WRITTEN QUESTION P-2490/01

by Bart Staes (Verts/ALE) to the Commission

(7 September 2001)

Subject: Redirection of European petroleum subsidies to sustainable energy sources

In its answer to question H-0527/01(1), the Commission merely summarises the existing programmes for renewable energy sources. Over the period 1994 1999 10 percent of the total energy budget was devoted to renewables. This amounted to 300 million. From 1998 to 2002 the Commission intends to allocate approximately 477 million to alternative energy sources under the Fifth Action Programme and Altener.

Between 1975 and 1998 the Commission gave 747.72 million euro in subsidies to European petroleum, gas and coal producers. The special treatment reserved for petroleum stands in stark contrast to the ambitious Kyoto objectives for CO2 emissions.

However, an article in the Far Eastern Economic Review (see Courier International of 12 to 18 July 2001, p. 21) shows the importance of lower petroleum subsidies for combating CO2 emissions. By reducing subsidies for fossil fuels, China has managed to reduce CO2 emissions significantly since the mid-1990s.

Does the Commission acknowledge that reducing subsidies for fossil fuels has helped to reduce CO2 emissions in China, as described in the Far Eastern Economic Review (see Courier International of 12 to 18 July 2001, p. 21) on the basis of a study by the Lawrence Berkeley National Laboratory in California (April 2001)? If so, does the Commission intends to redirect its support for the oil industry following China's example to the development and promotion of alternative energy sources? If not, why is the Commission refusing to redirect its support to the oil industry to the development and promotion of alternative energy sources, given the positive effects that similar action has had in China?

(1) Written answer of 3.7.2001.

Answer given by Mrs de Palacio on behalf of the Commission

(3 October 2001)

The Commission acknowledges that sustainable energy sources should be supported financially and through effective policy measures.

In respect of the support granted to fossil fuels, it should be noted that this support is not a subsidy but a financial contribution for the demonstration of innovative and efficient energy technology. As a matter of fact no subsidies were given to oil and gas companies as this is contrary to Community competition legislation.

Since 1998, support for demonstration of innovative oil and gas technology has been gradually decreased and redirected towards renewable energies and projects for energy savings. However, the Commission promotes a balanced approach to the promotion of innovative energy technology and therefore a limited amount of support has also been granted to technology for conventional energy sources, such as oil and gas.

It should be added that, when granting support to oil and gas technology, preference was always given to projects reducing the environmental impact of the use of fossil fuels. For example, in relation to the Kyoto target it should be pointed out that migration to natural gas from fuels with higher carbon content is one of the most effective instruments to reduce greenhouse gas emissions. An additional example of the contribution of hydrocarbon technology to the reduction of greenhouse gas emissions is a technique called underground storage of carbondioxide (CO2). By means of this technique, greenhouse gases can be safely and permanently disposed of in underground reservoirs.

In respect of the energy situation in China, it is true that over the last few years China has reduced its emissions substantially. However, such reductions were mainly achieved by closing down some old and very inefficient power generation plants and replacing them with new and more efficient power generation facilities. It should also be mentioned that China had been relying on coal for about 80 % of its energy balance. As a comparison, the current contribution of coal to the Community's energy balance is around 15 %.

In conclusion, during the last few years the amount of financial support for energy technology has been redirected towards renewable energy sources. When allocating the residual support to fossil fuels, priority was given to projects that reduce the environmental impact of the use of fossil fuels. The Commission is committed to the promotion of renewable energy sources, not only through programmes for the financial support of such sources, but also through appropriate policy measures such as the recently approved directive for the promotion of electricity produced from renewable energy sources(1).

(1) 2001/77/EC.