TOWARDS A NEW ENERGY POLICY STRATEGY FOR THE EUROPEAN COMMUNITY (Comunication and proposals from the Commission to the Council)
Date: 1974-05-29
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, EU strategy, energy efficiency, energy resources, energy supply, energy use, price of energy, security of supply, self-sufficiency in energy

ARCHIVES HISTORIQUES 
DE  LA COMMISSION 

COLLECTION RELIEE DES 
DOCUMENTS "COM" 

COM  (74)550 

Vol.  1974/9007 

Disclaimer 

Conformement  au  reglement  (CEE,  Euratom)  n°  354/83  du  Conseil  du  1er  fevrier  1983 
concernant  l'ouverture au public  des  archives  historiques  de  la  Communaute  economique 
europeenne et de  la  Communaute europeenne de  l'energie atomique (JO  L 43  du  15.2.1983, 
p.  1 ),  tel  que  modifie  par  le  reglement  (CE,  Euratom)  n°  1700/2003  du  22  septembre  2003 
(JO  L 243 du  27.9.2003,  p.  1 ),  ce  dossier est ouvert au  public.  Le  cas echeant,  les documents 
classifies  presents  dans  ce  dossier  ant  ete  declassifies  conformement  a !'article  5  dudit 
reglement. 

In  accordance  with  Council  Regulation  (EEC,  Euratom)  No  354/83  of  1  February  1983 
concerning  the  opening  to  the  public  of the  historical  archives  of  the  European  Economic 
Community  and  the  European  Atomic  Energy  Community  (OJ  L  43,  15.2.1983,  p.  1 ),  as 
amended  by  Regulation  (EC,  Euratom)  No  1700/2003  of  22  September  2003  (OJ  L  243, 
27.9.2003,  p.  1 ),  this file  is  open  to  the  public.  Where  necessary,  classified  documents  in  this 
file  have been  declassified in  conformity with Article 5 of the aforementioned regulation. 

In  Obereinstimmung  mit  der  Verordnung  (EWG,  Euratom)  Nr.  354/83  des  Rates  vom  1. 
Februar  1983  Ober  die  Freigabe  der  historischen  Archive  der  Europaischen 
Wirtschaftsgemeinschaft und  der Europaischen Atomgemeinschaft (ABI.  L 43 vom  15.2.1983, 
S.  1 ),  geandert durch die Verordnung  (EG,  Euratom) Nr.  1700/2003 vom  22.  September 2003 
(ABI.  L  243  vom  27.9.2003,  S.  1 ),  ist  diese  Datei  der  Offentlichkeit  zuganglich.  Soweit 
erforderlich,  wurden  die  Verschlusssachen  in  dieser  Datei  in  Obereinstimmung  mit  Artikel  5 
der genannten Verordnung freigegeben. 

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(74)  550  final 

Brussels,  29  May  1974 

TOWARDS  A  NEW  ENERGY  POLICY  STRATEGY  FOR  THE 

EUROPEAN  COMMUNITY 

(9~m~unication  and  proposals  from  the  Commission  to  the  Council) 

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COM(74)  550  final 

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CONTENTS 

Introduction 

Chapter  I  - A  strategy which  takes  account  of  the  new  situation 

in  the  energy  market 
A.  The  long-term  objectives 
B.  The  objectives  for  1985 

1)  New  hypotheses  and  constraints 
2)  Structure  of  the  energy  balance-sheet  in 1985 
Summary  of  the  objectives  of  an  Energy  Supply 
Policy  for  a  Community  in 1985 

3)  Dependence  on  imported  energy  sources 
4)  Nature  and  scope  of  the  objectives 
5)  Investments  and  budgetary 

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1 • 
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Cba pier  :q , ,: Electricity and  nuclear  energy 

; 
·A.  Demand  for  electricity 
~' B.  Electricity  production 

Chapter  III  Coal 

Chapter  IV  Oil 

Chapter  V 

Natural  gas 

Chapter  VI  Conclusions 

A.  Implementing  the  objectives 
B.  Prices 

Annex  :t.:  ~ :.  :: . Proposal  for  a  Council  Directive  on  limiting  the 
.use  of  natural  gas  in  power  stations. 

"►•~H"~"' 

Annex  I! 

·Proposal  for  a  Council  Directive  concerning  the 
.restriction  of  the  use  of  petroleum  products  in 
·power  stations. 

Annex  III 

Proposal  for  a  regulation  of  the  Council  concerning 

; ...  ~ ~ " :.  ;..  .  the  common  rules  for  imports  and  exports  of 

hydrocarbons 

Annex  IV 
:•. 
... 

,,  I 
I 
.-,  "  ............ 

Communication  from  the  Commission  to  the  Council 
regarding  the  rational  use  of  energy 

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Introduction 

The  recent  change  in  the  Community's  energy  supply  conditions  has  been  of  an 

order  which  requires  the  objectives  of  energy  policy  to  be  adapted. 

( 

0 

The  experience  of  the  latter  part  of  1973  and  its  subsequent  repercussions  must 
be  ·an"fricentive  to  the  Community  to  reduce  its  dependence  for  energy  on  the 

rest  of  the  world  to  the  utmost  extent  possible.  Vigorous  action  must  be  taken 

in  order  both  to  guarantee  greater  security  of  supply  and  to  prevent  vi~lent 

changes  in  the  prices  of  energy  materials,  which  always  prejudice  the 

effectiveness  of  investments  undertaken  and  call  in  question  the  wisdom  of  the 

path  economic  development  has  followed. 

,,.:.:~:~J~: 

The  objective  of  developing  more  secure  energy  resources  obvioucly  raises  the 
probJ.~I!I .. .O.f  "\;he  relative  prices  of  the  various  primary  energy  sources.  While 
acti~m~.tajcE\ln  by  the  authorities  can  to  a  certain  extent  improve  the  supply 

situation  without  an  adequate  prices  policy,  the  benefits  of  such  actions  can 

be  pu~  at. risk. 

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In  th:i.s  f,ield  as  in  others,  a  number  of  factors  must  be  taken  into  consideration. 

First, ,the  energy  sources  which  are  to  be  promoted  must  be  available  at  the 

low~st,possible  price,  as  an  incentive  to  potential  users.  Secondly,  the 

pro~uc~rs  have  no  interest  in  making .the  investments  necessary  for  the  future 

dev~lppment  of  production  if the  profitability  is  too  low. 

0 

Lastly~· :special  attention  should  be  given  to  the  role  consumers  themselves  can 

play~:  r While  the  increased  costs  of  energy  may  brake  demand  somewllat  in  the  short 

term •. ,tl').is,:may  well  be  less  so  in  the  long  term.  It  is  therefore  essential  that  the 
consumers  be  confronted  with  their  collective  responsibility  to  use  more 

effec,ively,energy  resources,  from  now  on  rarer  and  costlier  than  before. 

But  th~  substantial  increases  in  the  price  of  imported  oil  do  not  only  raise  issues 

in  the  f~eld  of  energy  policy;  they  raise  also  questions  regarding  the  adaptation 

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of .. economic. structures. 

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In  the-,immediate  future,  the  deterioration in  the  balance  of  payments  is 

, 

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preoccupying.  The  trade  deficit  to  support,  if there  are  to  be  the  same  quantities 

of  oiLavailable  as  before,  wi1l/,.su.l;-=:~:-An_-1ncr~ase 
ip. ;t~e  exti3rna.l  debt  of  the  Commu;iity  as  an  immediate  consequence.  · 

- - · -

• 

-2 -

In  the  longer  term,  the  factors  of  production  will  have  to  be  redeploJ~d: 

to  meet,  internally,  the  increased  costs  of  energy,  a.nd,  extern~lly,  the  need 

to  increase  income  from  exports.  The  importance  of  these  adjustments  appears 

quite  different  for  each  member  state.  The  differences  in  their  initial 

situations  and  in  their  medium  term  prospects  are  of  striking  importance. 

They  relate  essentially  to  the  balance  of  payments  situation  before  the 

energy  crisis,  to  the  importance  of  crude  oil  imports  relative  to  total  GNP, 

8-!1~ "t"o"~~e~  ~vailability  of  alternative  energy  resources  in  the  near  future 
at  a  competitive  price. 

Thus,  in  certain  member  countries,  the  gap  to  fill  to  arrive  at  a  balance  of  pay 

ments  in  equilibrium  is  much  more  important  than  in  others.  And  in  other  cases,  0 

the,iverr},~I,llited  availability  of  indigenous  traditional  energy  resources 
const;r~ins.any  reduction  in  the  near  future  of  the  degree  of  dependence  for 
energy14 ,W1,d  requires  a  special  effort  of  investment  to  promote  the  development 
o,f_  3:1ucJt:iar;,  t3nergy. 

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·  'Th~se  disparities  are  both  valuable  and  hazardous  for  the  Community. 

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'Valuable,  because  satisfactory  cooperation  among  the  member  countries 

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'  would  make  for  a  fairer  sharing  of  sacrifices  over  a  period  of  time 

.., 

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:  '  · ::  t:o::the  benefit  of  the  more  exposed  countries.  Hazardous, 

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because  there 

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is  a  danger  that  a  difference  in  situations  and  prospects  may  lead  to 

divergence  in the  policies  and  priorities  of  the  individual  member 
'  •• 
countries,  the  consequence  of  which  would  be  to  wipe  out  the  potential 

• ,  7 

~dvintages  of  the  common  market.  To  mitigate  this  risk,  a  Community 

1 

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,i  ·  energy  strategy  must  be  launched  as  soon  as  possible. 
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"'-:  :;  Th~s,  strategy  must  comprehend  the  double  objective  of  a  unified  market 

~  ·  ~d·security  of  supply  between  which  there  exists  a  close  association: 

1 it 11 ~s\1  only  if the  union  between  the  Member  States  - a  union  which l 

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i  ~~fleyts  the  principles  of  sharing  the  burden  and  that  of  the  free 

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·,  c;rcu~ation  of  goods  - can  function  without  hindrance  in  normal  situations 

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~t  can  have  it*s  full  significance  when  supply  difficulties  arise. 

1

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- 3  -

Events  require  the  Comnmnity  to  adopt  a  real  strategy  for  energy 

supplies.  The  Commission  has  set  out  itts  concept  of  the  totality  of 

such  a  policy  in  it's  documents  on  the  "Guidelines  and  Priority 

Actions  for  a  Common  Energy  Policy"*  - which  is  based  upon  a  threefold 

approach:  relations  with  other  consumer  contries  relation  with  producing 
countries  and  the  organization  of  the  market. 

,Regarding  the  first  two  of  these  themes,  the  Commission  refers  to 

its  previous  communicatiomto  the  Councill  and  stresses  the  fact  that 

the  policies  suggested  therein  are  entirely  compatible  with  the  new 

st_rategy  here  set  out.  Defining  a  Community  policy  for  energy  supplies 

0 

means  that  stable  and  balanced  relations  must  be  established  both  with 
l  •,  "  '  ; 1 
the  consumer  countries  and  with  the  energy-producing  countries;  though 

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in 'itself  the  defining·policy  will  give  more  substance  to  future 

~~6pe;ation  with  both  categories  of  country. 

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Oon~istent  with  the  objectives  of  the  new  Community  energy  policy,  the 

OoinfiliSsion  considers  that  R  &:  Dis  one  of  the  important  measures  to 

..  n  )-.~P.~!i'.1:1.ent  them. 

' 
Based,on  preparatory  work  already  underway,  the  Commission  will  submit 

2 

. 

to•tlie  Council,  in  the  very  near  future,  a  document  setting  out  guide 

l~he~~for  research  priorities,  a.nd  underlining  the  importance  of  the 

financial  measures,  public  a.nd  private,  required  for  their  implementation. 

0 

J(d~c~SEC(73)  1481  final) 
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'.·of.  Docs.  COM(73)  1320  a.nd  COM(74)90. 

2 
·In  particular,  based_:,_~n  the  Council's  resolution  of  the 
14  January  1974  concerning  a  European  Community  programme  in  the 
'area  of  science  and  technology  (JoO.  No  C  7/6),  the  outline  of 
,an  energy  research  programme  presented  by  the  Commission  within 
,that.context,  and  a.n  interim  report  prepared  bya  Sub-group  of  CERD 

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-4-

CHAPTER  I.  A  strategy which  takes  account  of  the  new  situation  in  the  energy  market. 

In  i·l;s  communication  to  the  Council  on  "Energy  Policy: . Problems  and  Resources 
1975-1985°1 ,  the  Commission  pointed  out  that,  in the  face  of  the  uncertainties 
affecting  the  supply  conditions  for  oil,  two  main  hypotheses  should  be  examined: 

first,  that  of  a  stable  market  with  some  surplus  available,  and,  secondly,  that 
of  a  market  where  supply  tightens,  causing  prices  to  rise  considerably. 

The  Commission  analysed  the  consequences  of  the  second  hypothesis  and  stated that 

"such  an  escalation  in  prices  could  profoundly  modify  the  stru.cture  of  energy  demand 
in  the  Community  if it  reached  the  stage  of  changing  the  ratio  between  the  price:·  O 
. 
of  oil  and  the  costs  of  competing  forms  of  energy'': 

2 

·  · ·  r . 

r. 

"  1t i-1ould.  slow  dorm  the  increase  in  the  demand  for  oil; 

(i)  0
(ii)  open  up  greater  prospects  for  nuclear  energy; 
(ii9. ~71~d: to ,,_a  potential  increase  in  the  supply  of  natural  gas; 
(iv)··.P,i-'odu~e 'a  more  competitive  Community  coal  industry,  and  give  rise  to  the 

(~  ~:  :l  ''.  11  i 

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~  r·  ~  r,  ,..  •  ,.  (1 
_..  de,v:e~o~.ll!~mt  of  a  greater  potential  market  for  imported  coal. 

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,.  ~  ~ r  r.  ~·  n ·. 

From.now  on,  this  view  of ,the  future  must  be  the  basis  of  a  Community  energy  policy. 
It migl;l,~ ~~8i f!eeme:d_ highly unlikely  in 1972  but  with  the  sharp  rise  in  the  price···  .··  -
of  oil ti  ,i t,,:r;io~.  seems  to  have  become  the  correct  hypothesis.  Even  more  than  in  the 
pas~~  ,stT~~a.  ~~ould  be  laid on  the  need  for  security,  by  seeking  to  create  a  structure 
in wh;ch. po -';One  decision  centre  can  have  such  an  importance  for  supply  that  it  can  _ , O 
compromise  the  overall  stability  of  deliveries,  in quantity  or  in price. 

i 
..  •  ~  1.- 1 ·r.  ~ L I, 

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• 

If  it  failed  to  do  so;  it would  lay  itself  open  to  the  harmful 

To  mee~~hi~ h~~ghtened  necessity,  it  is  essential  that  the  Community  adopt  a  clearly-
def~~cl ~Rl.~py1
econom3:~ O~llf'Je~ences  referred  to  in  the  introduction; ·and  it would  risk  seeing  its 
energy :WPP.lies  placed  at  the  mercy  of  fluctuations  over  which  it would  have  no  control. 
This  chapter  examines  successively: 
(i)  th:a::l~~  ierm  objectives  the  Community  should  adopt: 

.  ,.·;11• .. 

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5 

(ii)  the  more  immediate  outlook,  and  the .resulting  constraints  on  the  long 

term  strategy. 

Subsequent  chapters  will  draw  the  main  policy  conclusions  for  each  energy  source. 

A  f:ina.l  chapter  examines  the  ways  and  means  of  implementing  policies  to  achieve 

the  objectives  proposed. 

The  st~ategy  set  out  here  is  confined  to  the  problems  of  energy  supplies,  but 

.' xp.~sh~&  with  a  range  of  community  policies  which  impinge  on  this  sector,  such  as 

flnd  coon9ratirm  wi tl-i  rieveloninf'.:  countries. 

those  fo; 'th;  environment,  scientific  and  technical  research,  transport, 
iml..ustr:i,_al  and  social  policy/  The  problems  arising  in  these  areas  are  not  referred 
to  hero  (see  the  com.'11U.llications  which  the  Commission  has  already  presented1  or  will 
shortly  present  to  the  Council).  The  Commission  poi.~ts  out  however  that  the 
ad~~tip~  qf,~  new  Community  energy  strategy  would  give  a  fresh  impetus  to  the 
energy,,~p~~ts  of  these  pol~cies. 

I 

A..  1212c.lonmterm  objectives 

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A  reasonable  aim  for  the  end  of  the  century would  seem  to  be  an  energy  supply 

~- J; 

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-;: 

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st~ctu.re  relying  mainly  on  two  components: 

,. 

, •  .,  -

1.-

·,  ·• 

1)  Comp~;ed'with  other  energy  sources,  nuclear  energy  is  olearly  the  best  solution 
----··  r  ·~.- ~; 
... ·  • for  the  large-scale  production  of  heat  either  for  electricity  generation  or  for 

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·· in.du~tria.l  us_es  •  This  is  because  of  its  ready  availability,  adaptability,  and 
~<, 

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ease  of  transport  and  storage,  and  the  fact  that  it  safeguards  the  environment. 

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For  these  reasons  - bearing  in  mind  the  small  relative  part  played  by  fuel  costs 
,,.. 

.  in the  total  costs  - nuclear  energy  can  potentially  offer  a  high  degree  of 

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security  of  supply,  even  if  the  Community  itself  only  has  limited  resources  of 
,.  ,,... 
uranium'  ore.  More  than  for  most  of  the  other  energy  sources,  a  policy  of  diver-

. r.  ;~ 

--

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sif~~g  sources  of  supply,  and  establishing  stable  relationships  with  the 
producers,  could  rapidly  reinforce  that  security. 

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Qf  cqurse,  the  development  of  nuclear  energy  will  have  its  difficulties,  but 
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none  seem  insurmountable,  provided  that  the  necessary  action  is  taken  quickly 

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1Pre1imina:ry  report  on  the  problems  ofpollution 'linked  to -the  prod{ictio:ri  ofenergy 
lX)O·.,'.  SEC ('74)  1150  final) 

I 

I 

..  ' ' .  

2 
It  is  only  the  production  of  electricity which  is  of  major  importance  at  present, 
but  'in'.the  long  term  the  potential  nuclear  energy  market  could  cover  a  wide 
indu·strial  field:  production  of  synthesis  gas,  generation  of  steam,  etc. 

-.--------•···•'-·---.  ---,-··- ,.,  .1.·  .. 

I 

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--

•  ••--•·•-•·•--- ... - - .. -•--•••·•••  0  -••-• 

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-•-•••--•- .. •••-•-•··••------•----.. ----••-••-M••  •-•··  - - ........... - ............... _•-••---••  --•  r--·• 

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-6-

enough  and  pursued  resolutely  (technology,  environment,  sites,  waste  products, 

financial  capacity  for  investment,  industrial  capacity,'.  .the  training  of  qualified 

manpower). 

At  least ,50%  of  total  energy  requirements  around  the  year  2000  could  be  covered  from 
this  source.  Apart  from  industrial  uses  and  electricity production,  nuclear  energy 

could  have  an  additional  advantage,  that  of  making  it possible  to  increase  hydrogen 

production,  which  comes  under  the  second  heading. 

2)  The  gas  ·obtained  from  a  variety  of  primary  sources  (natural  gas  produced  in  the 

Community  or  imported  from  non-member  countries,  oil  or  solid  fuels  transformed  into 
synthes:i.~ -~~)  ~ould  cover  nearly  30%  of  energy  consumption,  mainly  for  heating 

buildings  and  for  industrial  processes  with  particularly  demanding  conditions  (high 
temperature  processes,  metal  processing,  synthesis).  Over  and  above  its  inherent 

advantage~  ~~rr~gards  pollution  and  the  rationed use  of  energy,  gas  also  offers  in  the 

long  te~~  ~p~~~dvantage  of  an  additional  outlet  for  nuclear  energy:  the  infrastructur4 
for  transporting  gas  could  gradually  be  used  for  distributing  hydrogen  or  systhesis 
gas  prod~~'e'd.  'By  tnea.ns  of heat  of  nuclear  origin. 

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In  th~ty years  time,  therefore,  if the  Comrmmity  concentrated  on  creating  an  energy 
economy_based  on.,nuclear  power  and  gas,  it would  only  be  left  with  a  very  limited 
dependence  on  coal  and  oil.  Taking  account  of  the  use  to  some  extent  of  coal  and 
oil  products~for1 gas  production,  but  also  of  the  fact  that  non-conventional  energies 
(particuiarly:·sdlar  and  geothermal  energy)  could  begin  to  play  a  small  role  by  that 
time,  'Coal. ruid  oil  used according  to  the'  "olas.sicaitl, :techniques  inay'  by  then_  be, meet~g  . 
-~nl"y:"_a1 qlla!rlt~r~d.f  total  needs. 

The  achievement  'or  these  long-term  aims,  set  out  in  orders  of  magnitude,  depends  on 
a  whol~

; ~~t~ ~f ~6~nditiona,  the  most  important  of  which  are  as  :follows: 

1

•.  -' 

";  ~  '  - r  ·, 

'I 

•,  ;;  r  i l  ,;  "  ~  ., 

0 

(i)  trfo"rlebt:}ssary  action  must  be  taken  immediately. 

In  particular,  the  energy 

.. 

, ,  .: 

' 

, 

I 

re'searc:n  and.development  programme  need  to  be  intensified 

;, 

0  I  • :i 

h' 

; 1  (~  ;.  f i  ,~ 

~~  ,,  : 

. 

