A4-0235/96

Resolution on the communication from the Commission on the European Community gas supply and prospects (COM(95)0478 - C4-0487/95)

The European Parliament,

- having regard to the Commission communication (COM(95)0478 - C4-0487/95),

- having regard to its opinion of 11 July 1990 (( OJ C 231, 17.9.1990, p. 77.)) on the Commission proposal (COM(89)0334) on the transit of natural gas through the major systems,

- having regard to its opinion of 24 January 1991 on the Commission proposal for a Council directive revoking Council Directive 75/404/EEC on the restriction of the use of natural gas in power stations (( OJ C 48, 25.2.1991, p. 163.)),

- having regard to its resolution of 13 June 1991 on energy and the environment (( OJ C 183, 15.7.1991, p. 303.)),

- having regard to its resolution of 12 March 1992 on a common energy policy (( OJ C 94, 13.4.1992, p. 279.)),

- having regard to its opinion of 17 November 1993 concerning common rules for the internal market in electricity (( OJ C 329, 6.12.1993, p. 150.)),

- having regard to its resolution of 21 April 1994 on the Agreement on the European Energy Charter and specific protocols (( OJ C 128, 9.5.1994, p. 378.)),

- having regard to its opinions of 18 May 1995 on the trans-European energy networks (( OJ C 151, 19.6.1995, p. 228.)), (( OJ C 151, 19.6.1995, p. 232.)),

- having regard to its resolution of 10 October 1995 on the Green Paper 'For a European Union energy policy' (( OJ C 287, 30.10.1995, p. 34.)),

- having regard to the draft opinion of the Section for Energy, Nuclear questions and Research of ECOSOC on the communication 'European Community gas supply and prospects' (COM(95)0478),

- having regard to the Energy Council conclusions formulated on 7 May 1996,

- having regard to the report of the Committee on Research, Technological Development and Energy and the opinions of the Committee on Economic and Monetary Affairs and Industrial Policy and the Committee on Transport and Tourism (A4-0235/96),

A. whereas the share of natural gas in EU primary energy consumption has risen from 15% in 1980 to 19.3% in 1994 and is projected to rise to 25% in 2010,

B. whereas a significant part of this increase is in the power generation sector following the withdrawal in 1991 of the EC Directive prohibiting the use of gas for power generation,

C. whereas in 1994 the EU was dependent on imports from third countries for 38% in 1994 and this is projected to rise to 60% in 2010; whereas three countries, Russia, Norway and Algeria, are the source for virtually all imports to the EU,

D. whereas the EU had a 46% share of world trade in natural gas in 1994 and is therefore a very significant customer in world markets,

E. whereas the International Energy Agency (IEA) has concluded that the level of imports should not of itself be taken as a security problem as it is more a question of the market structures within which these imports take place,

F. whereas 54% of the natural gas consumed within the EU in 1994 crossed at least one internal border, so that there is already a significant trans- European network in operation for the natural gas market,

G. whereas parts of the EU, however, remain both dependent on a single supplier and isolated, as to their supply and gas network, constraining their ability to make gas accessible in new regions and to undertake measures towards an open market,

H. whereas the use of natural gas presents a number of important environmental advantages, particularly as a means of transporting energy as such, in power generation generally and co-generation particularly, relative to other fossil fuels, and in the transportation sector when substituting traditional gasolines and diesels, but remembering that natural gas is not renewable or sustainable,

I. whereas a single part of a gas network is capable of transferring up to 10 000 MW of primary energy and beyond, all the way to the point of energy demand and consumption, more cost- and energy- efficiently, without obstructions above ground, without generating noise or electromagnetic fields, requiring a fairway of negligible width, otherwise cultivable,

J. whereas the environmental advantages that include lower CO2, SO2 and NOx emissions and negligible emissions of particulate matter, dust and waste enable the use of gas in all its main applications in the midst or immediate vicinity of habitation and industry, in support of decentralized power and heat generation and enhanced co-generation,

K. whereas the gas supply situation in individual Member States differs markedly in terms of share of primary energy consumption, levels of self- sufficiency in production and dependence on imports,

L. whereas natural gas is an integral part of a balanced energy supply in Europe and energy is essential for economic growth and prosperity,

M. whereas the cost of natural gas increases in proportion to the distance it must be transported either by pipeline or LNG (liquefied natural gas) tanker and the EU is located within economically transportable distance of approximately 80% of known world gas reserves,

N. whereas the natural gas industry of the EU has plans to expand underground storage capacity by at least 75% over the next twenty years as a safeguard against possible interruptions of supply,

O. whereas both single supplier monopolies and liberalized markets require independent regulators to oversee market mechanisms, enforce competition rules and balance the interests of customers, operators and owners of gas utilities, yet the regulator cannot guarantee security of supply,

P. whereas the liberalization of the gas industry in the UK has resulted in a reduction in R & D activities,

Q. whereas the present estimate of the ratio of reserves to current consumption is seventy years' supply and the confident expectation of the industry is that new discoveries and greater efficiencies in extraction will maintain this ratio for years to come,

1. Congratulates the Commission on a very competent analysis of gas supply and future prospects in Europe contained in this communication;

2. Notes the view of the Commission and the conclusion of the Energy Council meeting on 7 May 1996 that the EU natural gas industry has to date an exemplary record in the area of security of supply;

