WRITTEN QUESTION E-2156/01

by Bart Staes (Verts/ALE) to the Commission

(18 July 2001)

Subject: Redirection of European oil subsidies towards sustainable energy sources

In its answer to question H-0527/01(1) the Commission confines itself to summarising the existing programmes for renewable energy sources. For example, between 1994 and 1999, 10 % of the total energy budget amounting to EUR 300 million was spent on energy from renewable sources. Between 1998 and 2002 the Commission wishes to allocate some EUR 477 million through the Fifth Action Programme and Altener to alternative sources of energy.

The Commission does not give any definitive answer on the redirection of oil subsidies. Between 1975 and 1998 the Commission granted no less than EUR 747,72 million in subsidies to European oil, gas and coal producers. This special treatment for petroleum contrasts sharply with the ambitious Kyoto objectives on CO2 emissions. A great effort therefore needs to be made to redress the balance in favour of alternative energy sources.

Accordingly I should like a clear reply from the Commission to the following questions:

- Will the Commission be redirecting its support for the petroleum industry to the development and promotion of alternative energy sources?

- If not, why is the Commission refusing to redirect its support for the petroleum industry towards the development and promotion of alternative energy sources, in the light of the ambitious Kyoto objectives and the many years of preferential treatment given to the petroleum industry?

(1) Written answer of 3 July 2001.

Answer given by Mrs de Palacio on behalf of the Commission

(9 November 2001)

Within the Fifth Research and Technological Development (RTD) Framework Programme, in the distribution of funds for the promotion of new energy technology, priority has been given to

renewable energy sources and energy efficiency. Funds allocated to renewable energy sources and energy efficiency measures will account for approximately 80 % of the total budget. However, the Commission promotes a balanced approach to the promotion of innovative energy technology and therefore the remaining 20 % of support could be allocated to conventional energy sources, such as oil, gas and coal.

It should be noted, that in the selection of proposals elegible for Community support, one of the key criteria was the environmental benefit associated with the projects. Therefore, in the selection of proposals, priority was given to projects that reduce the environmental impact related to oil and gas exploitation.

In relation to the consistency of the support to oil and gas technology and the Kyoto target, it should be remembered that the increased utilisation of natural gas in substitution of more carbon-intensive fuels is one of the key elements for the reduction of greenhouse gas emissions. In that respect, support to innovative gas technology can contribute to the achievement of the Kyoto target.

It should be added that, in addition to financial support for renewable energy sources, the Commission promotes an increased penetration of renewable energy sources through a series of other policy measures, such as the recently adopted Directive on the promotion of electricity produced from renewable energy sources in the internal electricity market(1). The strategic objective of the Directive is to create a framework for the medium-term significant increase of electricity from renewable energy sources. The Directive abstains from proposing a harmonised Community-wide support scheme for electricity from renewable energy sources. This is to allow Member States to gain further experience with the application of their national support schemes. The Commission will follow the developments in Member States closely to gain further insight into the practical merits of each national support scheme. In Article 4, the Directive obliges the Commission to issue a report assessing the different national support schemes no later than four years after its entry into force. The report should give a clear picture of the effectiveness, including cost-effectiveness, of each national support scheme. Under the terms of Article 4, this report shall, if necessary, be accompanied by a proposal for a harmonised Community-wide support scheme for electricity from renewable energy sources. Such a proposal could be necessary inter alia to establish a real level playing field with electricity produced from conventional energy sources.

The Commission's Green Paper on the security of energy supply has launched a debate on the future of European energy policy including the issue of support to different energy sources. In this context, the Commission has raised the question whether sectors which have received public support in the past, such as oil, should not contribute financially to the development of renewable energy sources. More generally, in its proposal for a European sustainable development strategy(2), the Commission has proposed to phase out subsidies to fossil fuel production and consumption by 2010.

(1) COM(2001) 445 final.

(2) COM(2001) 264.