I ; 

·,;;:I  i 

./. 

-1-

a.'1d  speeded  up  so  that  the  technological  problems  still  to  be  overcome  may  be 

solved  in  good  time 

(ii)  action  in  pursuit  of  these  objectives  must  be  compatible  with  solving  the 

serious  short  and.medium-term  problems  which  arise,  notably  those  of  security 

of  supply.  Such  action  must  be  sufficiently  flexible  to  adapt  to  circumstances 

which  may  well  change  in  the  future • 

.  !inall.y,these  objectives  can  only  be  realised  if,  at  a  stage  when 

~ecisions  a~e  mo~e  advanced,  account  is  taken  of  the  consequences  their 
i~plementat~on  might  have  on  the  natural  environment  and  the  quality  of 
life  (damaging  the  natural  environment  because  of  pollution  and  because 
of  a~  increasing  scarci.ty  of  natural  resources,  a  reduction  in  the  quality 
of  life  by  the  increased  intensity  of  land  use  etc.,). 

0 

~  JJ 

S 
"1  /  d 
rm  ii  ·"  i 
~£);,£_01)Jectives  for  19  5 
!fo,r hYJ2otheses  nnd.  constraints 
Irt  dravlihg  hp  a  new  energy  s-u.pply  strategy  for  the  next  ten  years,  it  is 

necMsa:cy  t·o1  examine  the  validity  and  continuing  reliability  of  those  basic 

hypo·th·e•setl  l.-.1-iich  have  hitherto  been  considered  the  most  lilcely. 

Four  ma.in  factors  require  consideration: 

a)  The  rat:e·: bf  cbonomic  growth,  insofar  as  it  affects  energy  demand. 

ihe  pres~nt  predictions  of  economic  growth  justify the  adoption  of  a  hypothesis 
for:  the: Pr~w_th  of  GNP  of  less  than  the  average  annual  rate  of  ar:~1~t··  5.07;,  prFr,101:r.l;y: 
accepteil·for  the  period  1970-1985.  Nonetheless,  the  relatively  high  rate  of 
4o5%  has  been  assumed  to  ensure  that  the  energy  requirements  are  not  underestimated 

ob) 

'1 

·• 

]p.tcrchc1nge  in  clcmp,pd  for  enera:z 

I, 

i 

The-ne.vi,  price.relativities  between  the  various  energy  sources  will  bring about  · 

(' 

change.a.  ~:n .!!;he  a.cmand  for  most  of  them. 

..,  14 

.: 

·. 

·  . . . . .  

... 

However,  account  must  be  taken  of  a  series  of  constraints  characteristic  of 

I 

I 

r1 

i 

r:  "'  .. , 

H  i'  r~  #I 

,1  !, 

I '  

energy  C(?nsumption,  namely  that  certain  consumer  sectors  cannot  change  from 

~1 

.. .  t :" 

~ .  (  ,,. 

' 1 

!  .. 

one  s,ource  of  ~ncrgy  to  another,  or  can  only  do  so  by  gradual  steps,  for  technical 

,, 

reasons  as ,.well  as  economic  ones. 
In prac't:i.c:e·,  as  an  example,  sectors  such  as  the  iron  and  steel  industry  and 
motox  t,.·ansport  offer  little flexibility  in  demand,  even  in  the  medium  term, 

I'  •  . .  .  '.. 

whereas  th_e  production  of  electricity  can  be  based  on  a  number  of  different  fuels, 

.  '' 

I, 

,  .. 

, 

and  the  capacity  to  adapt  is  therefore  greater. 

./. 

Thus  the  room  for  manoeuvre  when  drawing  up  a  strategy  for  energy  supply  is 
limited  by  these  demand  factors. 

o)  Rigidities  in  sunply 

Some  sources  of  energy  will  have  to  be  used  whatever  the  circumstances,  either 
because  they  are  "bY""'Prodllcts"  of  certain  production  processes  (e.g.  coke-oven 
gas  or  refinery  gas)  or  because  the  investment  to  be  authorized  must  be  based 

on  lo~"l!.e.~_l?_rospects  of  profitability  (e.g.  North  Sea  oil;  natural  gas,  possible 

new  coal  mines).  Other  sources  have  greater  flexibility  and  make  it possible 
to  take  measures  e.g.  to  achieve  greater  security  of  supply. 

d)  InveGtment 

It  is  clear  that  despite  the  recent  considerable  increase  in  oil  prices,  the 

0 

futur;e,  p.~"5~p:ement  of prices  of  substitute  sources  of  energy  is  still very 
unce~t;a.~.  ~:t'f4ey  could  compromise  future  investments  which,  while  fulfilling  the 
nee~~ to! ~8:.  lr~~orced  seouri ty  of  supply,  could  become  less  profitable  owing 
to  economic  fluctuations. 
,  j 

'~  r  ,; 

:':  ;1  I 

The:S¥"a~fi&Y';~o  be  developed  must  set  out  to  increase  the  flexibility  of  demand, 
and.iry;,~qndeyelop  those  sources  of  supply  having  the  most  flexibility;  however, 
th~~~~cu.ip~~  ~praoch  will  only  be  implemented  over  a  more  or  less  extended 
time-r~q~l~,g~s  far  as  it  is  technically  and  economically  possible,  use  must  be 
maq~,,~f  lei;m..q.  of  energy  with  a  high  degree  of  security  of  supply,  where  there 
exists  a  demand  which  can  absorb  them  (either  immediately  or  gradually  by  means 
of ~'c~it:a;i.n  structural  adaptations).  The  balance  to  he  covered  from  more  uncertain 

so-i:rrbe~%hbuld  correspond  as  far  as  possible  with  the  most  flexible  part  of  the  0 
dezoo.ndt  e ~ t'.  f  r 
n;,:;  i~•  :,1h 

Th~~~~~~~~ld include  quantified  targets  which  would  constitute  a  framework 
of racti6ri- :like  that  which  the  Commission  had  already  put  forward  in 1968* • 

. • 

,I) 

t' 

; 

I 

j 

1

* Pr

e.11IIi~~  guidelines  for  a  Coriunu.nity  energy  policy.  Doo.  COM(68)  1040. 
In: 1i; '88t~  meeting  on  13.11.69,  the  Council  approved  the  basic  principles  of 
tli:Lbl: colnm\ll'iication  and  particular.ly  the  appropria.tness  of  developing  medium 
~e.~·  F=irli~tes  and  guidel:!.::..~s  for  various  energy  sources  (of.  R/2206/69 
(~  ~3,): 

. 

.. ! 

"  ~· 

' 

' 

:,  ;  ;; 

if)  I 

i if 

9  -

2)  Structure  of  the  enerr;r  balance-sheet  in  19S5 

In  view  of  these  restricti: .. ::1s,  it  appears  reasonable  for  the  Commu:ni ty 

to  set  the  following  targets  for  the  next  few  years  : 

on  the  demand  side 

(a)  the  implementation  of  a  deliberate  policy  to  obtain  a  more  efficient 

use  of  energy,  reinforced  by  the  effects  of  the  price  rises,  should 

make  it  possible  to  reduce  by  one  percentage  point  the  average  rate  of 
annual  increase  in  requirements  between  1973  and  1985  *,  without  in 
any  wey  reducing  the  economic  and  social  product  obtained  by  means  of 

the  energy  consumed.  Total  internal  energy  consumption  would  then  be 

_ approximately  lo%  lower  than  the  figure  originally  envisaged.(**) 

; :; ': ~ ~ ~ : 
(b)  as  soon  as  it  can  be  done  without  increasing  dependence  on  oil,electri 
,1  ·  r.  r  · 
·,  ;_ 
city  consumption  must  be  encouraged,  so  as  to  ensure  that  3%  of  total 
energy  is  consumed  in  this  form,  compared  to  the  present  figure  of 
~5%.  ,This  will  establish  the  largest  possible  market  for  nuclear  energy. 
~is  expansion  must,  however,  be  gradual  and  compatible  with  the  ob-

r  ~  r  ~  !:  : 

• 

◄ 

..... 

l 

j~~tive  of  stabilising and  then  reducing the  consumption  of  petroleum 
.  ('  ,. 
products  in  power  stations. 
)'  ~( 

' 

'1 

. ~-;- n i. 

on  t:1e  sunply  side 

'  ;;  ~ 

~ 

(c)  n~ql~ar·  facilities  would  be  increased  and  could  cover  half  the  production 
of;~ectricity from  the  middle  of  the  next  decade.  The  objective  to  be 
::  • -lai:d.:  dol'm  should  also  talce  into  account  the  possible  extension  of  nuclear 
1 1
~ :,  ~6~~~r''. to  the  production  of  industrial  heat.  It  would  appear  possible, 
s~~ject  to  certain  prerequisite  conditions,  to  have  a  total  available 
cap'acity  of  more  than  200  GW; 

.• 

(d} ~91:id  fuel  consumption  must  increase,  making  use  of  both  domestic  pro-

d~~tion,  which  will  have  to  be  stabilized  at  least  at  the  present  level,  ··-"' 
and  the  maximum  amount  of  coal  which  it will  be  possible  to  import  on 
i ~.:  , I 
sa:b'isfactory  terms  with  regard  to  price  and  security  of  supply • 

: 1 

.  i ! '  

0 

0 

(*) 

The'  estimates  for  1970/1985,  drawn  up  for  the  Community  vf  Nine  at 
' :-:  ) ~hf b~ginnin~  of  1973,  were  based  on  an  average  annual  increese  of 

tqtal. needs  (,=internal  consumption  +  e:>..-ports  + bunkers)  of  4.6%  bpt,•;een 
J.970  and  1985.  In  view  of  the  slackening-off  in  recent  years,  a.n  average 
a.nhuai  rate  of  5'/o  muzt  be  obtained  to  achieve  the  consumption  figui~e 
initially  estimated  for  1985  on  the  basis  of  1973.  The  objective  corresponds 
·  to  an  average  rate  of  3.8%  for  the  _period  1973/i9S5. 
. On:  the  assumption  that  e:>..-ports  and  r.,unkera  a.re  irreducible. 

· 
(**) 

,J  ;;  ,• 

I 

l 

10 

-

(e)  the  high  potential  demand  for  natural  gas  must  be  met  by  an  increased 
supply,  both  from  within  the  Community  and  from  outside,  provided  that 
tho  neoessary  economic  conditions  are  fulfilled. 

(f)  as  the  Commission  pointed.  out  in  1972:  "oil  consumption  would  be  con;... 

centrated  mainly  on  specific  uses,  i.e.,  for  motor  fuel  and  for  certain 
applications  as  a  raw  material.  Comscumption  of  liquid  fuels  would  be 
1imited  roughly  to  the  amount  inevitably  produced  as  a  by-product  of 
refining the  oil  used  for  such  specif'ic  purposed"  *.  Strengthened  by  the 
more  'efficient  use  of  the  energy  available  (cf.  (a)), this  trend  to  sub 
stitution  would  gradually  halt  the  increase  in  crude  oil  requirements,  and 
it  is  possible  to  aim  at  an  objective  of holding  these  requirements,  by 
the  middle  1980 1s,  at  a  level  barely  higher  than  that  of  1973,  after  a 
.. , ("  l  i 
slackening  growth  rate  continuing until  around  1978/80.  By  this  time, 
,,.  r·  ,  • · -
the  arrival  of  new  sources  (North  Sea)  will  tend  to  reduce  significantly 
~ :1 
the  share  of  the  present  suppliers  in  the  overall  supply  of  the  Community. 

,. 

-~ 

, 

_:  0 

,1  : 

< ;'  I  ~ i1 
The  fpl~owing  table  compares  these  objectives  with,  on  the  one  hand,  the 
actua;l.-,distribution  of  oonsu,'llption  amongst  the  various  energy  sources,  and, 
on  tti,;1other  hand,  with  the  forecasts  made  in· 1972. 

l  CC  ,l  ;: 

....  ; 
.....  ~  t 

.. ..1 
.... 

f 

. 
,., 

.. 
.. 
•  .t 
~ ~ ;'  J 1: 
·~  ~'.  ~  J .! 

" 

,· 

..\  ;l.  ~.  •\ 
t'  .. 
Soli~;fueis 
·.  :1. 
Oil  1  r.'  ' 

Natural.gas 
Hydroeie·ctric  powe 
~4,p1her!3 

• 

,1.lolr~ -~nergy 

Total  p~imary  energy:  needs  in  1985  ~ - Community 

1973 
(estimates) 

1985 
(initial  fore-
casts  *·>HE- • 

1985 
(objectives) 

Mill.toe 

%  Mill.toe 

%  Mill.toe 

% 

0 

227 
617 

117 

30 

14 

22.6 

61.4 
11.6 

3.0 
1.4 

175 
1160 

265 

40 
16o 

10 

64 

15 

2 

9 

250 

655 

375 

35 
260 

LJ 

16 

41 
24 

2 

17 

1005 

160 

1800 

100 

1575 

100 

Doc.  COM(72)  1201,  P•  25 
Internal  comsumption  + exports  +  bunkers 

(*) 
(**) 
(***)  Source:  "Prospects  of  primar;y  energy  demand  in  the  Community 
(f975-1980-1985)  (Doc.  SEC(72)  3283  final),  and  an  additional 

I 

' 

::  :)  .  est'imate  made  in  January  1973  for  the  new  Member  States 
..  ,  {~oc.  SEC(73)  128) • 
..,  ,,  . 

,-

l 

,..' 

.. 

, 

' 

-

l0a  -

• I 

A  Summary  of  the  objectives  of  an  Energy  Supply  Policy 
for  the  Community  in  1985 

I 

fucrgy  demand 

1)  To  reduce  estimated  consumption  in  1985  by  10%  in  relation  to  the  amount  initially 

estimated  for  1985)  by  the  more  efficient  use  of  energy. 

2)  In  step  with  the  development  of  nuclear  energy,  to  increase  the  consumption 
of  electricity,  which  should  in 1985  represent  35%  of  energy  consumption  25% 
in, 1972) • ..... . 

II  Enercy  supply 

1)  To  limit  to  40%  (63%  in  1973)  in 1985  the  degree  of  Community  dependence  for 

en-er{t'Y"  on ~outside  sources. 

0  2)  ill 

· 40%  (60%  in  1973)  the  share  of  oil  in  the  overall  energy  supply. 

To  lilll"it uto1
To  limit  to  75%  (98%  in  1973)  the  degree  of  dependence  on  outside  sources  for 
oil  suJ)pl::i:"e's'; 
This  implies  production  of  180  mtoe  in  the  Community. 
To~sh~ft--,;he  emphasis  of  demand  as  a  result,  in particular  by  reducing  consumption 
of  he.ay;x _fuel  ·on  in power  stations. 

••  1  • 

·1 

I 

, 

' 

' ,< .  

I ' •   I 

3)  Solid, f'lltils•; r 

. 

for  coal  180  mtoe  or  2SSmto 
To  maintain;· the  absolute  level  of  current  production  (£-ro-m=a:bout=20-5=-ni:l;o:e=il.~ 
to-21·5'"--~l-9~5)  increase  imports  (35  mtoe  in  1985),  to  maintain  the  share  of 
solid' fti.el  in  the  overall  energy  supply  at  more  than  15%  (about  23%  in 1973). 
To,.shif~ 1 dema.nq.  in  power  stations  as  often  as  possible  towards  coal,  and,  at 
the "l~ea.s-e't  wherever  nuclear  energy  cannot  bo  used  (i.e.  replacing  oil  products 
and Ina tu.rai  ~s) • 

r:  ~ ::  .  r.  'i 

j  \ 

': 

0  4)  Na;yural  gas, 

:~  n ~ r r :- ·~  ~: 

T'nis  '.':~11 7 ~~t~~l: 

To  roa~~~(!)l)(;tensive  use  of  this  source  of  energy,  the  share  of  which  in  the  overall 
supply 0 ahould  increase  from  about  2%  in 1973  to  25%  in  1985. 

(i). .,  ?,j; 1~.~?,~t  doubling  Community  production  (115  mtoe  in  1973); 
(ii):  :f~f  t.he.most  part,  using  imports  from  a  dive:irsity  of  origins. 
In.7:"eSJ?El.Qt,  of'.  demand,  the  use  of  natural  g"as  in  thermal  power  stations  - and 
perhaps .. in: certain  industries  -

should  be  discouraged. 

. '  1,  • 

;~ 

f. 

\ 

; 

' 

I  I  i  i  '  • 

: : I 

-To  enS1J.re  ,coverage  of  50%  of  electricity needs  in  1985  by  nuclear  energy. 
This·. 'irt,pli.es  an  installed  capacity  of  at  least  200  GWe  for  electricity  production 
(+::20Cvi~  ·f9r',other uses). 
[j 

l:  ~.  i: 

:◄ 

l;~ 

p! 

. •  ,  · t   : ·   ,,"  . ,   , ,  

. •  ,  I 

- 11  -

3)  Dcncndcnce  on  imnorted  energy  sources 

In  view  of  its natural  resources  it  is  not  possible  for  the  Community  to  ta.1<e 

independence  in  the  energy  sector  as  a  medium-term  objective.  Given  the  change 

in  market  conditions,  however,  it  is  obliged  to  accept  the  task  of  increasing  the 

security  of  its  supplies.  The  objectives  set  out  above  fall  into  this  pattern, 

and  would  make  it  possible  to  reduce  the  share  of  imported  energy  in  total 
consumption  from  60%  to  40%. 

1985  energy  balance(1) 

l3reakdo,-m  b;v  origin . 

•  ,·  "'I  ,: 

,..  "  ....  -...  ..,  ... 

.:.  ~  1  ~, 

,,.. 

•  I, 

) 

.. :i.  t  ;  7. 

1973 
Estimates 

1985 
Original  projections 

1985 ', 
Objectives 

·:  .·.  ,· 

',j  , : . ) :  

Produi9i;~op.:: ~, 
r · .. 

· .Imp~~'- .•  ,1 

Mtoe 

370 
635 

% 

37 
63 

1005 

100 

Mtoe 

640 
1160 

1800 

% 

36 
64 

Mtoe 

% 

915 
58 
660( 3)  42 

100 

1575 

100 

,,  C 

.  ' 

i 

'"l 

~·  ,.; 

1)Tot~i -C~~~iiy  requirements  (internal  comsumption  +exports+  bunkering) 
(
(2 )_Inclucling .. riuclear  energy 
( 3)Including  the  non-EEC  North  Sea(=  50  - 100  Mtoe,  or  3 - 6%  of  the  total) 

:-.  I.; 

The  del5"ree:of  13.ependence  indicated  by  the  foregoing  overall  percentages  must  be 

qualiiieci., · ho;,e~er.  Firstly,  indigenous  production  cannot  be  considered 

0 

0 

completely: ~~cure  unless  it  combines  physical  availability with.price  stability. 

This  is  the·· basis  on  which  its  share  in  the  supply  of  the  various  energy  sources 

,1  r:  r,  .l  ~  . 

,;  :!  fl 

has  been  determined. 

Furth~~mo~, ':a1i  nuclear  energy,  even  that  generated  from  imported  fissile  materials, 
has  been  in~iuded  in  indigenous  energy  fulfilling  the  foregoing  criterion,  owing  to 

~  ~  ◄  ~  ~ ~ 

' 

its  i~q_rent ·;characteristics,  ·~:dich  were  discussed  above. 

Secondl,;y:,:  each  of  the  potential  sources  included  in  the  42%  of  energy  imported  has 
a  different  degree  of  security,  from  the  quantity  and  price  angles.  It  is  therefore 
possibl~-to -attain  a  higher  level  of  overall  security  than  is  suggested  merely  by  the 

distindt"i1on·bet,:reen  indigenous .·u1d  irnpo~ted  energy. 

,1 

-~  ~  ••  ' 

I 

~ 
:'!  ~ ·:  L 

! 

j 

1] 

• • · · · • · - . · · ; .  

-

.L.l.018  -

IIJ.~S()INS  T()T,\(JX1>J)'J.~NEll(~l)i~  l)E  [u\ 
(]()HIIIJNAIJTE  ElJll()l1J.~ENNJi~  EN 11)73 a.  ft)ll.'J 

nS'l'l)IJ\'l'ION :i: toos 

C]Cor.nbustibles 
1!11 Petrole 

solides 

~ Gaz  nature( 
r-----i Energie hydraulique 
l__J et  autres 
c:J Energie nucleaire 
- - - - - -------~---
- - - - - - -----------

1 
n 
'1 
3 

t 

I) 

II 

:s 

·1---r 
noo 
ooo 

o 
tofl 'I' n 1• 

200 

too 

1000  1~00 

ttoo  t(HHt 

tnoo 

(1)  consommation  interieure +exportations+ soutes 
(2)  sur la base  des conditions du  marche a fin  1972 

1n1:1 
ESTIMATION 

11)113 

Production 
y compri, •nergie 
nuclea1re 

<JI Importation I 

l'!ltlfl!CTIV! 

OIJ!CTII' 

y com,rls mer 
du Nord non C.E.E 

- 12  -

The  str~te(;.Y'  required  must  therefore  operate  in  several  areas: 

promoting  structural  adjustments  to  demand  so  as  to  reduce  its  rate  of  increase; 

promoting  adjustments  to  demand,  as  far  as  is  possible,  to  match  a  new  supply 

structure,  in  which  energy  sources  with  a  low  security  level  take  as  small  a 

share  as  possible; 
promoting  the· development  of  new  sources,  i.e.  ,  those  most  reliable  from  the 

quantitative  and  price  angles; 
creating  conditions  which  will  serve  to  enhance  the  security  of  indispensable 

sources  which  carry  a  higher  degree  of  risk. 