3. Notes the Commission view that some national exploration and production policies currently inhibit producer incentives, such as requirements for state participation in exploration and production, the landing of gas onshore, giving the national transmission company right of first refusal and exclusive rights over a gas production area;

4. Recognizes the vital role of a trans-European network in gas supply for enhancing security of supply, for providing the necessary framework within which market mechanisms can operation efficiently and for practical measures towards further integration of the European economy, in particular through the various interconnector schemes linking the countries bordering on the Baltic sea, Mediterranean countries, the UK and Ireland with the main continental pipeline network;

5. Calls on the Commission and Council to make progress with measures establishing a true internal market for natural gas, with guarantees concerning security of supply, public interest responsibilities and consumers' rights and a high level of protection of long- and medium- term research and development within the industry;

6. Considers it important to maintain competition between different energy sources in order to ensure the adequacy of both supply and price; the importance of energy as a factor of production should not be forgotten; giving up the diversity of energy sources can be politically tempting, but it is economically dangerous;

7. With regard to concerns over possible interruption of supply from third countries, calls for more detailed risk analysis to be undertaken before any further action in relation to supply security is proposed at European level;

8. Considers that the political risks to financing and supply security, associated with those of its existing and potential external supply lines that cross one or several third countries between the gas producer and EU borders, call for a specific assessment by the Commission;

9. Calls for a package of social and political measures for the supplier countries to ensure that there are long-term, stable contracts entailing benefits for those countries;

10. Calls for the Energy Charter Treaty to be ratified as soon as possible by all countries concerned;

11. Welcomes the proposal for a second Energy Charter Treaty framework embracing countries to the south and possibly in the Middle East;

12. Calls on the Commission to deepen its evaluation of the potential and prerequisites of developing the major gas reserves in the Arctic regions of Europe, as an integral part of Europe's long-term supply assessments;

13. Considers that insufficient consideration has been given to the factor of competing demand for natural gas supplies from other parts of the world, in particular from Japan, China and the fast growing economies of south-east Asia;

14. Considers that the Commission has not taken sufficient account of the fact that because of the many benefits of gas other energy sources, namely renewables, will have insufficient investment, resulting in the medium and longer term in too high a degree of dependence upon imports;

15. Considers that the Commission may not have recognized that the advantages of the energy efficiency of combined cycle gas turbine power generation may outweigh the flexibility of dual capacity generation and thereby reduce capacity for inter-operability, which has implications for security of supply;

16. Calls on the Commission to support research into:

- hybrid systems for energy efficiency and conservation utilizing natural gas and renewable energy sources, such as solar energy in warmer countries;

- projects to make utilization of so-called associated gases from oil production, presently flared off to waste, a viable proposition;

- systems for co-generation which have the potential to achieve even greater efficiencies than combined cycle gas turbine (CCGT) generating plant;

- cooperative projects to reduce gas pipeline leakage in third countries where losses are significant and unburnt natural gas has a damaging greenhouse effect, and technology for remote monitoring and corrosion control of long distance trunklines through uninhabited regions in third countries, as a pre-emptive measure against pipeline leakages and deterioration;

- greater efficiency in natural gas liquefaction process and reduced losses in liquefied natural gas transportation;

17. Calls on the Commission and the industry to note and support, where appropriate, schemes for gasification technologies adaptable to raw materials in abundant supply within the Community, to diversify both supply dependency and access to alternative gaseous fuels; in particular, note should be taken of the potential of integrated gasification combined cycle power plant (IGCC), as demonstrated in the recently completed unit at Demkolec in the Netherlands, and its wider application in the fields of chemical synthesis and disposal of refinery residues;

18. Asks the Commission to consider in its report to the European Parliament and to the Council, which should be submitted in the year 2002, if measures to be adopted by the European Union concerning the choice between different energy, especially alternative energy sources, and affecting the general structure of energy supply should be proposed;

19. Considers that there are lessons to be drawn from the oil-price shock of the 1970s relevant to the supply of natural gas, and, in particular, that market forces will compensate both in the short term and longer term to bring about adjustments in demand and supply through the price mechanism to restore equilibrium, should there be a shortfall in supply;

20. Recommends that the European Union should ensure by international agreements with supplier countries that it is politically and economically wise to respect the supply contracts and that any violation of these will be subject to sanctions;

21. Asks the Commission to consider if the long-term safety aspects of gas deliveries should be taken into account in the financing resources reserved for TEN gas projects;

22. Calls on the Commission, consumer organizations dealing with hospitals and the domestic sector, and the industry to maintain close contact and liaison, particularly with regard to any consideration of guidelines for emergencies;

23. Notes the view of the IEA study on security of gas supply that sees very little scope for coordinated international action to improve security, sees risk-management as being central to the gas business and primarily a matter for suppliers and their customers, and favours market mechanisms wherever possible as the basis for security decisions, subject to considerations of safety and the interests of small customers, where regulation may have a role to perform;

24. Considers that the EU and Member States should be aware of the risks associated with overdependence on any one energy source, and suggests that 25% of total energy supply constitutes the threshold which should trigger a review by the Commission;

25. Proposes that the Commission:

- deepens the analysis of the role of the EU, the Member States and the gas sellers and buyers in safeguarding the gas deliveries and financing the safety costs; and

- compares the efficiency and costs of alternative ways of safeguarding the gas deliveries to Europe;

26. Approves the conclusions submitted by the Commission to the Council;

27. Instructs its President to forward this resolution to the Commission and the Council.