WRITTEN QUESTION E-1997/01

by María Rodríguez Ramos (PSE)and Carlos Westendorp y Cabeza (PSE) to the Commission

(6 July 2001)

Subject: Expiry of the ECSC Treaty and coal aid

At the recent EU Intergovernmental Conference the Member States rejected the idea of giving the EU powers in energy-related matters. Since the ECSC Treaty expires on 23 July 2002, it could be argued that there is no longer any clear legal basis for EU intervention in an energy sector whose production is not traded between the Member States.

What legal basis is the Commission intending to adopt for the purpose of regulating State aid to energy sources, including coal?

Joint answerto Written Questions E-1995/01, E-1997/01, E-1998/01 and E-2000/01given by Mrs de Palacio on behalf of the Commission

(19 September 2001)

1. By decision of 25 July 2001 the Commission adopted a proposal for a Council Regulation on State aid to the coal industry after the expiry of the ECSC Treaty(1). This proposal has been sent for adoption to the Council, which will decide after Parliament, the ECSC Consultative Committee, the Economic and Social Committee and the Committee of the Regions have delivered their opinions.

The adoption of a new system of State aid to the Community coal industry was a priority in the Commission's work programme. Adopting new rules as speedily as possible should help to smooth the transition between the present and future systems of State aid, enabling the restructuring and rationalisation of the sector to be carried out in the best possible conditions.

2. The system proposed by the Commission amounts to the creation by the Member States of an indigenous base of primary energy sources, in order to improve the Community's security of energy supply. A primary energy base of this kind means promoting or maintaining Community sources of energy, especially renewables and coal. Accordingly, the proposed system is not to be seen as an isolated initiative restricted to a single primary energy source but as part of a set of coordinated measures.

3. When the ECSC Treaty expires, State aid to the coal industry will fall within the scope of Community rules, more specifically Article 87 (ex Article 92) et seq. of the EC Treaty.

Article 87 of the EC Treaty raises the principle of incompatibility of State aid with the common market. State aid is, however, only incompatible in so far as it affects trade between Member States and distorts or threatens to distort competition by favouring certain firms or products. The case law has broadly defined these criteria(2), in this sector as well. In this context it is necessary to examine the effects of aid to coal production on the energy market as a whole, for the reason that the gradual creation of an internal energy market necessitates a policy of strict control of aid in the energy sector, which has to include control of all State aid granted to primary energy sources, including coal production.

4. The system proposed by the Commission is based on Articles 87 (3) (e) and 89 (ex Article 94) of the EC Treaty.

(1) COM(2001) 423 final.

(2) See lastly in particular the ruling of the Court of First Instance of 12 July 2001 in the joint cases T-12/99 and T-63/99, UK Coal plc v. Commission, not yet published.