In  these  circumstances  it  seems  not  impossible  to  set  at  25%  at  most  (instead  of 
50%,  as  in  the  original  projections)  the  proportion  of  high-risk  energy  sources 
in  the  :t<?-t;,~;i.  bq.,lance  for  1985. 

r·  :1 

,·  i  '1 

': 

:  1 

4) 

lfa:t,,1r.ei  e~d.  scone  of  the  objectives 

0 

It  must,, PQ  .ewP1t,asised  that  the  foregoing  figures  have  the  status  of  objectives, 

not  of',  ,f~:x;e~f.'"~t.s-:  As  such,  their  purpose  is  to  crystallise  the  nature  and  scope  of 

a  polit;ical,, ppnyn;itment  that  the  Community  would  assume  with  a  view  to  shaping  its 

supply: ,s~~c,turE},  in  a  particular  way.  This  objective  must,  however,  dfoplay 

adequa;t,erfl~xg>i~ity  both  in  space  and  time. 

In  te:qnp  ?.~;  f!?a,.~.:.  clearly,  their  attainment  in  each  of  the  ?,!ember  States  must  be 
adjust~d,to.m~tqh  specific  initial  situation,  and  the  possibilities  and  constraints 

,  t 

,  • 

' 

J..  ~, 

• 

which,e¥!st:•  h'r,hpir  pursuit  at  Community  level  requires  joint  responsibility  on  the 

part  of

1hei ';11:-~efta1dngs,  the  Member  States  and  the  Comraunity.  Depending  upon  theiro 

1 

O\-m  circwnsta.11-ces,  and  subject  to  their  competence,  the  protagonists  may  be  call_ed 
' 
on  to  act  at_  a  different  pace  or  nccording  to  different  procedures,  but  their  actions 

-~  4 .!  -•  ,.. 

...  ~  ~ ,... 

as  a  who~e.  ~~?~ ponverge  along  the  guidelines  agreed  on  at  Community  level • 

. - :1  - 'I  ~ ~ 

;i;i.me_: 
1 

the  Commission  has  already  emphasized  that  the  need  for  a 

In  termy 1:of
fra.::nework:-Qf!i:l-Ction  to  ensure  continuity  in  energy  policy  must  not  stand  in  the  wo.y 
of  i tq  p~:i:-~g1 ~d.j}lsted  to  any  changes.  in  the  factors  on  which  it  is  based ( 1
will  be  one  of  the  tasks  of  the  Eriergy  Committee  set  up  by  the  Council  Decision  of 
30  Janµ~ry-1914i•  namely,  to  assist  the  Comtnission  in  the  periodic  reappraisal  of 
ob~eci;_i:veG,,  f?9  ~hat  the  latter will  be  able,  where  necessary,  to  formulate 

).  This 

, ,  

! 

t 

proposal~·designed  to  modify  those  objectives. 

1
( 

)  "F:j..rsV· (}1£id.e!ines  for  a  CQJnmuni ty_ Energy  Policy  ( qoc.  COM  ( 68) ,1046 

·· 

Chapter  A:  : , .Fr::i.mework  of  Action 

./. 

- 13  -

?,Ioroovor,  these  objeotives  cannot  be  isola.tod  from  the  Comrmmi ty's  other  policiGs 

as  a  whole.  They  go  some  way,  for  example,  towards  determining  the  substance  of 

actions  that  will  be  undertaken  in  such  fields  as  the  environment,  ei-ternal 

relations,  scientifio  and  technical  research,  industrial  policy,  etc. 

5) 

Investment  a."'ld  budgetary  costs  * 

The  proposed  strategy  is  characterized  by  increased  reliance  on  Community 

production,  and  in  particular  accelerated  expansion  of  the  nuclear  sector,  and 

it no  doubt  requires  investments.  But  could  the  Community  really  spare  itself 

this  investment  otherwise  than  at  the  cost  of  diverting  even  greater  resources 

into  exports?  For,  in  overall  economic  terms,  the  energy  dilemma  - "invest  or 

import'.'.- 'tl;'¥1-flates  into  "invest  more  or  export  more",  owing  to  the  need  to 
0 keep  ;the,  trade, palance  in  equilibrium  in  the  long  term.  The  cost  in  both  cases 
is  mefl-sureq. !.iri ierms  of  the  possible  slowdown  in  real  consumption.  The  cost  of 

the  propo~e4  :POt,icy  must  therefore  be  compared,  not  with  the  status  guo  ante 

oil  crisis,  but  with  the  costs  that  could  be  attributable  to  a  less  voluntaristic 

evolt).tion:pf 1en~rgy  supply,  in  the  new  conditions  on  the  energy  market. 

While. :i, t.,  i~ ::the:refore  appropriate  to  enquire  what  would  be  the  cost,  to  the 
Ev.·f~pean,  economy,  of  investments  in  the  energy  sector  (leaving· out  induced 

• ' /  

I 

• 

., 

• 

" 

./investment~  in.the  other  sectors  of  industry)  that  cost  must  nevertheless  be 
l 

.. 

estim<-!-t,e4, ~E>i  ,~- differential  cost  relative  to  a  hypothetical  spontaneous  trend. 

,,/./.  Lastly,- !3'·  Vc-1:!'9-~,Problem  arises  with  regard  to  the  decision  to  invest,  for  it  does 
1 

·  not  s1;1-ffi9~  jf pwestments  are  macro-economically  feasible: 

the  undertakings  must 

·'

-

also  be  .'in}!·  _:po~i tion  to  invest. 

: 

, 

l 

, 

I 

. 

a) 

How  investments  in  the  energy  sector  will  weigh  in  the  Enronean  econor:iy 

;,  i  ,1  n ~  , ··  :·· 
The  a·t'-fo1nment  of  the  aforesaid  objectives  would,  in  investment  terms,  have 

the  foll~~tpg 1 results: 

Cumul~tiye  investments  in  the  energy  sector  as  a  whole,  in  the  period  1975-85 

would .,'b;e;·, a].)J_)roxima tely  300  000  mill ion  197 3  dollars. 

A ,m9-jq,r,  P.z:oportion  of  this  would  be  absorbed  by  electricity,  with  total 

expcndHure.  of  the  order  of  150  - 180  000  million  1973  dollars,  including 
120  000,  mill1ion  dollars  in  the  nuclear  sector. 

i  :· 

:1 

. 

· 

' 

' 

I 

' 

' 

~ 

' 

' 

. I  .1 

./ . 

*  The  Cq:ll1!Jlj.~q,i:9t:i  Jfroposes  to  send  a  more  detailed  document  to  the  Council 

at  a  later  date  on  investment  aspects  of  the  strategy. 

I 

- 14  -

In  the  hydrocarbons  sector,  where  the  figures  are  subject  to  the  greatest 

uncertainty,  it  can  be  assumed  that  the  emphasis  placed  on_  Community  gas  and .oil 
and  some  decline  in  investment  in  refineries  would  result  in  expenditure  of  the 
order  of  110  000  million  1973  dollars.  Lastly,  maintaining  the  output  of  solid 
fuels  should  account  for  about  6  000  million  dollars. 

. 

. 

. 

Whereas  investments  in  the__..,...energy  sector  accounted  for  some  1. 5%  of  the 

Community  product  in  the  period  1965-70,  the  figure  will  probably  be  between  2 
·and  2.5%  for  the  period  1975-85. 
would  be  betvieen  0.5  and  1%  of  Community  product. 
investment  would  demand  no  more  than  relatively  small  sacrifices  ofthe  Comnrunity 

In very  general  terms  the  additional  investment 

In  itself this  additional 

GNP 

,  but  these  would  be  additional  to  those  which  will  be  necessary  in 

any  eveii:, f?:½  :~fder  to  increase  exports •. 

The  pos,~tj.g~ _wJp  differ  between  Member  States,  however,  owing  to  both  the  structure 
of  their.  e~~r~-y~supplics  and  to  their  economic  situations.  The  need  to  maintain 

their. equ;i.t~bff~  individually,  as  part  of  an  overall  equilibrium,  may  in  certain 
cases  lead  to  structural  changes  which  may  warrant  a  call  for  some  form  of 
Community, ~_ql id~ri ty • 

0 

. -.  :  .; 

. ri  ~  '(  ,:  r 

b).  The- ;Ss,t. o:f  the  proposed  poli9..! 

:1  •  1 c:  t- ;,  ,  ,~ 

Community 

~ ~~e.ap~~~ce  of  any/strategy-,  the  higher  oil  p~ices  now  ruling  would  result 

in  slower  ~orry~  in  the  consumption  of  oil  and  energy  than  was  forecast  before 

the. c:r:is1isi :;.~\ly,ithat  grouth  would  ba  higher  than  is  implied  by  ~he  proposed 
policy.  '  It  i~  against  the  yardstick. -~f  this·  ass,,.rriecCrnark~-t  -r~n.;ti~-;t~t-. the 

additional;,cost  required  to  attain  the  objectives  must  be  assessed. 

I 

..  ~  "• 

. 

. 

' 

. 

As ·:a.:  f'~rs~  approximation,  and  on  condition  that  a  significant  fall  in 

the  priqe:  of.imported  oil  does  not  come  about,  the  proposed  strategy 
is  estiina:ted  to  _  ~~-
-result  in  a  net  extra  investment  effort  of  a,...round 
10.0Qb, n:ii11ion:dollars  during  the  period  1975/85,  but  from  the  balance  of 
payments  point  of  view,  the  strategy  represents  a  net  economy  of  around 
50.00_0  mil'lion  dollars  during  the  same  period. 
In  both  cases  these  are 

c,,_~le.t1i,,ve .. f.i.gures  for  the  period  in  1973  dollars. 

In  to~~l.:~ermf?,; i t  is  apparent  that  the  additional  investment  made  necessary  by 

the  n~w- ~tre.tegy  is  out  of  all  proportion  to  the  additional  exports  which  the 

EuropEt~,:'}q_on~Ill;I(,  would  otherwise  have  to  make  in  order  to  offset  hydrocarbons 

imports. 

:;Fu.rJ~hcrrnore,  the  add.i tional  investment  in  itself  is  not  a  prohibitive 

obstab_lfa,. i.op ;t_he  emphasis  on  the  nuclear  sector  affects  only  power  stations 

(investment  in  transmission  and  distribution  being  approximately  the  same  whatever 

form  of  production  is  used)  and  permits  lower  inve::;tment  in  refining. 

' 

I 

./. 

- 15  -

In  faot,  on  a  m~cro-eoonomie  level,  the  new  strategy  will  facilitate  security  of 

supplies  and,  far  from  increasing  the  cost  of  supplies,  will  make  them  progrecsivel: 

cheaper.  To  be  sure,  a  large  drop  in  the  price  of  imported  energy  could  alter 

the  situation,  but  can 'one  reasonably  expect  a  reduction  in  the  cost  of  imported 

energy  if no  competitive  alternative  (i.e.  Community  energy)  is  offered? 

c) 

The  decision  to  invest 

If  it  is  recognized  that  the  new  strategy  i~  possible  and  desirable  on  the 

macro-economi'c  level,  every  effort  should  be  made  to  implement  it.  Entrepreneurs 
may  hesitate  in  the  :face  of  a  obstacles 7 the  amount  of  investments  entailed 
and  the  time-scale  of  the  operation,  on  the  one  hand,  and  uncertainty  about  future 

n1· mber  of  notahly 

ener[W  price.s,  on  the  other.  These  two  :factors  play  a  decisive  part  in  calculating 

the  prpfi1<¾b~lity  of  investments  and  hence  in  taking  the  decision  to  invest. 

0 

If the  C:?~Uflity  is  to  clear  the  way  towards-1inplcmenting  its  policy  it must  .state 

-°its:; positi9p  unequivocally  as  regards  prices  and  indirect  taxation  in  this  field:~ 

Thus . ~~e- r: t?e  cornerstones  to  be  erected  appears  to  be  a  prices  policy  which 

offers  conditions  forthe adequate  long-term  profitability. of·  investments  which 

are  desi~e~  to  attain  the  objectives  set.  Such  a  policy  would  have  to  provide,. 

wher~.n,e,c~$~ary,  :for  incentives  to  speed  up  investments  which  would  not  otherwise 
be  made,.1 '?!. , f pr  measures  of  a  fiscal  nature  to  ensure,  among  other  things,  that 
energy .6.p~fc.cs  with  a  low  initial  cost  do  not  receive  an  undue  financial  benefit: 

~  ''.  '"  1 ~ ;.  ~: 

!1 

, 

·/0 

,  11:·?.-~~~:j;ion,  the  size  of  the  investmentsin  question  will  necessarily 

lead iit~~ to  call  on  the  international  capital  market,  and  it  is  thus 
import~nt  ,that  the  Commu.ni ty  should  facilitate  their  obtaining  such  finance. 

,.  q 

... 

I  .~  ~.:  r\  :.1 

: 

• 

: I '  

d) 

: Buo.g~tary  imnJ.ications 

The  i,trategy  propo~ed  entail::3  no  additional  budgetary  expenditure,  except  in 
so ·f~r ·~s-·the  Member  States  or  the  Community  might  have  to  take  steps  to  curb  or 
stimu.lat~:certain  spontaneous  trends.  Some  meaoures  of  this  kind  arc  envisaged  :in· 

the: f,ollow~g  chapter,  but  it  is  not  yet  possible  to  estimate  their  cost  or  to 

indioate.with 1  any  precision  their  scope  and  detailed  characteristics. 

' 

. 

' 

In  an  .a~t~mpt

to  arrive  at  some  idea  of  the  order  of  ma&nitude  one  could  consider, 

1

for  ~~m:p!~,:~he  amount  of  resources  that  would  accrue  from  a  moderate 

·  ·  ·  · 

· 

; .· 

levy  on  energy  consumption  and  compare  this  amount  with  the  sums 

alrcc).d.y:  allocated  to  actions  in  the  energy  sector  by  the  Community  and  the  Kamber 

· Statea 1a.nd1with  recent  Commission  proposals. 

./. 

- 16 

.By  way  of  a.n  e:x:runplo,  a  charge  of  0.01  u.a.  per  'barrel  of'  oil  equivalent  on  all 

energy  consumed  in  the  Community  in  1973  would  have  yielded  a  total  of  70  mu.a. 

The  following  sums  can  be  talcen  as  the  basis  for  a  comparision  with  these  figures: 

Provision  has  been  made  for  an  annual  budget  of·25  mu.a.  in  support  of 
Community  projects  in  the  hydrocarbons  sector(*)  in  the  financial  years 
1974"'."76. 

,".  r  I  .' 

:"  r. 

r.  )  ),  '  Ji  :!  i. 

The  total  amount  of  direct  and  indirect  aid  granted  in  1973  by  the  Member 

;$t~t9~_pursua.nt  to  Commission  Decisions  Nos  3/71  and  73/287  was  of  the  order 
of  1.5  thousand  million  u.a. 

·: 

:  1.'  i  ::  (  r) 

0 

As  rega.r41i1 1~~venue,  the  new  situation  concerning  prices  will  increase  the  amount  of 
revenu~ ~CCJ"µing  to  the  Member  States  as  a  result  of  indirect  ad  valorem  charges • 

.  ' 

'• 

In  addition,  the  amount  of  expenditure  incurred  in  supporting  the  coal  industry  will 

diminish  to  some  extent. 

T'nus,  it would  be  possible  to  keep  the  budgetary  expenditure  entailed  in  adopting 

the_  strategy  proposed  to  a  reasonable  level •. As  for  investments,  guarantees  of 

market  stability are  an  important  factor  governing  the  choice  to  be  made.  They 
~ust  be: ~iv.~n\ in  order  to  encourage  long-term  budget  commitments.  The  provis:i.on 
for  :p~r.ii.~~:i;:°1  r~vision  of  the  objectives  would,  however,  make  it  possible,  where 

0 

necessary, ;to·  avoid  expenditure  for  which  there  is  no  further  use. 

"i  ,_. 

* 

* 

* 

In  or,derdo;  attain  these  objectives  as  fully  as  possible  by  1985,  a  real  supply 
policy wHl  have  to  be  implemented  for  each  source  of  energy  by  means  of  appropriate 
inco~tiye~-or:qurbs  in  the  administrative  and  financial  fields,  at  Community  level 

and  in  the  ?w1ember  States. 

The  following  ~hapters  trace  the  broad  lines  of  this  policy. 

(*)  Regulation  (EEC)  No  3056/73  of  the  Council  of  9  November  1973  - OJ  1312, 

;: 13: :N~vemb~r  1973,  p.1. 

./. 

- 17  -

CHAPTER  II 

Et,ECTRICITY  AND  NUC1,b1AR  ENEROY 

In  the  now  breakdown  of  the  total  demand  for  energy  among  the  different 

enore;y  sources,  efforts  should  be  made  to  assicrn  the  largeot  possible  share 
to  electricity  for  reasons  of  price  and  security  of  supply. 

The  cost  of  fuel  for  conventional  power  stations  represents  approximately 

one-third  of  the  final  cost  of  electricity  to  the  consumer.  With  the 
growth  of  the  share·of  nuclear  energy,  for  which  the  fuel  cost  is  still 

lower,  the  effect  of  the  cost  of  fossil  fuels  on  the  price  of  electricity 

will ··decrease·~ 

Electricity  is  also  a  reliable  form  of  energy  as  it  can  be  produced  from 

0 

a  wid~  v~riety  of  sources. 

A. 

Demand  for  electricitv 

:OV'e':r:-tlre::last  _ten  years,  the  average  annual  rate  of  increase  in  demand 

,:  I :f'o~  ~lectrici ty  has  been  7. 2%  in  the  nine  Community  countries,  which 

represents  a  doubling  of  demand  every  ten  years • 
. :  .  '  ) 

~)  ~  : ,; 

.,  1;  T~e;:  e90npmic  advantages  of  electricity  and  the  security  of  supply  which 

..  '.it, _fff o;rds  should  result  in  wider  use  being  made  of  it more  quickly, 

,.  ,, es.:pe9ia,l~y  in. heating  and  transport • 

..  · TWi:a;l iticrease  in 'demand  must  not,  l1ov1ever,  upset  the  overall  energy 

,_: 

0 

balance  by  increasing  dependence  on  petroleum  products; 

it must,  there.:. 

·;  ·· 

,  i  t  r 

:  ;: 

fore,  be  geared  to  the  contribution  of  nuclear  energy  to  overall  electricity 
..  r;  r  .  ;~  ~ 
;. 
:·1 
.pr.oduction. 

!t!,i:s~d.:i.fficult  at  present  to  contemplate  a  higher  rate  of  increase  than 
:tna.t  qf  the  past  few  years.  Only  from  1980  onwards  will  the  full  effects 
,  pi\ ;,the  substitution  of  electricity  for  petroleum  products  be  felt. 

,The 

aru,.~al,  rate  of  increase  in  the  production  of  electricity  could  then  be 
: ?,%  and  reach  9%  during  the  period  1985-90.  The  sha.re  of  electricity  in 
· ; t~1-t;~f~primary  energy  consumption  would  then  be  35%  in  1985  instead  of 

25/o as  at  present. 

~oosttn_g  the  use  of  electrical  energy  in  this  way  depencls  largely  on 

' 

~ 

~• 

' 

I 

rational  use  of  the  available  power  stations,  which  will  call  for  a  better 

I•  , 

.  " 

., 

.~;t~~n  on  the  capital  invested.  Constancy  of  demand  during  the  day,  the 

.  : week'. a~ct  the ·year· will  be  of  prima~  importance  if  nuclear  power  stations 

.  •· 

~;~· to  be  operated  economically.  Appropriate  pricing measures  should,  there 

forer;  be  taken  to  encourage  consumption  outside  peak  periods. 

n ;,  . 

./. 

- 18  -

To  provide  producers  with  the  necessary  income  to  finance  nuclear  power 

~ 

stations,  tariff  readjustments  reflecting  the  real  costs  of  production, 

transport  and  distribution  should  be  decided  without  delay. 

B. 

;Electricity  nroduction 

Electricity '"genera.tio:ri  for  c'onventional  energy  sources  will  remain 

important  until  the  end  of  the  next  decade. 

. ................. . 

1.  Apart  from  pumped  storage,  hydroelectric  production  will  only  increase 

' 

slightly,  since  there  are  now  practically  no  more  sites  in  the  Community 

countries  with  a  head  of  water  which  could  be  economically  exploited  solely 

for  the  production  of  electricity. 

0 

0 

2. 

3. 

Brown  coal  will  continue  to  enjoy  mainly  regional  importance.  It  can  be 

' 

l 

.-.  7 

,.. 

