy-using industry, environmental protection and secure energy supply.

3.2. The Committee of the Regions considers that energy policy is part of an economic and social development policy, where people's needs should be given priority while also observing the sustainable development principle. Decisions on energy policy affect employment policy and social policy. The impact of energy-policy decisions on local and regional development are also patent.

3.3. The Committee of the Regions supports the Union's desire to make better use of market mechanisms in the production, transmission and distribution of energy, and in regulating consumer habits. However, in order to implement the single internal market and promote healthy competition, it is also important to recognize the links between energy policy and economic and social policy at Community and Member State level, and at the local and regional level. Market mechanisms should not be used without properly identifying their impact on low income groups and in rural areas and, where necessary, taking steps to ensure hardship does not result.

3.4. The Committee of the Regions supports growth in competitive capacity founded on sustainable development through a common EU energy policy. The internal energy market within the union and the price structure of energy will then support the building of contingency reserves of energy, while also working for environmental protection goals.

3.5. Keeping carbon dioxide emissions at their present level and gradually reducing them will require particularly strong EU action. The price of energy should include all the environmental costs.

3.6. The Committee of the Regions proposes that the debate arising from the Green Paper should specify those measures yielding added value that call for a common Union energy policy. At the same time, the division of responsibilities between Member States and regional and local government should be considered. This consideration should be based on the principle of subsidiarity as described in this document by the Committee.

3.7. The Committee of the Regions proposes, referring to the subsidiarity principle, that local and regional government should be guaranteed opportunities for achieving the common goals. Special care should then be taken to see that:

- district heating technology based on combined generation of heat and power is promoted with special regard for the region's environmental situation, together with the competitiveness of the power produced this way;

- plants using local renewable energy resources are developed;

- access to power networks is ensured for local and regional energy producers, etc.;

- the important role played by local and regional government in planning the community structure and its significant effect on energy consumption is acknowledged;

- opportunities for a mixed urban structure and practical applications of the information society are created in order to reduce physical traffic;

- an environmental tax on traffic is used to protect the environment. Increased competitiveness of public transport is another important factor here.

3.8. The Committee of the Regions proposes that a European Union energy policy should also be examined from the point of view of consumers and citizens. Energy policy should make it possible for consumers to support energy conservation and environmentally sound energy use through their own personal decisions. The underlying energy policy objective should be the concept of energy services - meaning the provision of heat, light and electricity at an affordable price - rather than the supply of cheap energy.

3.9. The Committee of the Regions points out that the social impact of decisions on energy policy may well be great and that failing to take this into account results in widespread economic and social problems. Before they can be effective, changes in energy consumption habits also require social impact to be assessed. Several of the investments aimed at energy conservation demand a carefully pondered action programme adjusted to suit the potential of different population groups.

4. Specific comments

4.1. Page 4, Summary and policy directions

The Committee of the Regions takes the view that the Union should not have a mandate to interfere in local or regional structures within its own energy policy, if these are overall in line with Union policies (competition, cohesion, etc.). The last sentence on page 4 of the Green Paper, 'The energy policy of the Commission has to answer these challenges and optimise the diversity of national and regional energy portfolios for the overall benefit of the Community`, conflicts with this principle.

4.2. Page 8, item 1

In the Committee of the Regions' view, the public interest cannot be entirely left to market forces. It is to counterbalance market forces that the public sector exists; it sees to those matters in a society of citizens which would otherwise be left undone or which get distorted because of an unsatisfactory competition. In the public sector, local and regional government have their own important role to play, as outlined above in sections 2 and 3.

4.3. Page 12, point 15

In the Committee of the Region's view, the Green Paper text quite rightly stresses the great importance of the energy sector for regional development. Energy investments in peripheral areas and areas with small markets, say, do not necessarily seem very tempting in purely competitive conditions, however. In this respect, energy policy must be based on the structural policy.

4.4. Pages 16 and 17

On these pages, competition comes across as a goal in itself. The Committee of the Regions considers that competitiveness is only an instrument in attaining the goals of energy policy. The document should be supplemented with the arguments outlined by the Committee in section 2.

4.5. Page 25, point 48

This point contains one of the few mistakes in the document. Combined production of heat and power is successful using also other fuels, and not just coal. This has been demonstrated in Finland, for instance, where wood-based waste from industry and peat have been used on quite a large scale for combined energy production.

5. Conclusions

5.1. The Committee of the Regions concurs with the Commission's view that energy issues should be handled comprehensively, while recognizing that operations in the energy field involve various levels:

- the European level, including issues related to trans-European distribution networks, watching over monopolies, consumer protection and common requirements for minimal standards for environmental protection and environmental taxation;

- the Member State level; and

- the local and regional level, which includes all the energy-policy functions outlined in this Opinion.

In the Committee of the Regions' view, a common European Union energy policy should largely refer to issues at the European level.

5.2. In order to be feasible, a European Union energy policy calls for the viewpoints outlined in the Green Paper to be given a highly concrete and precise form. Many aspects are left vague and no priorities are defined for goals. Some of the goals are mutually contradictory, such as the aim of reducing regulation to a minimum while also introducing taxation and other instruments.

5.3. The role of local and regional government in the European energy field is barely touched upon in the Green Paper. A successful energy policy, efficient use of energy and environmental protection require full support and action at the local and regional level if they are to succeed. Regional and local authorities are undertaking energy planning studies with EU support. They are taking environmental problems linked to energy into consideration in the local initiatives which they are implementing under Agenda 21.

5.4. The internal market must be further developed in the case of energy, with due regard for the optimum use of renewable energy sources. Some of the barriers slowing development can probably be eliminated by taking the regional and local viewpoints and needs outlined in this Opinion into account.

5.5. The Committee of the Regions should provide an Opinion on all issues connected with Community energy policy and more broadly the whole energy field.

Done at Brussels, 20 July 1995.

The Chairman of the Committee of the Regions

Jacques BLANC