• 

ext'racted  at  a  reasonable  cost  from  the  deposits  currently  being  worked  in 

!  ; 

; 

I 

• 

~; 

: )  

t  ' 

West  Germany.  Once  nuc1P.ar  energy  can  meet  the  increased  demand  for 

,,..., 

l 

"': 

f"  ~  •· 

_,. 

electricity,  it will  be  preferab:::.c  to  endeavour  to  make  more  profitable 

'  >,  i  '.1 

~~~.~!l.~art  of  the  brown  coal  extracted  from  these  new  deposits  than  that 
afforded  by  its  application  as  a  fuel  in  thermal  power  stations 
'c ~~ ~-:;:  ~sification) • 

.':' 

.... 

'· 

. ·  ·1 
The  production  of  electricity  from  manufactured  gas  and  other  by-products 
~  ,,  :-.  '. 
or  waste  will  expand  at  approximately  the  same  rate  as  the  industry  pro 
, ..  i  ,;  ! >.  .-
ducing  these  fuels • 
. r.  ;_  t.  1  :.. 
In~ vi~:w  of  the  limited  quantities  of  natural  gas  in  the  kno'l-m  deposits  of 

:~ 

1 .   . 

,  . 

, 

(" 

.. , 

. the  Community,  this  fuel  should  as  a  general  rule  be  reserved  for  more 
' .....  .., 
economic  uses  than  fuelling  power  stations.  It  should  be  available  for 
. ~.  :.  . '  , . -: 
,~.leqtrici ty  generation  only  on  condition  that  supplies  are  interruptible, 
~nd  •only  when  more  profitable  use  is  temporarily  impossible,  or  the  use  of 
'  . . • .   1 
gas  is  essential  for  economic,  technical  or  environmental  reasons. 

('  ~ 

' '   ,-, 

I 

'I:.,.• 

For  power  stations  burning  petroleum  products,  the  long-term  aim  must  be 
:t1o_  restrict  their  consumption  entirely  to  heavy  residues  from  refineries, 

• 

' 

.  ,, 

which  cannot  be  used  for  other  purposes.  To  achieve  this  aim,  permission 
.iio  build  new  oil-r'ired  base-load  plants  must  henceforth  be  refused  unless 
exceptional  reasons  exist. 
:  ·.,'.I  :,  : 

'~  1 ' 

'  • 

j  ._' 

./. 

• 

. I 

' .. 

, I ~.  !'  1 : ~ 
;  . 
' 
'  . 
I: 

' 

. ·' 

t 

r 

' 

\ 

1 

• 

.  1,. 

- 19  -

Low-output  power  stations  designed  for  the  production  of  energy 

to  cover  demand  peaks 

- Use  of  fuel  oil  to  ensure  the  ignition  of  other  products 

- Use  of  a.  residue  which  cannot  be  put  to  a  better use 

-

Impossibility  of  using  other  fuels  for  economic  or  technical  reasons. 

Existin~  oil-firc<;l  power  sta-t.i,.ons  and  those  under  construction  should  as 

far  as  possible  be  gradually  used  as  medium- and  peak-load  plants. 

These 

measures  should  ma.~e  it  possible  to  reduce  oil-based  electricity  production 
from  the  present  30%  to  less  than  20o/;  in  1985. 

6. 

Coal  will  have  to  play  an  increasing  stop-gap  role  in  electricity  production 

,-. 

•~ 

1  I  1, 

because,  between  now  and  1985,  the  production  of  coal-fired  power  stations 
could  be  increased  by  30  to  50%,  if corresponding  quantities  of  coal  are 
availabie.  However,  the  fact  that  coal  is  now  reaching  the  threshold  of 
competitivity  with  petroleum  products  for  eledricity  generation  is  not  in 
•• 
itself  enough,  in  the  present  circumstances,  to  influence  the  supply  of 
.... 
coal.  If the  available  quantities  of  steam  coal  are  to  be  substantially 

"  ... , 

·•• 

;, 

11 

: 

' 

( 

ino~~~~~d,  lonite~n  contracts  must  be  concluded  between  the  coal  producers 

and,  the:electricity  producers. 

In  a  situation  marked  by  rapid  and  unfore 

seeable·changes  in  the  prices  of  petroleum  products,  the  electricity  pro 

duce·r:s .·  cannot  enter  into  such  comroi tments  unless  the  authorities  offer  them 

ad.equate  guarantees. 

a)  ,:Nucle~r  energy  having  now  become  economically  competitive  with  all 

:,~ther  sources  of  primary  energy,  production  of  electricity  in  nuclear 

r::  ,:  power  stations  must  be  increased  as  quickly  as  possible  for  security 

, ,   T, 

• 

'::::reasons. 

In  the  long  term  - by  the  year  2v00  - nuclear  energy  will 

r.  •  i  b~come  the  pri vilegcd  source  of'  energy  by  reason,  firstly,  of  the  use 
;1.  ;;  of  breeder  reactors,  and,  secondly,  of  fusion  devices.  It  will  be  able 
i 
•  to  satisfy  a  large  proportion  of  our  energy  needs:  electricity  genera-

::  :, 

1

:.'·: 'tion',  process  heat,  gasification  of  coal  and  brown  coal,  production  of 

!i  ~- 1

• ·~ynthetis  gas  and  hydrogen,  and  the  propulsion  of  ships. 

;:  :  'Between  1985  and  the  end  of  the  century,  the  importance  of  these  applica 

:l  :.  t  tforis  will  nonetheless  remain  relatively  limited. 
:i,  "ineci:tum  term,  the  fundamental  role  of  nuclear  energy  will  be  to  proyide 

In  the  short  and 

,, 

,·~n:.alternative  form  of  energy  for  producing-electricity. 

Its  sphere 

•  w~l~:  encompass  all  eleotrici ty  production  which: 

0 

0 

1!'r:cannot  be  obtained  from  "inevitable"  or  privileged  fuels  (industrial 
1 :,gaf;,es,  hydro-electric  energy,  geothermal  sources  of  power,  broi-m  coal), 
- :and 

~ 

• 

• • 

I 

,  , "'!'  requires  a  high  load  factor. 

./. 

- 20 

The/. aim  is  to  ensure  that  by  the  mid-198os,  50%  of  electricity 

/' 

prlduction  is  nuclear-based. 

This  figure  represents  an  installed  capacity  of  at  least  200  GWe  in 

1985,  to  which  could  be  added  the  production  of  process  steam,  which  in 

1985  could  be  equivalent  to  an  annual  oil  consumption  of  about  25  million 

metric  tons. 

b) 

In  order  to  attain  this  nuclear  production  objective  three  main  problems 

,,  '·-
must  be  solved: 

i 

that  of  the  capacity  of  the  Community  industries  to  build  the 

required  power  stations  in  the  time  required.  One  advantage  is 

that  it takes  less  time  to  develop  this  caraci ty  than  to  construct  ' 

the  power  stations; 

i'i•i  n -

that  of  ensuring  that  the  development  of  nuclear  energy  does  not 

•

·~ 

1  r:  •J 
r'  ::  · 

harm  either  public  health  or  the  environment.  Vli th  this  aim 

the  Commission  has  already  sent  the  Council  of Ministers  in 
'  ..  February  1974  a  document  on  the  promotion  of  the  use  of  nuclear 

I'  C 

' 

0 

enere,y( ""'·1  which  lists,  with  a  precise  timetable,  all  the  measures 

which  the  Commission  intends  to  take  or  pursue  in  this  field, 

including  the  following: 
•  the  forward  analysis  of  the  potential  radiological  implications 
of  nuclear  construction  programmes  over  a  period  of  25  years, 
together  with  the  adaptation  of  basic  standards  of  health  pro 

tection  to  the  advance  of  knowledge  in  this  field; 

•  the  transport  of  radioactive  materials; 

•  the  recording  and  storage  of  radioactive  wastes; 

•  the  safety  of  nuclear  installations; 

that  of  the  supply  of  nuclear  fuels  to  power  plants  which  is 
due  to,  on  the  one  hand,  the  small  amount  of  the  Coll'lmunity's  own 
resources  of  natural  uranium,  and,  on  the  other  hand,  the 
Community's  position  as  a  net  importer  of  enrichment  services  at 
least  until  the  middle  of  the  next  decade. 

··  For  natural  uranium,  it  is  necessary  to  have  sufficient  and  secure 
resources.  For  this  purpose,  it  will  be  useful  to  study  what  support  the 
Community  could  give  to  industry,  the  ability  of  that  industry  to  make  the 
supply  available,  and  the  contract  policy  the  users  must  eventually  folloi-1. 
Security  of  supply  requires  that  stable,  balanced  relations  should  be 
established  with  the  producing  countries  and  that  a  stock  policy  should  be 
defined.  These  questions  are  in  the  process  of  being  examined  with  the 
Consultative  Committee  ~f  the  Euratom  Supply  Agency.  Proposals  for  action 
will  be  submitted  to  tne  Council  at  a  later  date. 

For  enriched  uranium,  the  Commission  has  already  submitted  to  the 
Council  a  proposal  about  the  creation  of  European  uranium  enrichment 
capacities  (**)  which  it  is  necessary  for  the  Council  to  deal  with  without 
delay. 

(*)  Doc.,  COM(74)  10 
(**)  Doc.  COM(73)  4065  Final 

I 

- 21  -

o) 

I·~  ii:.  moreover,  in  the  Community's 

interest  to  enconraee  the 

development  of  new  reactor  types  to  contribute  to  security  of 

supply,  bot:tl  .by  the  deve~_opment  of  the  breeder  reactor  and  by 

preparing  the  way  for  more  rational  utilization  of  nuclear  energy 
as  a  source  of  heat  by  the  use  of  high-temperature  reactors,  and 
even  by  combining  the  advantage  of  these  two  lines  of  approach. 

0 

·O 

•  · :   I 

I 

./. 

CHAPTER  III 

22  -

A. 

The  increase  in  oil  prices  which  has  taken  place  since  October  1973  has 

made  a  large  part  of  Community  coal  production  competitive  with  other  fossil 

fuels.  However,  the  coal  industry  is unable  to  adapt  rapidly  to  this  neu 

situation  on  account  of  the  time  required  to  develop  new  productive  capacities 

and  to  recruit  and  train  the  requisite  manpower,  of  the  need  for  a  guaranteed 

return  on  the  heavy  investment  required,  and  of  the  fact  that  for  technical 

reasons  mines  once  closed  cannot  be  reopened • 
. Power  stations  and  the  steel  industry  account  for  Bo%  of  Community  coal 
consumption  in  about  equal  proportions,  nine-tenths  of  which  are  produced 

in  the  Community. 

In  view  of  the  characteristics  of  the  steel  industry  in  respect  of  the  quality 

,~ 

.._ 

l 

....,  r 

' 

- ~of'~oal  required  and  its  relative  inflexibility as  rega.rd.s  the  use  of  other 
fu,~ls 1, )·:t  can  be  expected  that  its  coal  consumption  will  remain  relatively 
. :~~afl~ ~d that  Community  coal  will  continue  to  remain  in  competition  with 

j,mported  coal. 

f~.Yt~ct:ricity  generation  conventional  power  stations  will  continue  to  play 

~~ impor.}ant  role  despite  accelerated  proB'I'ammes  of  nuclear  construction, 
a,nfln  t~e. 1Commis_sion  believes  that  a  substantial  proportion  of  this  conven 
~~~~+ ~lectricity  production  should  be  coal-fired. 
Coal  consumption  in 
t~i-s1
b~s.:t,1 pr-o;:,pect  for  reducing  the  Community  dependence  on  oil  imports. 

,  se.q.tor  could,  therefore,  increase  dynamically,  thereby  offering  the 

0 

, 

I  < 

:B.  World  energy- supply  prospects  and  the  objectives  of  Community  energy  policy 

t  1 r,  ~: 
r,  \~~ .. 
imply  that  action  should  be  taken  in  the  following  three  principal  fields: 
> !', 

'~  r:  !\,  ~  J 

.. 

~ 

1 ),  - ,Co;nrnuni tv  Coal  Produoti on 
'  .  • "'T:  . 
, tl:l~  :P9r~ission  considers  that  between  now  and  1985,  Community  coal  pro-
. ~  .  . ; 
~u~~i9~ be  maintained  at  least  at  its  present  level  of  approximately  250 

.  \ 

~~"t.:rft..C?·:tpns. 

The  following  measures  are  required  to  secure  this  objective 

~d; :~l;lus  to  enable  the  coal  industry  to  continue· to  play  a  significant 

0 

rQle: in  covering  the  Community's  enere;y  requirements: 

.,, 

I  i1 

i 

I 

1· 

./ . 

.... 

H 

',  ..  ,. 

:  • 

:~ 

- 23  -

Ra.tiona.lization  of  the  coal  industry  by  conccn·trating  production  in 

regions  with  high  or  potentially  high  productivity.  Where  production 

is maintained  on  a  temporary  basis  for  reasons  of  regional  or  social 
policy,  the ·addi•l:;ional  costs  arising thercfrom  should  be  borne  b,y  the 

appropriate  Community,  national  or  regional  authorities; 

Community  action  to  support  rationalization  measures  in  exj_sting  mines 

and  to  open  up  new  production  capacities,  (e.g.  through  ED3  loans;  low 

interest  loans  from  Community  resources). 

- A  manpower  policy  which  encourages  recruitment  and  training  of  labour  of 

"~--hi£~~calibre  through  attractive  remuneration  and  secure  career  prospects, 

with  financial  inducements  towards  mobility  of  labour; 

A  price  policy  directed  towards  the  attainment  of  a  free  market  situation; 
::- 4,  f~"Q-qpcial  contribution  from  the  Community  designed  to  intensify  research 
an.(i. development  work  towards  the  improv.ement  of  working  conditions  and 
., 
the.reduction  of  the  impact  of  labour  costs  on  production. 
- ' 

':: . .'  ;· 

),  . ' 

,. 

In·vliil~rof.-the  inflexibility  of  the  coal  industry,  these  measures  t~  maintain 

Cormnunity  coal  production  at  least  at  its  present  level  must  be  supported 

by;the;following measures  to  secure  outlets  for  the  coal  so  produced: 

~ ~inartcial  intervention,  should  the  need  arise,  to  guarantee  the 

cotnp@titivencss  of  consumers  using  Community  coal  under  long-term 

~  conrtracts; 

.... -•·adtnini:strati ve  and  financial  action  to  promote  the  construction  of 

· e:oa..1-fi?'.'ed  power  stations  and  the  consump-tion  of  coal  in  the  electricity 

- ecb:tor; 

the  proposed  measures  concerning  the  consumption  of  oil  in 

.,  po~-ie:r i:atations  will  operate  in  the  san1e  dircctionj 

inite11.sification  of  research  and  technological  develop:nent  uork  on  coal 
1i:p'gTa.d:ing  ( e. e;.  gasification)  to  ensure  the  avn.ilabili ty  of  the  appropriate 

:  _1 tecln,.ologies  in  the  Comrnuni ty  at  the  appropriate  time; 

"I'he 1Uornmission  might,  moreover,  state  clearly  that  long-term  contracts 
woulh:be  guaranteed  even  in  the  event  of  requisitioning  and  distribution 
of:obal  supplies  under  Article  59  of  the  ECSC  Treaty. 

./. 

0 

0 

- 24  .... 

2) 

Imnortr:....fD?m  non-!1:<"~r  countries 

Since  the  potential  market  for  coal  in  the  Community  exceeds  the 
taking  account  of  the  qualities  in  demand 
production  potential  -

an  increase  in  imports  is  to  be  expected  insofar  as  the  Community 

coal  industry  could  not  or  would  not  supply  the  quantities  in  question 

under  comparable  conditions  and  insofar  as  these  new  imports  meet 

_ the_ long-term  safety  criteria.  With  these  aims  in  view,  the  con 
clusion  of  lon6 .... term  con-l;racts  and  the  participation by  Comr.1u~i ty 
- "industry  in  joint-venture  mining  operations  in  non-Member  countries, 

for  example,  should  be  encouraged. 

The  Community  market  should  therefore  be  opened  to  imports  where  they 

_c3:re  necessary  and  desirable  without,  however,  permitting  such  an  opening  -

.  ,,.,.  . 

~ 

' 

' 

;  ,.  -

.:  t ...  -

't•o  col1t]:n'·omi se  the  result  of  measures  taken  to  maintain  internal  pro-
duction~ 
l  , 
l·  "  .·  ·, 
' 
coal  sho11ld  gradually  be  implemented  under  which  imports  from  non-Member 

The  Commission  considers  that  a  true  joint  trade  policy  for 

"l 

; 

\ 

l,...  •, 

countries  should  be  able  to  develop  freely,  while  being  subject  to  a 
,,.  '·  I. 
certain  degree  of  monitoring • 
.  . 1  r'  ~ ~  l  ~  ;· 

l  L \.. 

_31)(_  Stockniling 

Ji\i~thermore,  the  Commission  proposes  a  policy  of  coal  stockpiling,  the 
..  · aims!, (if'  which  would  be  to  stabilise  Community  production  in  the  face  of 
c~llea~_yariations  in  demand  and  the  creation  of  substantial  stocks  in 

producers'  and  major  consumers'  hands,  to  be  available  in  ·the  event  of  an 

inter~ption  of  coal  supplies  or,  to  some  extent,  of  supplies  of  other 
., 

~ 

"'  ~-

-

. 

. 

:1  - · ' .  
··.forms  of  ener[;Y. 

I 

• 

I 

I 

~  ~ ~:· 

\~ 

-~ 

I,· 
. •   )1  J 

~  .(  -:· 

. 

•1 

• • '   .• 

.  -'·  2 I 

• I .   • 

• 

'I 

• 

, 

j  (,  I I  

~- ;:  ·-l"n  j  l 

* 

* 

* 

Th~  /C:9mrii.issi.on  will  shortly  forward  to  the  Council  a  more  detailed 

9.q;wn~ie:a.tion  on  coal  problems  and  the  ways  and  means  by  which  it 

pr!QJlP~~~- to  solve  them. 

./ . 

• I 

0 

0 

- 25- · 

CHAPTER  IV  - .£!1 

,Several  factors  must  l;>e  taken  into  account  in  giving  t"he  oil  policy  of  the 

Community  its. new  orientation: 

{i)  Oil  will  for·a  long  time  yet  continue  to  be  a  basic  element  in  tbe 

supply  pattern.  Even  if  all  the  prerequisite  conditions  existed  to 
make  it possible  to  achieve  in  1985  the  aim  of  holding  consumption 
at -~·level  barely  above  that  of  1973  (65.5  HT  against  617  H'l'),  demand 

·M  )[ill. "cto'ntinue  to  grow  appreciably  during  the  period  of  time  required 

to  develop  the  replacement  energy·sources,  ~nd  before  the  effect  of 

such  substitution  measures  has  come  to  play  a  decisive  role. 
case,  with  a  share  in  the  Community  total  energy  supplies  of  41%  by 
~ l.~8.5  ·(ai;ainst  61%  in 1973),  oil  will  still  constitute  the  main  source 
-~  ~fc~??-er:e;y  for.  the  Community. 

In  any 

(ii)~~he  producing  countries  will  progressively  increase  their  control  over 

production.  An  increasing  proportion  of  world  supplies  now  comes 

~~4e~ t~~  control  of  governments  or  public  bodies,  whose  behaviour 

... 

.,.. 

... 

-

.,J 

...  ""  ... 

~~~pr~mafily  dictated  by  the  requirements  of  economic  development  or 
py  io.l~tical  choices. 

(iii)· }l~~ld·e~ibti ts  of oil will  come  into  -oroduction,  in  particular  in  the 

C:ommtlri1.t)"  or  in  contiguous  regions  (e.g.  the  North  Sea),  thus  reducing 
~he 1rEi11.tive  share  of  the  traditional  suppliers. 
-".  n n ,  ,  ' ·:  1 

{iv)  thg-part  played  by  the  multinational  oil  companies  is  tending  to 

,~ 

... 

;,;, 

;..J 

' 

. ' 

-': 

..; 

~~~e~qo  chanFe,  and  is  subject  to  a  number  of  uncertainties.  These 

:  ,'  ...  i 

-: 

~ · · ~  ·1; 

r~ 

undertakings  will  have  to  adapt  to  the  new  market  structures  which 

• •  , 
i 

• 
• 
'"  r·, 

f 
•• 
.,  ,.  ,., 

' 

are~oe-ginning  to  develop.  The  companies  will  continue  to  have  important 

i~~J.1t{i~functions,  within  a  framework  of  equitable  competition,  side 
-~~~·  -~~ 
oy:.side:. with  other  kinds  of  operator 

independent  operators,  national 

l~aittk:iclngs  set  up  by  oil-producing  countries  or  by  consumer 

~6uJtri~~  - whose  influence  may  increase. 
-,  ~ ~1  l  : , : J 

~ 

1 

( v)  9:'he  -cr:i.1.·:  requirements  of  other  consumer  countries  will  exert  a  growin"' 

~  C:;:  ~:  ;. 
effect  on  the  world  market; 
~  ,,  r. 
countries  and  those  for  whom  energy  is  an  indispensable  factor  for 

this  is  true  both  of  the  industrialized 

'  - : l 

I  • 

,• 

!  ~  : 

I 

;_, 

1 

•  , 

;>f  , l "  

t~t¾r":~~yelopment • 
~~r:1~··: 1 
~~r~•,..r~--..~ 
.  . .  .' 
.. 

. . .  

• 

.  :-: 
.,"\ 
t_ 

~ 
.._ 

~ 
;: 

'•  A 

,-4 

26 .. 

The  Community  must  therefore  arm  itself  with  a  supply  policy  which  combines 

these  various  elements,  with  the  aim  of  achieving  stability  and  security  of 

supplies,  in  the  most  favourable  economic  conditions  possible. 

This  policy  must  be  based  on  the  following  principles: 

(a)  the  Community  market  is  a  component  of  the  world  oil  market; 

relations 

with  the  producing  countries  and  with  the  other  consumer  countries  is 

therefore  an  essential  aspect  of  its  oil  nolicy; 

... 

(b)  by  :~~~~n of  the  unity  conferred  upon  it  by  the  free  circulation 

provided  for  in  the  Treaty,  the  Community  market  must  continua  to  be  an 

attractive  field  of  activity  for  the  operators; 

(c)  the~~~~~et~must  be  characterized  by  a  spirit  of  equitable  competition 

whi~~i.'11:i;;l..1 1  allow  the  consumers  to  enjoy  the  most  favourable  long-term 

supp:J.y ico_:p.~i tions,  and  permit  the  operators  to  develop  their  activities 

on  tl.J,e  market  with  the  maximum  degree  of  flexibility  compatible  with 

:  J. 

:...  :; 

' 

I  ~  r~ 

the  general  interest; 

(d) 

the  market  must  exhibit  the  requisite  transparency  to  enable  the  national 
''  ! :· 
and  Community  authorities  to  satisfy  themselves  that  it  functions  in 

t  ;,  ~  J J 

•I 

-~ 

::: 

,. 

,; 

(  ~ ) 

accordance  with  the  foregoing  principles  and  with  the  more  general  aims 
di  ihJ 3dne}gy  policy. 

To  _put  such  a  policy  into  practice,  the  Community  must  have  at  its  disposal 

in}o~m~-£:i~~-·permitting  them  to  discern  market  trends;  it  must,  where  necessary, 
be ·:a~i~ ;'to': ~egotiate  on  the  terms  of  these  trends  with  the  producing  countries, 
to  work  tbgether  with  other  consumer  countries  and  to  hold  a  dialogue  with  the 

"'.  ~  '•  I-

:1 

• 

:· 

' 

O 

0 

• 

.t  " 

:--

I 

...... 

oil  i~aust~y;  finally,  it  must  have  available  to  it  the  necessary  means  for· 
action;~  1 

: 

.. 

'1 

•  • 

. 

I 

' 

~ 
I  ' 

,i  >. 
I 

, 

• 

~ 

.... 

l, 

~' 

,•. 

.''  l  ' 

The,  tot.al.Hy  of  these  instruments  will  need  to  be  applied  in  as  pragmatic  and 

flefJ~{e,. ~' ,manner  as  is  possible  and I  as  need  may  dictate,  at  the  Community 
level,,Q-r~; b;y:  the  co-ordination  of  national  actions.  Some  of  these  instruments  have 

: 

... 

:1  .• 

' j   .  ,\ 

alreaqy:  been  adopted.  Otherproposals  are  on  the  Council's  table,  or  are  attached 

to  t!).i~. ,present  document ;  and  others  again  will  be  submitted  at  a  later  date 

.  ·'  ,.  ,. 

' 

' 

by  t~~ Cppµnission. 

I 

' : j   :;  l 
' 
~  i:  ~  :l  ~  ·' 
/'  11 
,: 
, ' ,l  j  '.: 

...  ,  I  • 

27;.. 

In  more  precise  terms,  a  policy  of  oil  supply  for  the  Community  must  rest 

on  four  pillars: 

(a)  a  joint  attitude  towards  oil-icporting  and  -exporting  countries; 

(b)  the  development  of  secure  resources; 

(c)  a  Community  system  making  it possible  to  take  appropriate  measures  to 

deal  with  supply  difficulties; 

(d)  the  organization  of the  proper_  fu.rlctioni;g  of_  t:rie· ma,;k~t  'at  Cornmuni_ty  level. 

1.  Relations  with  the  producer  and  consumer  countries 

The  necessity  of  cooperation  with  the  consumer  and  the  producer  count~ies 

flows  from  the  world  approach  to  the  oil  problem,  as  sketched  out  above. 

(a)  As:f~~L~~:~he  producer  countries  are  concerned,  the  Commission's  ideas 

on  the  development  of  these  relations  were  submitted  to  the  Council  in 
I 
January  1974: 

the  Commission  considers  that  these  proposals  should  be 

~  ;; • {1 

~' 

; 

~ 

th6rc5liihl;Y,: studied  by  the  Council  as  expeditiously  as  possible. 

lfnt:if ;1the· bouncil  has  handed  down  a  decision,  the  agreements  which  might 
~e•  ~o:rtd1\id~d,  by  certain  Member  States  with  the  oil-producing  countries 

shoulQ~at: the  least  be  subject  to  previous  consultation  at  Community 

le~el1 ~4~  fh~  Commission  has  suggested.  This  would  allow  it  to  be  determined  how 
these  agreements  could  contribute  to  achieving  a  common  trade  policy  in  the  oil 

se6tb~rJJ~~ll,  and  to  achieving  stability  and  security  of  supply. 

; 

:  A C n  ;  ll 

(b)  As  }'e~¥:~ 1, ?or-operation  with  the  consuming  countries,  especially  within  such 

int;r~t\ioF~l, organisations  as  the  OECD,  it  is  equally  necessary  to  apply  fully  the 
prdy~~\~P~ :Of  the  Treaty,  whether  concerning  the  negotiation  and  adoption  of 
ev~pJ~~\f~~ements,  or  the  implementation  of  common  actions  by  member  states,  duly 
co-ordinated  on  the  basis  of  propositions  which  \he  Commission  will  submit  to  the 
Counci~  to 1 this  effect.  Similarly  if  the  Community  were  to  speak  with  a  single 
vo1.·ce  •.a-s,  a.  rule  in  these  bodies,  all  this  would  ensure  that  an  indispensable 
Eur,opa~identity  would  be  provided  for. 

:  j  - i'  i  ' i 

,  ;  ' 

,i 

I 

' 

. 

0 

0 

.. 
, 
. \ 
2.  The  devel·opment-of  secure  resources 

. 

; 

~ 

., 

.. 

~, 
;..  . -\ 

~ 

' 

: ~ 

A  special;~ffo~t  ·must  be  made  to  encourage  prospecting  for  and  production  of  oil  in 

new  areas·~ 1

I 

·  The:'brunt  of  the  financial  effort  will  have  to  be  borne  by  the  oil 

I 

' 

, 

industry:;c~ however:,  in  certain  cases  the  active  participation 

. ' 

' 

.... 

-"28  -

o~ or  an  information  operation  b~"the  Community  will  ~e  necessary,  either 

as  an  encouragement,  or  to  coordinate  activities  which,  if  uncoordinated, 

would  be  likely  to  lose  their  effectiveness. 

(a)  The  11Community  projects" 

Twenty~five  million  u.a.  have  been  allotted  annually  under  this  head  in 
the  Community  budget  between  1974  and  1976. 

In  view  of  the  interest 

shown  jn  this  kind  of  backing  - an  interest  which  has  found  expression 

.~n  the  forwarding  of  many  projects  to  the  Commission  -
may  '"we11··need  to  be  increased  in  future. 

this  allocation 

(b)  Extension  of  the  "Community  projects"  concept 

Co~~uni~Yr~upport  is  at  present  limited  to  technological  development  in  0 
th~ 14y~r@s,~rbons  sector,  but  could  be  extended  to  prospecting,  storage 

ang;t~~~~~9rt  operations  in  this  sector. 

Wh~l8<  ~~tJ~ecessarily  calling  for  substantial  funding,  this  extension 

would  giye  a  "Community  incentive"  to  the  forging  of  links  between 

t\  ~  J.  ;:  •  ~  ~ V  ~ 

comp~nies  9ontributing  to  the  Community's  supplies. 

!l  ;: 

•I 

-; 

;J  ;;  ()  l 

(c)  I~fo,~m~ti~~  regarding  prospecting  for  and  production  of  hydrocarbons. 

The  Membir  States  and  the  Commission  should  consult  regularly  on  the 
situaiiod 11  ~espect  of  prospection  for  and  exploitation  of  secure  sources 
of  hy9,~q~~b~n~.  To  this  end,  there  should  be  an  exchange  of  information 

(the  detailed  machinery  for  this  to  be  settled  later)  regarding  the  efforts 

made  ;;;J lr:~;~t{s  obtaine.d  in  prospecting  for  hydrocarbons,  and  on  the 

0 

•  potential  for  prospection  and  production  on  Community  territory. 

,.  :!  .  ~ • . 1 ...  ~  ""''." 

~~  p :.  ;;  ·-~  ~  ~ ~ ;i 

).  Me!SSff~(~o  be  taken  to  deal  with  suuuly  difficulties 

The  measure~~~equired  to  deal  with  supply  difficulties  have  a  twofold 

, ,   . 

• 

'1 

• 

j 

I 

; 

.:purposcf~'o!f: m.iiritaining  free  circulation within  the  Community  and  of  moderating  the 
ef:f:_~~t~,, <?t. ~-.. ~!_le>rtfal~  in __ suppli~s. 

,1  I 

•1 

. 

• 

t 

: 

. 

~~  '-•  ~  I'  . ~  -; 

...  i:  :- .  • 

; .. :  J  .:  :1 
~  ;! 
;.  '.'.,  I  .;  1 ;i 
;i  ~  l  :  ~  ;_  ll  ; .  ;; 

.... 

1.  . •  
l.. 
' 
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.  . 

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,.  -
~  '  ... - -
~  ~  ~ ~ 4 ~ ~ ~ ; 

.. 

'" 29  -

. .  ··-· ...  - ·-

Certain  Community  provisions  in  this  field  exist  already: 

Council  Directives.  Nos  68/414/EEC  of  20  January  1968  and  74/425/:t;EO  of 
19  January  19722 
impose  on  the  Member  States  the  obligation  to  maintain 
a  minimum  level  of  stocks;  Directive  No  7J/238/EECj  covers  the  measures 

. 

l 

intended  to  cushion  the  effects  of  supply  difficulties.  Recent  events 

have  demonstrated  the  necessity  of  these  provisions,  as  well  as  the  need 

to  supplement  them  by  other  measures  suited  to  the  particular  circumstances. 

,,,  .................  ""'-• 

It  is  consequently  necessary  to  create  a  framework  which  will  make  it 

possible  to  establish,  in  the  event  of  supply  difficulties: 

(i)  an  information  and  monitoring  system  covering  movements  of  crude 

.oil  and  petroleum  products  within  the  Community; 

[1L.l  I  <n~>A-;, 

(ii~.a  ~~pi4_information  system,  within  the  framework  of  existing  or 

••  L  • . • . •  C  ~ t. 
. 
_;_P,rOJ>OS~d,  machinery  ~e~lations 1025,  2603,  1055 .. and:  their  supplements·~.aninports  ; 
r:i.~~  !~~irts; 
,:  :..1;8tP~~  ~~mmercial-policy  measures  as  might  become  necess_ary; 

this  system  would,  if required,  allow  of  taking  such 

...,  ::,  f 

,.  L. 

. 

1 

"' 

~-

... 

(iii) :a. ir•anger :i.of  measures  to  reduce  consumption,  harmonized  and  balanced 

t:  ;i,n, accardance  with  the  structures  specific  to  each  Member  States, 

and  not  of  a  nature  to  prejudice  free  circulation; 

~ 

:;  '  ~  ~ A ~ 

:J 

(iv). :ia.  CommWliity  system  for  the  allocation  of  available  supplies; 

(v)  0octdin~ted  action  in  respect  of  prices. 

)  .: 

(  0  ~ 

The  national,or  Community  measures  required  would  in  essence  be 

. 

. 

.  '• 

• ••.  I, 

administered: ~t  Member  State  level;  but  with  the  closest  concertation 
poss~bl'.e;i ~a:~:r~;:·::r~,..;..~  to  overail_' p~i'i?f gu.ideiine's  'estc3:blished·-~:t  the. 
Communi't~f• 1#-e).  on  the  basis  of  Commission  pro.posals.  They  must  be  capable  of 
rapid .. inrplEimentation  with  a  maximum  of  flexibility,  taking.account  of  decisions 

, ...... ~ 

i••  •  l 

_,., 

, . 

!· 

· 

"  . •   I 

. 

.. 

. 

taken1~\ ]~e::: f,~vel  of  the  OECD. 

No  L  }08,  23  December  1968. 
I 
No  L  291,  28  December  1972. 

.I  1(  ;.j  ~  k  i  I 

:  .. 

r  ,: 

Noll:,  ~22&,,  il.6  August  1973• 

Cha"Otel"  V.  Natnral  ,';,3.S 

30  -

Natural  gas  accounted  for  13~~  of  the  Comrnuni ty' s  energy  supplies  in  1973  and  could 
be  covering  almost  a  quarter  of  its  ener0y  requirements  in  1985. 

This  doubling  of  the  share  taken  by  natural  gas  in  relative  terms,  should  itself·· 

be  based  on  the  approximate  doubling  of  present  Community  output  and  on  recourse 

to  sources  of  imports  compatible  with  the  aims  of  security  of  supplies.  Such  an 

objective  is  ambitious  but  not  unreasonable.  Generally  speaking,  it  assumes  that 

the  problcms·on  natural  gas  - whatever _may  be  its  specific  nature  - should  be 

a.pproachQd .. wit~-the  same  thinking  as  the  oil  problem. 

' 

In  the  immediate  future  three  aspect  require  a  Community  policy: 

the  grm~th_:  i11  ~ay~ilable  supplies  of  natural  gas; 

the  strenethening  and  increased  integration  of  the  transport  and  storaee 

systems j  •  '  C:  1  1  i  r 

the  optimumr: economic  use  of  natural  gas. 

.,  ~ 

'l•o 

increis'e  the  available  supplies  of  natural  gas  it will  be  necessary: 

,  1 

( 

:.  ·j  "; 

a) 

to:- int.e11-8:V¥-1natural-gas  prospecting  in  the  Community. 
~i~. ;i~pi~es: 

t~~ pro~ision  of  precise  information  presented  in  a  standard  pattern  to 

th~ p~b~~I)  authorities  regarding  reserves.;of  gas  existing  in  the  Community 

and  the  prospects  of  working  and  developing  them; 

0 

.,  ~ 

••  L 

' 

.. 

.. 

• 

·hie  p;s·s\~ility  of  taking  measures  (ad,'TI.inistrative  a:nd/or  fiscal)  to 

I-". 

r 

, 

' 

,  • 

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: 

I 

0 

' 

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'.  . 

''  ' 

encourage  prospecting  for  new  depo~its 1  and  of  gr2..nting  financial  aid 
..  ;.  ,. 
0 by  in~~ns  of  the"Community  projects"  system,  to  overcome  the 
e:·g~
essent~ally  technical  problems  arisin[;"  in  connection  with  production 

~rfii::,  triris)?6rt  or  to  assist  the  execution  of  major  projects  in  the  field 

of.  1il'liiernational  or  intercontinental  transport; 
' 
J;::~~t_: 

.  ' 

b)  to  e11qpµra.,~- the  conclusion  of  new  contracts  or  the  extension  of  c::-:istii::{;' 

cont~a,cct;~ ;;fo! ·,the  irn.port  of  naturnl  gao  with  Third  Countrfos,  eventually 

throU:gh  the,  conclusion  of  Community  agreements  for  trade  cooperation. 

1,  ,· 

,, 
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t 

a 

.... 
uo 

-

( .... 

-·3i -

4.  The  organization  at  Community  level  of the  proner  f'u11ction:in.::;  of  the  l'T)ar-ket 

... 

~  ...... ·--

'  - . 

. ... ,  ..... 

Being  - like  the  free  circulLion  oi"  goods  -

the  indispensable  prerequisite 

for  a  Community  oil  supply  policyt  the  organization  at  Community  level 

of  a  smoothly-functioning  market  must  be  based  on  an  adequate,  joint 

supply  of  information,  on  a  wide-ranging  and  flexible  system  of 

concertation,  and  - where  necessary  - on  the  possession  of  means  of  action. 

A~  An  ade·guate 2  joint  supply  of  information 

The  supply-.o.f.  information  is  essential  to  achieve  transparency.  Moreover; 

it must  be  acquired  in  a  manner  such  as.to  ensure  a  sufficient  degree  of 

standardization.  On  the  other  hand,  the  collecting  of  the  information 

must  be  kept  flexible:  according  to  circumstances,  national  or  overall 

")  • 

I. 

(  <  -

J  1 

fieure§"~afb~~sufficient,  or  it may  happen  that  data  coming  directly 

from  the ·u\-i.'de~takings  are  passed  on  via  the  Member  States,  - · 

---· ... 
. -· 

------:· 

,., 

.  ·1.  -

.,  , •• 

'Qe_ing~_liandle'd"with  appropriate  confidentiality. 

:-:  :i  )  )  ;j  .1  ;,  - t' 

:; 

)  : 

:  l  .1  C t• 

As  a  first  step  at  least,  it would  appear  to  be  adequate  if  this  joint, 
homog:p7~us.  information  covers  imports  and  exports,  investments,  and  the 
cost  and  price  of  petroleum  products. 
(1)  Imporfsanct  exports  of  hydrocarbons 

'  i  i•  ,  ~  ~ r! 

:1,  ~  · '   .. 

~  t., 

~ 

J 

, 

~~  r.  j 

.,. 

! . .  (  ,, 

:. 

)  ! 

;  t 

Council  Regulation  1055  adopted  in  May  197~  allows  of  a  sound  quantitative 
pictu!~  o~  ?9th  the  actual  and  estimated  imports  o:f  crude  oil  into  the 
Commup.ity. 

,:  l.  ]  •  ,, •  J  C·O 

,.  · 

l  < C  ll 

. 

. 
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However; Jii;egill.ation  1055  m1:4st  be  extended  to  cover  petroleum  products,  to 
obtain:·an Li'deatof  the  trends  on  the  oil  market  and  in  particular  ot  the 
creation ,•o:f·i  in~tlor  refining  capacities  outside  the  consumer  countries.  The 

Commi1tt1~l  ~f9~itted  an  appropriate  proposal  to  the  Council  on  j  August  1973: 
the  Commis:s:i.on11  s  view  is  that  this  proposal  should  be  adopted  as  early  as 
4:  ::  J  )  t  ; 
possibi~~-·- 1 

~  -.• :  . . 
1 

. 

'

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) 

' 
' 
':  ~ 

'. 

Simil-a.rl;y: ~ .t-01< reasons  of  homogeneity  and  particularly  in  view  o:f  the. 

~~2~~~~ ......

. 

.; 

"' 

)  >  .,  • 

prospe~~s.ot_production  on  Community  territory,  it is  necessary  to  know 

the  actual;  'and .. estimated  exports  from  the  Community  to  non-member  countries. 

• 

A prop8q&1 .. i~,- this  sense,  additionally  covering  natural  gas,·  was  put  to 
the  cbJJcf~l  in __ August  1973; 
again, i:th~: yQJ:liliiission  considers  that  the  Council  should  approve  this  text 
as  soon ,iaa: p~ssible. 

a  reminder  was  given  in  January  19?!--.  Here 

1·  · •   • '  f: 

I t ' • • , • .  

• I 
,-. 

• 

I 

- 32  -

(2)  Investments 

It  is  equally  indispensable  to  have-a  good  knowledge  of  the  circumstances 

governing  the  execution  and  planning  of  investment  projects  in  the  oil 

sector  within  the  Community.  This  the  Council  recognized  by  its  approval 
of  Regulation  1056  in  May  1972.  The  Commission  does  not  consider  that• 

the  present  situation  calls  for  the  provisions  of  that  Regulation  to  be 

strengthened. 

(3)  Cost  and  price  0£  oil ·products 

This  is  a  vital  problem,  which  has  incr~ased  in  importance  in  recent 

months; 

it  arises,.· in  respect  of  price  and  cost  formation,  both  before 

c_,\_~  enter  the  Community  and· within  the  Community  itself. · 
th:e  P_. ~--~-d-iu_
1

Consequently,  the  Commission  holds  the  view  that  the  Community  should  -

. 

;~ 

:1 

:  1  (  J :~ 

(·. 

'  r.  C'  l 

have  available  detailed,'  regular  information  to  a  standardized  pattern, 
sho~'ling '-t1~·~:  various  price  and  cost  elements  (fob  and  cif)  for  crude  oil 
an~.~~~ ~~oducts  imported  into  the  Community.·  It  might  then  be  possible 

r  .- .,;  J 

<  ·,:  J  :"' 

• 

'.· 

.I 

to  envisage  that,  starting  from  thi.s  basic  information,  there  would  be 

:for  the  Community  and/or  for  each  Hember  State 

. 

J.  ~ ~  ...  ·'  ~ 

..  ( 

.~, 

r:  r  ~  ~ 

::;  i 
:fixed  - qua;i:-terly, 

J  t;  C ;  ;  l  ?J  (  C 

- an  1ndicator  expressing  the  average  level  of  the  cost  of  supplies. 

: 

:  J  ,  ; 

i  .1  C 

Similar~i;the  Commission  considers  that  the  Community  should  have  a 

detiil~d;ab=kJ.ysis  of  the  costs  of  refining  and  distribution  operations  in 

ea;ck ~1kmb:ei- State. 

LC 

i  ::  :>  ~  L  •  t 

. 

All  ::this .:w.o~ld  improve  the  transparency  of  the  costs  and  prices  for 

pe:~i-~'ii~rft l:pToducts.  The  Commission  has  already  carried_ out  studies  in -

t 

'i. 

....  u?  ; 

1 

t4~~. T_i.~la;~.  Before  placing .a  formal  proposal  before  the  Council,  the 

Cdmb~s~~tni ':wishes  to  exai ... ine  the  matter  in  greater  det~il  in  the  Energy 

C6mmi:l~~~ ~:  ;possibly  with  the  assistance  of  independent  experts  or 

rJpr~1~At~tives  of  the  industry,  to  determine  the  technical  means  of 

oot'ai~lP~ \the  desired  cost  and  price  transparency • 

.l 

::  r,::;,  L : . L' 

·~ 

: ' 
.,  I •  .,  "  ~  L 

:.:  "  ~  •- ' 

·,.. 

B.·  A,  wide-ranging  and  flexible  system  of  conccrtation 

T4e;  9P!!liµuni;ty  must  obtain  its  oil  supplies  under  conditions  which  are  in 

"l-,  ~t 

• 

.; 

, 

,1 

, .. 

.J 

l~  ) 

the:  i~terest  of  the  consumer  and  which  respect  the  rules  for  the  free 

i.  :.  : .  ";  ( 

;)  :-:· 

·: 

, 

. 

c:i.rcul~tion  of  goods  and  services  laid  down  in  the  Treaty  of  Rome. 

I 

::• l  ~ ~ " ~~  '. 

~  ~-

Tl;lis  ~.s  tb:e  fundamental  responsibility  of  the  Community  and  national 

'i  ~  .(  q :1 
; · 
autho,rg. ~ies;; 
,  J,  r·  r•  ·•  -" 
th~!  d~,~~s:i,.ons  taken  by  the  Council  of  the  Communities  and  by  the  Member 

this  responsibility  is,  it  is  true,  carried  out  by  means  of 

,-..  A  ,. 

. 

!,..; 

J  -,j  ~~ 

' 

,~  ~ ::) 

... 

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• I 

/· 

· · - 33  -

States,  but  also  by  means  of  continuous  concertation, ·as  exemplified  by 

the  Committee  of  Energy. 

It  is  also  the  responsibility  of  the  companies  which  supply  the  Community, 

As  the  Commission  has  repeatedly  declared,  it  is  consequently  appropriate 

to  associate  the  directors  of  these  companies  with  the  deliberations  of 

the  public  authorities,  by  means  of  concertation.  The  purpose  is,  by 

initiating  a  dialogue  which  will  provide  the  conditions  for  the  smooth 

evolution  of  the  views  of  all  parties  concerned,  to  preserve  - and  to  bring 

i~to __  pi~Y.  __ gradually  - a  pattern  of  behaviour  which,  while  respecting  the 

Treaty  rules,  takes  due  account  of  the  public  interest  and  the  legitimate 

aims  of  the  industry. 
It ~bhldbJJem  that,  to  ensure  that  this  concertation  fully  meets  expectatioI 
tlid  ~1ii~~;covered  should  not  be  restricted  initially,  and  that  the  system 

· s~ou~~  b~.~ept  extremely  flexible. 

The  C~mJfddion  does  not  therefore  propose  to  surround  the  system  of 

..  ~,~-

•· 

cdnc·bi-tiifein vm:h  a  rigid  legal  framework  - at  least  in  the  first  stage  - sine 
tliis11fUni  lnust  be  characterized  by  a  state  of  mind  such  that  a  genuine 
cdmmuhi!t;oil  policy  canrevelop,  gradually  and  in  a  pragmatic  manner.  The' 
ortly1 t~~Jrk  the  Commission  wishes  to  add  - and  this  does  not  exclude  other, 

cdmpl~mentary  arrangements  - is  that  the  concertation  in  view  should  take 

pfie~=i&ltae  Energy  Committee. 

Li:d  t;u 

. 

This  concertation  procedure  could  cover  the  following  main  points: 

,. 
~ ;_  .i° • J  o·  lJ  :.  ' 

( '  

.• 

,-

i  ;  :  ..  t  .>. 

:~  ~ 

(ll In  resnect  of  supplies 

-,th~(a~~Uql  forecasts  of  imports  (Regulation  1055)  and  their  progressive 

ful:f'il,f\1ent; 
::.  :  (  ,:  i:  ·,;  ; 

' 

- -~h~.f~ye~year  importing  plans  (own  resources  -

long-term  supply  contracts) 

I 

~ I  4  ,.t 

l, 

;1  " 

-

-

' 

,,;,  ,J  ,.  ,. 

.or:~~,isupply  prospects  in  general; 
~  ., 
the  tinancial  terms  of  supply; 
)  ll  ~  ;:  :~  r:  . 
the,manner  in  which  undertakings  propose  to  deal  with  possible  reductions 
l  ::  ·.  i  r:  ~; 
in.or.interruptions  of  supplies; 
)  ~: 

-.:  ·.  : 

..  ~  i':  j 

''. 

. 

'., 

.  I: 

- all ,means  of  increasing  the  security  of  supplies. 

; 

L' 

I  •  :;  ;J 

. 

-· 

(~)- !ri jrcspect  of  activities  in  ·the  Community  market 

.  j 

/· 
I 

./ 

/, 

-

1th~~iiv~stment  forecasts  and  their  progressive  fulfilment  (Regulation  1051: 
...  ..; 
th;~p;tte;n  of  distribution  over  the  various  undertakings  of  the  availablE 

..  -·' 

... 

, 

qulnfi't'iefs  of  crude  oil.'.....and  oil  products; 

·l:j~~:((! .• · 

' 

'. 

.  I 

; 

.... 

,,:.. 

t . . . . . . . .   .., 

., 

- 34.-

-

the  technical  and  financial  potential  of  the  undertakings  and  the 

essential  elements  of  their  administration; 

- all  mathoda  capable  ot  improving  equitable  competition. 

c;  The  means  of  action 

In  respect  of  oil,  the  Commission  has  no  intention  of  creating  an 

unnecessary  proliferation~of  means  of  action.  To  do  so  might  carry  the 

.• 

/ 

risk  of  making  what  is  essentially  a  mobile  situation  much  ~oo  rigid,  of 

depriving  the  economic  operators  of  the  ~ommunity  of  part  of  their 

initiative  and  capacity  for  adaptation,  ·and  of  establishing  centralized 

machinery  which  would  perhaps  be  irreconcilable.  with  the  aims  of  modern 

economic  management. 

~  ( 

t  ~  ; : J  .: 

Nevertheless,  a  Community  oil  policy  will  require  the  support  of  a  certain 

0 

number  of  means  of  action. 

1 

; 

;;  C  1  ;  ~·  .: 

i 

.J  J 

r.  :  ~ . . (  i.: 

(1)  As  regards  comnliance  with  the  rules  of  the  Treaty  and  Community 

!  [;  ~ 

;1  :  -

provisfons-in  all  matters  relating  to  competition  and,  in  particular, 

the•proolems  entailed  by  industrial  concentration • 

. ·  C  r:  .... 

. 

.  " 

(2) ·A~~;~~~rds  commercial  policy 

;;  !. 

i, 

'  ] 

A  ~9~~~~ :co~mercial  policy  is  an  obligation  laid  down  in  the  Treaty  of 

Ro~~;  5  ~h~·  Cbmmission  proposes  that  imports  and  exports  of  hyd~ocarbons  be  covered 
by'bJfm"kh~nt:surveillance  arrangements  (all  licences  granted),  based  on 
r~giif.l6tirls1 1025  and  2603,  to  ensure  rapid  information  flow.  Moreover  this 
syst~~ ¥9~1,d~:-permit,  in  periods  of  tension  or  crisis,  the  implementation  of 

s~f~~r~~n_g:measures  decided  upon  by  Community  procedures. 

• 

(3?. A~  '.r.~e~ards  the  nrice  of  petroleu:n  products 

. •'•  .,  -

One  ~f:t~e  major  difficulties  affecting  the  proper  functioning  of  the 

mark~t  and,  in  particular,  the  free  movement  of  goods  is  not  so  much  the 

.. 

I';;  . .  

differences ·:between :the  price  structures  applied  by  each  Member  State · 

< ,.  7  ;1  ~  1 

.• 

.• 

as,tlie 'differences  between  the  level.so!  these  prices. 

•· 

. 

' 
. 
.;~  ~.  ~;  -~  ~ .;  , ! 

;1 

•  ,,  :;  ,,  .1  d ;, 

.  ' 

-~  :  . 

-

M 

rT  • •   ~1 

. . . 

••  •·• 

For  this  reason  the  Commission  believes  that  the  objective  to  be  pursued 

in  this  connection  is  a  g·reater  degree  of  uniformity  (which  does  not 

. 

imply  standar.d  prices)  in  these  price  levels  rather  than  in  the  price 

structures.  This  objective  can  only  be  attained  by  successive  stages 

and  to  a  reasonable  timetable.  Consequently,  the  first  step  would  be  to 

encourage  consultations  between  the  Member  States  and  the  Commission 

before  any  fresh  decision  is  taken  to  alter  prices; 

the  second  step  would 

be  -to_  ~~~empt  to  harmonize  progressively  the  criteria  underlying  the  price 

structures  applied  to  determine  the  level  of  prices; 

the  final  step  would 

be  to  set  up  a  Community  system  based  on  transparency  and  publication  of 

prices • 

The  Cp~@iSq~on  holds  that  the  undertakings  should  be  allowed  to  fix  their 

p~ic~~~f~~~iy under  these  arrangements.  The  national  and  Community 

aut~prit~ij~.  would  be  empowered  to  intervene  only  in  the  event  of  market 

p~e~~~r~ij;which  might  result  in  movements  of  a  speculative  nature  or  if 

t4~  p~lici ipursued  is  likely  to  compromise  certain  of  the  Community's 

• 

·-· 
>·· _:_1 

;_ 

;;  ,:; 

t:;  ?·'.r 

........ 

T~i~ 1 c6£~urlity  price  system  based  on  a  detailed  knowledge  of  the  cost 

• 

atld  p~ice  elements  provided  by  the  information  network  suggested  by  the 
Co.mmi~•~e.Il  1,(see  4  A.))  would  obiige  the  undertakings  to _publish.  schedules 
ot .s~4~i~g  1prices  for  each  of  the  major  petroleum  products  and  for  the 
majo.r, ~~ID..tI)~s  of  consumption. 

Iri 'thli 1\?espect  too,  the  Commission  believes  that  the  technical  details 
o/ 1sibi~J'system  will  require  a  considerable  amount  of  reflection  to  make 
ii!  1~4rl.1£~bib,  simple  and  practicable.  As  for  the  cost  and  price  elements 
in·respect  of  petroleum  products,  the  Commission  is  waiting  for  the 
opinion \;f  the  Committee  on  Energy  and  that  of  qualified. experts,  before 
making·· izi'y  proposals  to  the  Council. 

. 
.· 

~  l:  '.~  j j  p i  'I  • J 

~  L J  ~  ~~  ii  :  1 

.• ] 

•  a. 

I 

I 

,. 

Even  if  such  imports  entail  a  degree  of  dependence  on  outside  sources- of 

supply,  they  may  nevertheless  be  more  secure  than  oil  imports,  in  that 

they  further  diversify  the  origin  of  supplies  and  their  conditions  of  supply 

offer  particular  safeguards. 

B.  The  enlargement  and  i~te,r:-ration  of  the  transuort  and  storo .. ~e  svstem  wfil 

make  it  possible  to  increase  safety  in  transport  natural  gas,  to  achieve  a 

better  covera.ge  of  the  seasonal  variations  in  the  increasing  demand  in  the 

va.rious  regions  supplied  and  to  increase  the  security  of  supply  as  a  protection 

against  the  interruption  of  deliveries  for  technical  or  polit,ical  reasons.  To 

this  end,  a  Community  rer,ulation  governing  the  gas  pipelines  could  improve  the 

economic  conditions  of  the  transport  system,  but  the  need  to  increase  considerably 

inV~ft~~-f:  ~~ transport  and  storage  facilities  will  require  special  e.tten·t;ion. 

• 

·· • •  ' 
, 
' 

J., 

~ 
1  ' 

•  ";,  ,,  -
,  ~ I 

c.  The  ontimum  economjc  use  of  natural  f':?..S  calls  for  a  certain  degree  of  regulation 
to ri_.~,  ~s.~ 1 :: ~_he  mechanism  of  the  normal  market  forces  is not,  by  itself,  adequate 
for  the  purpose. 

To  :f;}l;t.ii  :e11~i  :2the  use  of  natural  gas  in  new  thermal  power  stations  should  be  ma.de 

-

subje6t  v~;~~rangements  requiring  prior  authorization  in  order  to  keep  fuel  for 

app-lieat~i1bns·  ·where  it  is  used  to  better  advantage~  Likei·d.se  its  consumption 

in ·existihg'tftations  should  be  progressively  reduced.  Finally  it  will  be  necessary 

to  lp:rorirot!ctJ:ie  general  introduction  of  contracts'which  can  be  interrupted  in 

respec-V lofclm-ge  industrial  consumers  wishing  to  run  on  natural  gas. 

~  . · rr  5.  l 

•  r.  1  J 

Final~y,  a  1?-armonizcd  policy  of  prices  and  price  scales  at  Community  level,  of 

a  :u}i:f1ci.~n£ ;.degree  of  "transparency",  should  serve  to  ensure  that  na. tural  gas 

• 

. 

. , 

l  . 

.  ~ 

, ' 

. 

is  ut :i:l'±zed  in  conforrni ty with  the  aims  of  the  Com..'lluni ty  enere:Y  policy. 
' 

,  ,  r  t  . : ::.  r. 

. 

~  ~ ~  ~  ~ M 

-

~  ~ 

(I 

••  f;" 

l 

t  ~  .... 

Such' a  polfcy 1  necessary  in  the  medium  and  the  long  term,  would  moreover  prep:J.re 
fo; tt; i.'~~~term  energy  supply  structure: 
infrast¼~~ure  which,  by  making  the  best  of  gas  resources,  encouraees  the 

the  creation  of  an  appropriate 

eventriJ'l  1nt~oduction  of  synthetic  "natural"  gas  and  hydrogen  into  the  Community's 
ene'~d-i 'baliiirtd~. 

. .. / ... 

- 37 

Chapter  VI  - Con~lur:iions 

Two  funclamental  problems  are  posed  uhen  following  the  guidelines  no,-;  c::,tr1.hl ishecl  for 

each  ener[;Y  source,  under  the  umbrelln.  of  the  supply  objectives  set  out  in  Chapter  I: 

that  of  having  available  appropriate  policy  instruments,  and  that  of  establishing 

relationships  between  prices  in  conformity  with  these  guidelines. 

A. 

Irnol8mentin~  the  obiectives 

0 

0 

1.  To  fix  ambitious  objectives  for  the  energy  supply  of  the  Community  such  as 

have  been  outlined  above  for  the  period  up  to  1985  and  beyond,  requires  that 
the  action  be  taken,  as  was  set  out  in  detail  for  each  energy  source  above. 

Generally  speaking,  moreover,  the  Community  co.nnot  seriously  expect  to 

ach.ieye :f:lYC?h  objectives  if  it  docs  not  possess  instruments  of  persuasion 

or  support  operating  at  a  Community  level,  and  following  an  overall  strategy. 

-

,i  ·\  :,.  •  l  :  :c 

?:ha  d.Ef{a;J.o.:pment  of  the  existing  energy  sources  and  the  introduction  of  new 

sources,. to  the  extent  that  they  reinforce  the  security  of  supply,  will 

! 

. ,  

' 

( . "  

require ,cpnsidcrable  efforts. 

•  I 

.,_ 

• 

' 

• 

,. 

In  certain  fields,  in  which  the  whole  of  the 

Community  has  an  interest,  the  scale  of  the  operation  or  the  risks  involved 

p91.~Jsi~ :t~,q11:tre  Community  intervention  which  following  a  cons is tent  policy, 

would  thus  be  much  more  effective  than  scattered  individual  interventions • 

. :  :,: 

\J  ~  i 

.  r1 

t  ::  ;: 

( 

2.  This  approach  to  a  strater,y  implies  a  necessity  for  action  throughout  the 

- C t 

·, 

• 

I  1  :;  l  . .  <: 
'.'  - . ~ 

.:  -
encrgy'scctor.·  Such  action  could  for  example  involve,  the  prospecting  for, 
1: 
the  expi'oitation  of  .:md.  marketing  of  new  resources  located  inside  or  outside 
''  . 
ihe  Gonmi~~lty 1  the  participation  of  Community  firms  in  joint  ventures,  the 
:.  . 
development  of  the  necessary  infrastructure  (transport,  stocking  facilities), 

;  .  r,  :,  ::  1 

( 

,_ 

: 

. 

-

l 

·  and,.  ;r~s.~nrch  and  development,  ei thcr  into  new  ways  of  producing  energy  or  the 

, ' , • , I  

·,  !j  j 

Ii 

J' 

mo:r:e.effeG;tive  use  of  energy,  in  the  context  of  tho  need  to  protect  the 

;  . 

' •  

..  ~~  • 

I 

• 

~:n:''f~~9iyn(:}nt.  There  must  be  no  over  lapping  with  action  arising  either  from 

pqUWl~tty  law,  or  the  implementation  of  other  common  policies~ 

,- . 

. .. I ... 

3.'i'he  requisite  support  towards' ac1~ievin0  all  these  tasks  could  be  assigned 
to  a  Co:rJnu.nity  agency  having  a  legal  personality  and  financial  autonomy. 

This  organi.sation  would  operate  within  the  framework  of  the  policies  defined 

by  the  Corrnnunity  institutions,  with  the  necessary  financia.l  rne~s.  It  would 

be  under  the  control  of  the  CommisGion  and  would  be  assisted  by  a  consultative 

committee  composed  of  therepresentatives  of  the  Member  States  and  the 

interested  parties  (industry,  workers,  users  and  consumers). 

:S.  Prices 

Even  if  the  risk  is  minimal,  reoccurcnce  of  divergent,  disorganised  price 

movements  arising  from  instability  of  the  market,  cannot  be  tolerated.  They 

co1;tlfl  hi17-p.~r,the implementation  of  the  objectives  of  the  energy  policy  or 

comprowise, economic  via.bilit;.v- of  considerable investments  made  to  achieve  the 

, !  

:i 

ri 

.•J 

..  "· 

• 

objcct;ives; .. they  might  ever..:::,.;xert  these  two  effects  simultaneously.  Another 

'  . ' 

'·.  •'• 

possible  cpnsequence,  which  the  Cormnu.nity  cannot  allow  would  be  the  app0arance 

·. 

'-" 

'·  \ • .  

of  m.or~ .,o;r 1 l~Gs  rigid  barriers  between  the  markets  of  the  different  Member 
State~~ i.;·  .,  c 

: . ~  (  r  ~:  i  ,:_  ~-

It  is  therefore  necessary  to  initiate  a  searching  and  systematic  Community  study 

to  find  joint  approaches  to  the  question  .of  ene1~c;y  prices  in  General,  on  the 

rela:t1onships  between  the  prices  for  different  types  ·of  encrQT,  and.,  of  course, 

on  the  role  and  the  use  of  taxation  policy  in  the  energy  field.  This  problem 

..  ,  .. ,, 

.·  ,, 

r 

is'1unaamental:  ft  represents  one  of  the  pivotal  issues  for  a  Community 

~-

::  ( ;·  t  ;  ( ;  j_ 

plan  for  energy  supply. 

:  • . r~~~i -~  ~ 

' 

~- : .  !  -~  l  ;! 

i 

. 

~  A ~ 

( r,  ;;_ 

: ,·  :·  . 
.. 
• t  "'  ~. 
;., 
~ 

,;  ' 

r  ; 

• 

0 

- 39  -

11.mmx  I 

PROPOSAL  FOR  A  COUNCIL  DIRBCTIVE 

on  limiting  the  use  of  naturel  gas  in 

power  sto.tions 

(presented  by  the  Commission  to  the  Council) 

'. 

0 

0 

- 40  -

EXPLANATORY  ME!-:ORANDUM 

l.  The  use  of  natural  gas  in  power  stations  in  the  Community  begun 

when  large  deposits  of  natural  gas  were  discovered  in  Europe. 

2.  The  consumption  of  natural  gas  by  power  stations  is  only  justified 
whcii"far·  economic  and  technical  reo.sons  it  cannot  be  used  more  pro 
fitably  elsewhere,  or  when  there  ~s  a  gravo  supply  crisis  in  othor 

fuels  which  requires  it. 

3.  A  ramified  network  for  the  transport  and  distribution  of  natural 

.gas  has  now  been  constructed  in  the  Member  States  of  the  Community 

and  will  be  further  developed  in  the  future. 

4.  The  technical  and  economic  advantages  and  the  cle~nness  of  natur~l 

g~§  4qve,resulted  over  recent  years  in  a  constant  increase  in  demand. 
~P@~b~YffS'  market  has  become  a  sellers'  market,  and  demand  now 
exceeds  supply  capacity • 

.5.  i11cthe,  f;hort  and  medium  t.er:1·,  limitation  of  the  consumption  of  nutural 

(;g.'?:;li~:  p~wer  stations  can  make  additional  gas  available  to  satisfy 

~b~L~Xc~ps  demand  elsewhere. 

6.  1'h~;i~ctural  gas  thus-made  available  can  be  used  in  technically  and 

· ~ee.no.mically  bett~r  VEJ.:P  in  industry  and  in  the  home  ("premium  markot 11 ) 

•  -
• 
' 

,.-i 
µ 

'•  -

• 

-i-:) 

0 

( *) .:/fh~ ;11 premium  market"  in  that  which  provides  for  the  optimum  use  of 
; ;.~a~'ll:ral  gas  for  certc:,_:;n  consumers,  either  beoause  it  is  virtually 
••iridpi~cable  by  other  fuels  (  for  example,  in  the  glass  industry) 
:~o~•because  it  is  more  convenient  than  other  fuels  (domestic  uses) • 

.  .. 

.• 

, 

. 

i i  

,,.  ...... .., 

A 

il. 

r 

l. 

\ 

..J 

- 41  -

7.  Frequently  and  in  particular  in  multi-fuel  power  stations,  naturnl 
gas  can  be.replaced  by  other  fuels  without  any  large-scale  chunJ~s 

i 

• 

being  needed. 

8.  For  these  reasons,  new  conimcts  for  the  supply  of  natural  gas  to 
power  stntions  must  receive  prior  authorization  by  thb  Member 

States,  which  can  thop 

influence  the  award  of  contracts  in  such  a 

way  as  to  ensure  that  this  source  of  nnergy  is  put  to  the  most 

profitable  use. 

r 

~.  As  regards  contracts  for  the  supply  of  natural  gas  which  have  al 

ready  been  concluded  with  power  stations,  the  Member  States  should 

encourage  tho  power  station  operators  to  replace  natural  gas,  where 

jossi~le,  by  other  sources  of  energy  so  that  natural  gas  can  be  put 

io;b'etier  uses  elsewhere.  This  does  not  exclude  that  these  power 

ste1.t,ion's  should  reP.Jain  at  least  bivulent,  so  that  natural  g,3.s  can 

be  used  if  there  should  be  a  grave  supply  crisis  in  other  fuels. 
i.  )  ~ 

.]  .\  -: 

10.  Th~:vrembcr  Btates  shall  supply  the  Commission  with  the  necessary 

ihfor~nation  on  the  application  of  this  Directive  60  that  _the  Com 

miso:t:on1  can,  if  nocessa.ry,  take  steps  to  harmonize  the  a.uthorizu 

B.3n ·p!x:-ocedu.re  in  all  the  Hembar  states • 

A  ~ 

'I  • 

. ~ ( 
;  :·1,.., 

.: 
,1 
',, 

- 42  -

PROPOSAL  FOR  A  COUNCIL  DIRECTIVE 

ON  LIMITING  THE  USE  OF  NATURAL  GAS  IN  POWER  STATIONS 

THE  COUNCIL  OF  THE  EUROPEAN  COHMUNITIES 1 

Having  regard  to  the  Treaty  establishing  the  Eurapean  Economic  Com 
munity,  and  in  particular  Article  103  (4)  thereof; 

. 

. 

Having  regard  to  the  proposal  from  the  Commission; 

Having  regard  to  the  Opinion  of  the  European  Parliament; 

. Having  regard  t6  the  Opinion  of  the  Econo~ic  and  Social  Committc~; 

·wher~di•~h~  establishment  of  a  Community  energy  policy  is  one  of .the· 

objectives  which  the  Communities  have  set  themselves; 

Whereas  the  Community 1 s  security  of  energy  supplies  requires  the 

de~elopment  of  all  ito  sources  of  energy; 

~  ;:  :'..  ~  ,' 

•  l  ,: 

Where~s  n~turai  ga~  is  one  of  those  Community  sources  of  energy; 
wh~rdas  'it-:e  quantity  is  limited 

• 

0 

'Whe~ens  natural  gas  should  be  reserved  in  the  first  instance  for 
those  applications  for  which  it  can  9e  most·profitably  used; 

~  ,~ 

;.  ~A. 

•  I 

-"I 

•~ 

: 

; 

WllQre·.:lS'  ·naturru.  gas  has  great  advantages  for  certain  specific  uses; 

.;  ;i  Q  ;.  ~  •· 

. ~ 

,: 

./. 

,·,.,.., 
,.  ~  • 

I i  

.,  ' I • •  
--. 

• 
'  ' 

•• 

... 

- 43  -

Wh&ro~s.  ooneequently,  n~tu~~l  s~s  ehould  be  trans!ormed  1nto  ~loo 
trical  energy  only  where  it  cannot  be  used  fo~  other  purposes,  wterc 

there  is  a  technical  or  economic  necessityi 

Whe~oas  the  main  economic  and  technical  reasons  for  the  use  of  natur~l 

gas  in  power  sto.tions  are  the  following: 

the- quantities  of  natural  gas  available  cannot  for  the  moment  bo 

disposed  of  in  any  othor  wo.y  owing  to  the· absence  of  a  suitable 

transport  and  distribution  network; 

the  quantities  of  natural  gas  available  ~annot  ba  disposod  of  on 

the  "premium  mo.rket"  with  the  necessnry  regularity  on  account  of 

~\ijoa~p~al  variations  in  sales  which  necessitAi~- the  conclusion  of 

. 

I 

'~  :-:Ln.t:er~upti.bl.e  contructs; 

the  available  mno.ns  of  transport  cannot  be  exclusively  used  for  ~v 

-
1-,  :·1s.up;p;t.ying  the  "fremium  mnrket 11  wl'lile  a  natural  gns  distribution 
c _,i?lC~;\'fOf~  is  being  constructed;, . 

~  O&,nP~~ther  fuels  nre  available~ 

I 

• 
·, 

WheTeas:$~ecial  problems  concerning  the  protection  of  the  environment  can 

like·wise  neces:::ii tate,  in  certain  cases,  the  use  of  natural  e:as  in  power 

r1 

::.  ~  ! 

~ 

~~  ~~ 

stations; 
;.  i. 

• 

•• 

I 

•  , 

'\-lh<f:t~a~  it  is.  advisable  to  this  end  to  make  the  conclusion  of  cor.t.:::Z"lcts 

fo~ ~tht.l  supply  of  natural  gas  to  power  stations  subject  .to  govcrnn:ent 

authorisation; 
~  ... 
... 

.:  ).. 

~ 

\-lhJtEii:,.'~: it  is  necessary•  in  the  interests  oi  the  best  alloca.tion  of 
1•cd6tirbt:~  and  the  security  of  _supplies  to  preven~  the  use  of  nv.turr.,l 
gas  becoming  the  subject  of  differing  provisions  in  the  various 
· .. ; 
r. 
Memb~r  States; 

;l.  > i:  14 

· 

. '  ' 
' 

HAS  ADOPTED  THIS  DIRECTIVE: 

- 4h  -

Article  1 

.. Th~. conclusion  o!  new  eontrC\cts  and  the  extension  o!  existing  con 

trncts  for  the  supply  of  natural  gas  to_powor  stations  m~st  be  made 

subject  to  prior  nuthori~ation  by  the  authorities  of  the  M~mber 

Stntes  responsible  for  these  power  stations. 

,• 

This  nuthorizettion  may  only  u.,,··:  t;i~"'u  ;fur  contracts  which  ure  inter-
. ..  ,, 
ruptiblo  nnd  whore  the  follo'r.rin 1;' 'conditions  apply  :  :  · 

.. 

. 

. 
. 

~~he  use  of  natural  gas  in  power  stntioni  is  neoessary  for  economic  or 

~--· .. .-·· te_ch~icc.l  reasons; 

~  the  natural  gas  cannot  be  put  to  a  more  profitable  use;  ~ 

special  reasons  for  the  protection  of  the  environmel').t  .reo:u.ire  its  use • 
.Article  2 

Where:1:x:isting  contracts  for  the  supply.of  natural  gas  do  not  fulfil 
the  d6n~~~{ons  of  Article  1  (2),  M~mbe~  States  shnll  encourage  the 
Ci'.l.ncel1ation  of  such  contracts  by  mutual  ngreement  bcJ,ieen  the  con-

.  ,~  ,. 

... 

. 

Article  3 

l 

; .  ~  1 } ci 

~ 

i' 

Any  authorization  granted  by  a  Member  State  ~ur~uant  to  Article  1 
and  'anj3
· ni~nsu:i:-'~  taken  :pursuant  to  Article  2  sho.11  be  notified  ·to  tl: J 
Comr.i{;srfon:  accom:panied  by  o.  detailed  stntement  of  the  reasons  justi 

fying :..the. ~ction.  taken. 

. ('  L l 

Art:i..cle  4 

• 

0 

~,- ~  .  ''.  ·~  :: : ..  ::  ;., 

Member  .States  shall. put  into  force,  not  later  th,:m  31  December  1974 1 
the  ia~s 11  regulations  and  administrative  provision~  needed  in  ord~r 
to: ~o:mf.l!'.  ~ith  this  Directive.· 

•. ·.· 

:  • •  

: , :  

' 

•~  

'. 

• 

• 

• 

I 

\ 

: 

' 

·:  ! .. 

This  Directiv~· is  addressed  to  the  Member  States. 

Article  5 

'.;,  (!• 

i 

. -

·,  . i 

• 

- 45 

·•· 

Am1:sx  II 

• 

0 

0 

PROPOSAL  FOR  A  comrcrL  DIRECTTVE 

CONCERNING  'I'HE  RESTRICTION  OF  THE  USE  OF  PETROLEUM 

PRODUCTS  nr  PCHER  STATIO:!S 

(presented  by  the  Commission  to  the  Council) 

·-·--,--.. ,,., ....  -

EXPLANATORY  ME1t;ORANDUM 

.The  part  of  electrical  energy  produced  in  the  Community  countries  from 

petroleum  products  ro.se  from  near  lo%  in  1962  to  about  32%  in  1972. 

In 

thi~  sam~  year  several  countries  depended  on  liquid  fuels  for  more  than 

half  of  their.electricity  production. 

The  supply  of  electricity  for  most 

of  the  Member  countries  depends,  therefore,  for  an  increasing  part  on  the 

availability  of  petroleum  products. 

As  the  increase  in  the  security  of  supply  is  a  priority  objective  of  the 

Community  energy  policy,  appropriate  measures  must  be  taken  to  arrest  and 

to  reverse  this  development.  \ 

·Nuclear· energy  can  now  ensure  in  base  load  a.."ld  mid-merit  power  stations  "the 

; 

=", 

'~  ~ t· 

1; 

• 

!;  •  ,  ,  rl  n  1 l 

production  of  electricity  under  favourable  economic  conditions  as  well  ·as 
,-
t.he  securitt'  of  supply. 
-~- : .. 
fa~tor.,  l'iar!l  coal  could  provide  an  i·mportant  contribution.  For  many  of  the 

For  power  stations  with  a  lower  annual  utilization 

: < rr  ~  : 

:~ 

• ~ 

... 

• 

f 

.4 

~  ;  • 

,. 

• 

I~ 

1.  1 

,,  ::  ·• 

new  pow~r  stations  it  will  therefore  be  possible,  by  the  use  of  nuclear 
1; 
~r~:~it~~ fard  coal,  to  avoid  the  use  of  petroleum  products. 
In  order  to 
strengthen  the  security  of  supply  the  maximum  use  of  these  two  sources  of 
energy  ohouLl.d  .be  made. 

T~u~,:  .1~,: ,attached  proposal  for  a  directive  provides  for  consent  by  the 
authorities  of  the  Member  Statea  prior  to  the  construction  of·new  power 

stations  which  are  intended  to  burn  liquid  fuels.  As  a  rule,  such  authoriza-

tion  c~ _only  be  given  if the  use  of  other  fuels  cannot  be  considered  for 
e~qndrn~d ii- technical  reasons. 

I,  ,, 

.~.  t  , 
• 

.l  .,  / 

\ 
)  ; 

.  ll  11 

0 

0 

Ttltis/: thi Lc~nstruction  of  new  peak  energy  power  stations  burning  petroleum 
p:i-6du:cts tre·;g.  gas  turbine  power  stations)  may  in  some  caoes  be  appropriate. 
Tn~·  ifu~i :consumption  of  this  type  of  power  station  is,  because  of  its  low 
ari~tiaLiiti1izati~n  factor,  rela~ively  restricted. 

··/.· 

,l  ,.,  r  ~ 

'i  h •.•  : i 

0 

0 

.  . 

47-

1"· 

Some  solid  fuels,  which  arc  not  easily  inf~arr.mable  and  have  a  low  heatinc;  value 

··  need  the  addition  of  iiqu.id  ( or  gaseour.;)  fuels  to  ignite  and  maintain  the 

.corr.buction. 

In  so  far  as  the  energy  con~ribution  of  the  oil  fuels  remains 

small~  this  type  of  power  station  ma.y  also  be  authorized. 

La~t-ly-'; "certain  refining  residues  that  may  not  receive  a.  better  valorization 
in  other  applications,  may  continue  to  be  used  as  fuel  in  the  power  stations. 

In  cases  where  the  construction  of  a.n  oil-fired  power  station  is 

indicated  for  technical  and  economic  reasons,  it  is  often  possible  to 

improve  the  security  of  fuel  i::;upply  to  the  power  station  b:r  equipping 
it  with  dual-firing boilers,  using  coal  as  the  subst.itutc  f-nel.  The 
a~~~:~~\\\~~ _ of  memher  countries  will  verif;'{  in  each  cnsc  if the  power 
~:if1: ;c~,n }'e  made  du3.l  firine  (oil/coal)  and  the;v  could  possibly  make 
st
1
dual-firing  a  condition  of  authorization. 

'. 

r'. 

:1  ; 1  !  , ::  ~·, 

' 

I 

- .~ - . . , .  

I 

· 

•  1  ·'" 

,,.  Tl-ie. Me'mbor  ·states  will  furnis 

• 

· 

' 

·  h  t 

th  c 

e  ommisa 

· 

O 

1· on  the  r,eccssarv  information 

., 

~oi1

c~ilii~1g·lthc  implement in~ of  this  directive  so  that  the  Commission  can 

in  the  direction  of  a  harmonization  of  the  authorization 

: .. 

: r  :  . 

. 
I 
....  r 

, ... 

\ .  

; 

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3. 

_Q1'>jop:~'1'Crl  of n  Tln.~;~~J.  Utilir.r.~:ion  of  F:1\'.',.'t:y  Pol:t.sx 

Tho  lon;,r' tc:;,,m  objective  to  bo  1mr:::ucr.l  by  a  r.aJ~io:ne.l  Utilio:.\·~ion  of 

E,wrc;y :policy  fo i tho  olc,rin.c;- clo~ra  of tho  rn.to  o~ c;i'ot·tll  of clc~z:d  i'or 
cno:..•ey  rcn:o.tll'.'cc::, ·;nu.i  thi:-.,uc·h  the;~  -'~ho  rnto  of  ioportc/d.011::i  of thcoo 
_.:: 

rcoou:.•ccn;  trhi.::1Ft·:oulcl  cncblo  1:1,11  imp:rovor:i:n1t  in tho  cccurity of su:J.:,J.y  of 
the  Co.n~:.ml.ity.,:  ·;  · 

. 

1hia·: objoc:U vo,  c:;..T,;.•c::iccl  in  ficuro::i  uni  rolr-.tc1.  to  n  c1o·~cx-mi.1c:l  . 

po:t'iod.,. t:·ould  n~nn  n  ninir.:u:i  rc~1uo".;icn  of l~ of' tho  e.-:r,cotd  c,.•c~r,  clc::nd 
in  1985., · oth~r  thiUL":J  b:l.11.;  C<[l.w.l. 
Corcr.n.u~i-~y  c.o::i=inJDtion  of  2 r500  nD.lion  tcv,  n  policy  fo:.'  -'i;ho  co:-c  r.,:Hcr..n.l. 
utiHcr.tfo;i, o,f.  C;:t3rGy  t:oulr.l  G1.:ibJ.o  u:J  to  on.·aory,  to  tho  oce;~  clcc-:-~o, 
cnorey  c1~r.ip,;~~,  vh.ilo  ori.viri,1  250  nill:1.o:n'  foo  r.r,prox. 

Thu.~,  \teing  t,11  ~7,o·~hc:.Jio  of o. 

· 

'l'hio  cnvi.113'  t:cmlcl  1;:,  -~ho  rc::ml t  of  join-~  o.ctic:1  n:'i;  Co::::.::nmi t:t trr'..i 

t";,. 

0 

0 

cquv.l  :to,%~ :oo.tb:i:-n,~:.-Hon  of nuc).c~r  olcc-~::-;l.city  o:.."  of  ecru.. 
that  thG · l'\'.:f.iu'.t"tri  }:ouJ.c1  b:,  oMa.ir.~  o.lr.ioct  c~"h1-0i voly  in the  fil'.::';l  ccn 
OLU;lp·H-crt :o,f: 6n~i:;t.'Y  ,:c;."'a  tc!:cn  in·~o  accoim:~ •  tho  c-:icrc;y  ctficic~oy or 
trminfoj;•mn:tfoh bo:uJ3  hn::-Jly  c2.r,.:~blo  oi'  :1.r:, .. ·ovcr:~nt  in  r.mch  a  cho~~  pc:rici 
for  the  '1'fq.G0;11~  .}.-t:1icr.tccl'  in po.ra[;:,'ar,h  l  •  thio  objcc•~ii.~.'.>  :l.c  czvrc:::::c:l.  by 
nn  economy .. of.  18%  to  19%  of  fin(ll  cno!'ey  coni:.1u::piion. 

If tho  foot 

' 

( 

. . .  "  . ~-

. 

· Tho  cn.'Vil)Gil  by the  yc:u-- J.905  uill I  houovcr,  rcr,,~c:;cnt  only  o.  ;:·., :.:,~:,~, 

pho.oc'. bcoauo:e ·:tho  l'<1.tion:u  utilion:ticn  p:r;,cc:::i::i I  ~nco .. 1..'rl  c;::::-:::tio'!lp  trill 
ohou  rctul fo  en  an  illCI'C::-.:Jili_'.;  CCt".lo,  e.'11  in the  la:it  15  yc.J.:r.J  of -'i:ho 
ccn1u.:.""j  tl10 :.od.vinc;:J  chould  1):)  clo1.1blco.. 

'  '. 

I 

• 

• 

oil 

1 

- 49  -

• 

0 

o-

PROPCBAL  FOR  A  COUNCIL  DIRECTIVE 

CONCF.RNING  '11HE  IIBSTRICTI0:I  a,,  TP.E  USE  OF  PEI'R0LEUM 
....  PRODUCTS  IN  P0HE.R  s·r A'l'I CNS 

THB  COUNCIL  OF  THE  EUROPEAN  cmr:.rUNITIES, 

Having  regard  to  the  Treaty  instituting  the  European  Economic  Community, 
and  in  particular  Article  103,  paragraph  4  thereof, 

Having  regard  to  the  proposal  from  the  Commission, 

Having  regard  to  the  Opinion  of  the  European  Parliament, 

Having  regard  to  the  Opinion  of  the  Economic  and  Social  Committee, 

• 

Whereas  the  implementation  of  a  Community  energy  policy  is  one  of  the 

'b:bjC'o..'tivcs  that  the  Communities  have  set  themselves,  and  whereas  it  is  tho 

responsibility  of  the  Commission  to  propose  the  measures  to  this  end, 

WhQre~s,the  security  of  supply  is  a  priority  objective  for  the  Community 

energy  policy, 

Whereas  electricity  is  a  form  of  energy  vital  to  modern  ·society,  and 

}1;here.as;· its  contribution  plays  an  increasing  part  in  covering  the  Community's 

total  energy  requirements, 

Whereas  the  security  of  supply  of  electricity  in  the  Hember  countries  of 
:the· Gonununi ty  can  be  improved  by  limiting  the  use  of  petroleum  products  in 

:tb~ ·po.~1er  stations, 

Whereas.  electricity  can  be  produced  under  economic  conditions  from  different 

sources.of  primary  en:rgy, 

\,fn,erear;; · conventional  pm-rnr  stations  can  be  equipped  with  rr.ul ti-firins 

hoiJ:ers,  us.in,<:7  ti:·,o  or  more  fuels,  amon.c,:  them  coal, 

. . . . .   t 
.  ·.;,I 

.; 

,_ 

.. / .. 

I 

• 

I 

I 

50 

·.  ,•·• ..... 

HAS  ADOPTED  THE  PRESmIT'  DIRECTIVE: 

Article  1 

.  1. 

The  construction  of·  new  power  stations  uoing  oil  fuels  as  well  as  the  conversion 

of  existing  power  stations  for  burning  such  fuels  must  be  submitted  for  prior 

consent  by  the  authorities  of  the  Member  States  in  which  the  power  stations 

are  located. 

2. 

Authorization  can  be  granted  only  in  the  following  cases: 

- if the  power  station  has  a  small  capacity  and  is  intended  exclusively  for  O 

the  production  of  peak  energy; 

- ..... 

\,J 

-, 

i.:•  ,4•_._ 

if the  petroleum  products  serve  only  to  ignite  and  maintain  the  combustion 

• 

of  other  products  and  if  their  total  energy  contribution  remains  small; 

:1  ~ 

- if the  fuel  is  a  residual  product  that  may  not  receive  a  better valorization 
r~ 
. ,.  ir>:  p~her  applications; 

'  (  .~-t 

; 

·~ 

I. 

;._  J  ;,_,  , 

~-:  if \he  use  of  other  fuels  cannot  be  considered  for  economic  or  teclmica.l 

' ,.  t  \  l  .:.  -

ietore  granting  an  authorization  in  the  above  cases,  the  member  countries 

will- c.onfirm  whether  it  is  necessary  or  not 7  for  reasons  of  security  of 

0 

' 

• 

fue;L_  s11pply,  to  equip  the  power  station  for  dual  firinp:- 7  allowinr.;  the  use 

►  , 

cf  coal. as  the  substitute  fuel. 

The  authorities  of  memher  countries  could 

0 

possibly  make  authori7.ation  cond.i tional  upon  the  installation  of  such 

equipment. 

... 

Article  2 

' ::.  _::  J ~:  ~' 
Any  authorization  granted  by  a  Member  State  implementing  Article  l  shall  be 
:  :;  :• 
·communicated  to  the  Commission,  accompagnied  by  a  full  report  of  the  reasons 

,-1  •, 

N 

• 

jtistifjing  it. 

.· ./ .. 

I .  

0 

- 51  -

--··. .. 

, 

..... 

Article  3 

The  Member  States  shall  take  appropriate  measures,  by  the  latest  31  December 
1974,  by  way  of  law,  regulation  or  administrative  action,  in  order  to  comply 
with  this  directive  and  shall  inform  the  Commission  thereof. 

Article  4 

The  present  Directive  is  addressed  to  Member  States. 

.J 

Done  at  Brussels, 

• 

By  the  Council 

The  President 

l  i·  .:  • 

,, 

I 

i 

PROPOSAL  FOR  A  R."SCULA'I'ION  (EEC)  0~  THE  COUNCIL 

CONCERNING  THE  COMMON  RULES  FOR  11/TORTS  AND  EXPORTS  OF  HYDnOCARBONS 

(presented  by  the  Commission  to  the  Council) 

•• 

0 

..... 

J 

' 

. . 

... .  ··•· 

•.  '.' 

. ... 

----------- __ .. _ -iL...--··-·•-•'--• .. •·  -·· . ., 

- 53  -

EXPLANATORY  NENORANDUM 

1.  The  supply  policy  as  outlined  in  the  document  "Towards  a  new 

stratoey  of  energy  policy"  provides  that  forecasts  communicated  by 

the  undertakings  one  year  in  advance  will  be  used  as  a  basis  for 

· · preparing  a  supply. plan  for  the  whole  of  the  Community  in  accordance 
.'\  '  •·  . 
... ·· 

.  ,.  ~ 
with  the •objectives  of  energy  po~icy. 

. 

2 •.  In  order  to  ensure  that  this  supply  plan  is  implemented,  the 

Commission  proposes  that·crude  oil  and  refined  products  be  brought 

·under  the  existing  common.rules  for  imports  and  exports  within  the 
framework  of  the  common  commercial  policy  (l),  subject  to  a  supervisory 

·:  system,  i.e.  the  automatic  award  of  an  import  or  export  certificate. 

", 

. 

• • •  ' . . . . . .  

:  · 3.  ·  Information  concerning  imports  and  exports  carried  out  is  centralized 
.  ft .p9~ununity  l~vel  pursuant  to  Regulation  (EEC)  No.  1055/72  concernine 
:  . :  .. =· __ ~:q~rf,¥  policy  already  adopted  and  its  proposed  extension  to  cover  exports 

..  j ,  

_. 

·.  _ fQ9~f~ing  to  which  undertakings  must  corr..municate  t~e  quantities  actu?,lly 
-~If~pr~od  and  exported  over  each  period  of  six  months.  If the  Commission· 

considers  that  this  information  suffices,  it  may  forgo  the  information 

~:r:ov!~ed  for  in the~_Regulations  governing  commercial  policy. 

1, 

~~  A  • '   A 

4,..  The  consul tat ions  provided  for  in  these  Regulations  will  take  place  · 
;,n  .t~~  Energy· ·committee  which  can  assess  them  in the  light  of  the 
. <?.\Je~t,.ives  of  the  energy  policy  with  the  assistance  of  experts  in  the  field 

of  commercial  policy. 

0 

.. 

• 

(l)-

I 
' 

. 

11 :~ l  

. 
' , I   R~gulation  "(EEC)  No.  1025/70  of  the  Council  of  25  May,·  1970 

::  : · 
es_tablishing  common  rules  for  imports  from  non-member  countries 
t ·  - Regulation  (EEC)  Uo.  109/70  of  the  Council  of  19  December  1969 
. L·;  ·\  :,  :1

·,  establishing  common  rules  for  imports  from  state-trading  countries 

~ 1 ;','~- Regulation  (EEC) ·No.  260_3/69  of  the  Council  of  20  December  1969 

establishing  common  rules  for  exports 

----------- -------··. 

·•.··- ·---- -···-. -·--··•- --------···------ •-····--- ...... _.., ............. , ... . 

54 

5.  The  safeguard  measures  provided  for  iri  the  ab~vementioned  ree;ulations 
could  be  applied,  where  necessary,  if the  security  of  supplies  to  the  Community 

were  threatened  by  conditions  affecting  the  development  of  trade  with  the 

non-member  countries. 

..  ' 

5  L:  ·,  {: 

t  ~ L I  c 

•·  ,1 : 
~p  ')X;)L·(r 
::- - h :1  1 e ~  i  c 

. . 

0 

0 

,, 

' '  . 

.. 

..  0 
' 

- 55  -

PROPOSAL  FOR  A  REGULATION  (EEC)  OF  THE 

COUNCIL  CONC:!:."'ill.TING  THE  COMMON  RULES  FOR 

. 
IMPORTS  JJTT)  .,,..XPORTS  OF  lIYDROCA..-qBQ:NS 

THE  COUJWIL  OF  THE  EUROPEAN  COKMUUITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic  Community 
and,  in  particular,  Article  113  thereof; 

Having  regard  to  Regulation  (EEc)' No.  1025/70  (l)  of  the  Council  of  25  J,;a.y, 

197o·establishing  common  rules  for  imports  from  non-member  countries  and, 

in  particular,  Articles  2  and  7  (2)  thereof; 

Having  regard  to  Regulation  (EEC)  no.  109/70  ( 2)  of  the  Council  of  19  Dec 
ember,  1969 1  establishing  common  rules  for  imports  from  state-trading 
countries  and,  in  particular  Article  2  thereof; 

2-Qth .. D.eccmber  1969  establishing  common  rules  for  exports  and,  in  particular, 

\ 

.. 

-

f. 

.1 

• 

' 

Article.  10  thereof; 

., 

.-! 

,  : 

I, 

~ 

i  . 

• 

,  Ha.y;~~~;tegard  td  the  proposal  from  the  Commission; 

~ay!~g r~gard  to  the  Opinon  of  the  European  Parliament; 

Wp_e1:~a}S: the  introduction  of  a  common  energy  policy  is  one  of  the  objectives 

·.o;f,·~l,f:;  Q<:>mmunities, 

'(l~ ;,  0,.J.  No.  L  124 1  8.6.1970,  p.6 
( i) ::  9. J .,  No.  L  19 ,  2 6. 1. 107 0,  p .1 
(3)  O.J.  No.  L  324,27.12.1969,  p.25 

' 

' 

-~ · - · - .. -.J . . . . . . .  ___  - - - - - - - - - - - -

' 

Whereas  the  system  of  imports  and  exports  of  hydrocarbons  must  be 

harmonized  in  order  to  implement  the  common  commercial  policy  and 

the  common  energy  policy; 

·:Whereas  it  is  appropriate  that  the  Energy  Cornmi ttee  set  up  by  the  Council 
. De-c-ision:  of_  30  January,  1974,  should  carry  out  the  duties  of  the  Advisory 
Committees  provided  for  in  the  abovementioned  Regulations,  as  regards 

hydrocarbons; 

Whereas  it  is  appropriate  to  subject  imports  and  exports  of  hydrocarbons, 0 
because  of  their  importance  in terms  of  the  Community's  energy  supplien, 

to  the  Community  supervision  in  the  form  of  the  automatic  award  of  import  or 

• ex:p.o;rt. certificates; 

• 

ll 

.,  t,,..  · 

1 

• 

.:. 

lJl?-er~~~,regulation  (EEC)  No.  1055/72  of  the  Council  normally  ensures  the 
centralization  of  information  concerning  imports  of  hydrocarbons  in  each 

. si~-.month  period  and  forecasts  of  imports  for  the  following  year; 
. 

---

~ 

~ 

. . . 

,. 

. 

. , 

, (  

••  "'  .. 

I'  I 

u  ~  ,J 

W~e.reas,it  is  essential  to  extend  the  field  of  application  of  the  supervisory 
a:Qd  sa.f e-guard  measures  provided  for  by. Regulations  (EEC)  Uos.  1025/7.0  , 
109/70  and  2603/69  if the  security  of  supplies  to  the  Community  are  threatened 
... ?~::CO~ditons  affecting  the  development  of  trade  with  the-non-member  count-sj 

.._  >-, 

~ • 

-

..... ,...,.  ·, 

,1  • \   , .   •• 

. . . .  

:  4 

HAS  -ADOPTED  THIS  RECULATIOU: 

«. 

,J 

A  ~. 

Article  1 

The  common  rules  for  imports  and  exports  shall  be  applied  to 

!if~p9~rbons  in  accordance  with  the  following  procedures. 

\ 

:; 

. 

. 
. 
(;  ~ '::  ·i  ,:  ::  '.' 

i;  ,,  ), 

,t 

... 

------- ---·-~------· --

. '· 

.  .. 

• I 

'  .. '.  :'  -

·o  .-.:·· 

.  • .. • 

.·,·: .. 

: 

57 

·.  '·, 

. .  ! .'. _.,  . 

Article  2 

.  ,:,, 

·••f 

•  • ·. 

.  . 

•  ~  ;_.• 

. I 

•~ 

. 

'.'  ·  1. 

The  products  listed  in  the  Annex  to  this  Regulation  shall  be 

included  in  the  lists  in  Annex  I  to  Regulation  (EEC)  No.  1025/70  and 

in the  Annex  to  Regulation  (EEC)  No.  109/70. 

: · 2.  ·.· 

: The  products·  fal1ing  under  sub--;headings  27 .09  and  27. 10  of  the 

.CCT  shall  be  deleted  from  the  list  annexed  to  Regulation  (EEC)  No.  2603/69. 

·· •. · . . ,:_ 

,· 

I 

Article  3 

.The  Enerey  Committee  set  up  by  the  Council  Decision  of  30  January 

. '1974.shall  ca:rry  out  the  duties  of  the  Committees  provided  for  in  the 

t 

Regulations  referred  to  in  Article  2,  as  regards  the  products  listed  in  the 

· ~-~ 

•"~•Annex  to  this  Regulation. 

,· ... •. 

.. ·,  I  .:•r ,~  1  ; 

'.,: 

Article  4 

,·  . 

Impqrts  and  exports  of  the  products  listed  in  the  Annex  shall  be 

.·  . ~  &,"l;lb~-9~t:  ~o  the.Community  supervision  provided  for  in  the  Regulations  referred 

~ 

to  in  Article  2. 

• 

'  . 

'  The  Commission  may  forgo  the  information  that  the  Jfomber  States  must 

'.furnish  for  the  purposes  of  Community  supervision  in  so far  as .the  Commission 

c9}lsiders  that  the  information  received  from  the  l.fomber  States  pursuant  to 

. . 
. 

.. 

. 

.  . 

(1) 

...  · ~9~~~ti,on  (EEC)  No.  1055/72 

••••••• and  No ••••••••••  suffices • 

. ' 

.. 
. ' • .  

. .  .  . 
... 

. 

,,, 

Article  5 

The  safeguard  measures  provided  for  by  the  Regulations  referred  to 

...  i.  · 

in /,rticle  2  may  also  b<.~./taken  in  respect  of  the  products  listed  in  :the  Annex 
·. i .  ~: 
:  tq ,t!i~s  Regulation  if they  are  justified  on  the  grounds  of  ensuring  thP. 
··  · ~~curi 'liY  of  energy  supplies  to  the  Cor.ununi ty • 

.. 

' 

.- ,.. 

,: 

, .  .:. 

-,  ~· 

~  ....  # I , ,~   ..... 

---

. 

' .. 

_.  58  -

Article  6 

This  Regulation  shall  enter  into  force  on  ............ 

;  ·., This  Regulation  shall  be  binding._in  its  entirety  and 

..  .,  ,  ·. directly  applicable  in  all  Member  States. 

:. 

Done  at- Brussels, ••• 

For  the  Council 

The  President 

,, 

0 

0 

'  : 

- 59  -

ANNEX 

. ,· 

.· .. -

. ' . 

.  . 
, 
l.••· 

Petroleum  oils  and  oils  obtained  from  bituminous 

minerals,  crude 

Petroleum  oils  and  oils  obtained  from  bituminous 

minerals,  other  than  crude;  preparations  not  elsewhere 
specified  or  included,  containing  not  less  than  70% 
by  t1eieht  of  petroleum  oils  or .of  oils  obtained  from 

·:  bituminous  minerals,  these  oils  being  the  basic 

c_onsti tutents  of  the  preparations i 

Petroleum  gases  and  other  gaseous  hydrocarbons • 

- r  - - -

. • •A~   -

·,  ~ .....  ' 

. o-· 

.  ' 

... __ _ 

.......... 

t 

. 

.•.  i 
· . 

•., 

.. 

. , 

• 

,·4  • ••  · - • 

. .  •. 

0 

! 

t-

- 60  -

ANNEXE  IV 

Communication  from  'fhe  Com.mission  to  the  Counci;J. 

regardi~g  . . 

RATIOli.11.L  ur.rIL:'.:SNI'I01:  OP  B:r~~'JY 

-------

• 

1. 

}fatm·e  oi'  the  Pro·clem 
-----·-·--

Awnrc.noss  of  the  shortnge  of rr.w  materials,  including  certain 

cneri:t  resources,  and  thl)  of'ten-o.bu:;~d  utilir;ation  thereof 1  has  lo1  the 
Co::u:nission  to  cx:~rnino  ·the  problem  of  tho  na.-bional  Utilisr..tion  of Energy 

• 

during  the  pust  t,-,o  years  (  see  CEC  11Heccss~ry  Pro{;i-e:::s  in  Co1,1.::nmi by 
a.orgy  Poli~y  of 13th  Octobar,  1972). 

:i;y  the_  terra  "moro  ::.."ational  utilisation  of  energy",  the  Coz..!j\isoion 

~  r·  # •  

ur.clcrst~.r.ds  tho  reduction  of  tho  cncrc;t  input  for  th~  o.:imo·  level  of 

output  of useful  energy. 

encr{!,Y  :snot  intended;  thi3  energy  being  necocs~ry  for  econonic  and 

Thuo  the  reduction  of tho  utilisation  of useful 
.... 
On  the  contrary,  our  concern  b 

,-lith  the  better uce 

social  dovclopmont. 

-., 

of  available  er.cr{;'J. 
!;  -~  Ll 

."'  ? 

(  ; 

.  The  problem  should  be  treated  in  a.  pra.smo.tic  f.:..shion  and  l>y  a.  dual 

approach. 
•;  ::: 

:> 

~,  :  ::  :. 

l.1  !  !.: 
On  the  one  hand,  it  ccncerna  the  increasa  in  tho  specific 
;_  •t  (  ;:  I 

;  . (  ; 

;  ,  ~  ::<  ~f, 

efficiency  of  encrc:;r  in  the  lcno,-m  toch...-iologieo;  im:r>roiremont  of  the 
procudm·c~  ~n  ~s~;  and  I!',odification  or  the  co:isumption  r.truct-.iro.  On  the 
other  h~14'°  _t]1~ .,,wastof'ul  consumption  of  energy  should  bo  limited:  ·-oy  a 
. 
better  control  of  tho  procedures  of utilis~tion. 

;  ·,.  ' 

'  J  •'•  ~. 

.]  ·. 

~ 

.~. 

'-

}~ 

~ i  l.  1 C ~ 

.1Tm-,  pr9co(lures  or  structures  reducin,1  cncr{;Y  losses  inherent  in 
~~;(;.; 

~ 

. 

technolop.e:~  ~p:i;>lied  at  the  present  time  (  Car-ilct  cycle;  I.fotoro  Otto/ 

. 

) . 

l• 

'  ~. 

.. 

.. -. 

Diesel)  Ghci;ld. ~~ developed:·  this  is  tho  field  of  Rcsc~i.~ch  and  :Vcvclopm~nt, 

.; 

(.  . .   J., ,. 

,:hich  is  dealt  with  by  tho  :.ppropri::..tc  body  ( CRES'r) • 

. \ ·,  :::  L 'l  ;;  '.:  -, 

:• 

i.'nl~ ;p.rQbl~m  of  tho  r.~tion"-1  tJtiliriatio:r.  of Dnercr  in:::ofo.r  t?.s  it  is 
dofinl.}cl  docici·  :rw~ · aim  a.-~  a  mor'l  a.1.cquato  ~,lloti:::-.o?.t  of  cn0rQ  r~aoui•c,~~  or 
their  v;w.ortcation  on  the  spot, thcr::o  boine  outsido  the  cconomic-tochnoiot,i-

;  ·:  ... :. 

~  ( 

:  t] 

1 

• 

I 

~-

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' 

c:.i.l  fr.:ut~~-,6r-;~.; ~f ;the  incrcaso  of  em,rg;J  effici~ncy  in  tho  commr.:ption  of 

! .. \  ~ 

l  :. 

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- 61 

... 

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2. 

.t.t1~'J  o:~ ..  n .. JJ:'.)~.tc;y  rn  th"  P..'."..t1.c-:."'".'l  TTt:l.1:i.r.2.t.ic::1  m?  ~-:,:i."':'f 

.......................... ~~~~ .. ._.___..,....-.: __ __._ ..... ...__.........__...., 
AJ:~h.~t.:;~  c::c,rDY  r.::r:cl.U'coa  o-Z  td.1:::i:;,-,2.l  o:·iciu  c.:-.l  lici tc~1.:,  b 
tlloil'" 
o.iffcr.::Jt  l~-J□ o  thoil"  r~t.:i.o::-~n.l  uc::)  io  1~'.:'.,cc □ c~::'f O  in o.  c:::2::.:.'~  i:::,.:r.::;r"  by 
'1-ir·tuo  o:?  cm•  :i:-o::.r,-:::::::nibi:H·ty  u"'l tb rce,'<:.:•1  to  t!1.()  m~:;;;!~j  o:?  !:.:.~-1  c::,.,tc:-1.cln 
ful'  futlt"t'O  c(:no:rr.tio:.W  r:=-1  cwpcoi~lly  n.,~::,,  tho  poin-""  cz  vio:1  of!  ,:o::.~11. 
C"Jli(lc:.•:.i.-ty O  .:~::l  th".l  yrotcc·~ic:1 of  th:::>  CJ.l7isc--2cnt. 

~  ·- ......... 

. 

tbio  f-lo1d~  c.:J.~o  (.)lc:-.:-ly  u:.-n~ficicc.t 0  c::1  cv:;::i  o:p:,~::::-1  to  tllo  l'".:::-,Hc::tic11. 
:C:::r::..!-:.3  n  po:::·ic:1  oz  1011  pric:::1  c:..:c:-:_:11J  C'.J  hi  t:i.:i  l>"S~~o~ 
o:l  i.n:.::,h  e>,  rJolicy. 
c:::.o-:£:e'J  co~⇒ticn c-:.y  b:>  t:r~ir..:.11ctc1  t:>  ·the  c.1otr·it'.~:::.t  o?  ~.tn  r-:.:.:ti.c::..?.l  u.-::::tt 
in  e,?ito  of t!1:)  l:!.Di"i:c:tic!l  o-Z  !'or.::.u:rcoo • 
po:-..~ic:1 '6-2  I\:tc;1:.,j:Hc~:l  c:.;.::.:~!'C"J  tha:l;  cll e::~:::10:-,3  cr,o  c'ble  to cftp·~  t!l  r-.~".1 
r:::-.:rl:c-'G  ·c:i~~j:~i-c·::.3  {  -fo~"'  c~:~r:,lo0 . le.ck  0'1  et1fficic::.1·~  iclc~::-:~:lc11~  1:ic.!.clity 
oz  ntr-t;.0-'.:ttt-o:::i  ot6.) 

.  . '.  1:  1  .  ,:  :.  ~ 

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infon'.'.l'liion,  ui t11  o.  v"ic.:1  to  in-tcz-c::rl;in[:  the  lro\10  ~oo  of 
energy  con:n.u:o:.."'3  co  t-:cll  e.o  tho  r:i.--oci.uccro  D.!'..d.  clich"'i bu-tc~o 
run  to  p:..--opro>o  ~-tl  ti.ovolop . tho  co~curco  or  ·~ho  publio 
authori·~:l.co l  c:-,:p~i::...'1[;-0  of  info:r:::1-tion  bo-tuecn  tho  iu:'ccrc~·~c1 
r,o.rtioo,  not!l.bly  bo·t1:ccn  tho  cc:t'V:l.cc'.J  concc:::-i~o-1  or  tho 
public  <-:utho:i."'i".;ico  oi tho Mctibcr  Stc:tcs; 

,·, 
I , 

c'lircot  o.cticn::  of tho  rn.tl)lic  o.wtho., .. i-'cico,  c9vc!'in~  the  ro:-~ 
Of  aid  or  of  qozi..'Jt!.•~in-~  (Dl~t::rtion of  tho  t>.~~9lica·~io11  et-· 

.  ~ 

.. y~l_9:z;."l;i.'?J:"y  t:.~~!7 ... 1I'CO  r!Otu.bly  for  01~ c-~~r: bu:l.luin;:;:s  c.:,::~ . 
..,  ~ focnoj  t~ f~~ilitic:11>  c1100"'.;io:u  ot oblic::,t-:>r-J  t:.:.::;::.:;  c.-2;., 

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. Boi~3 coVd-6ci Lit\ Ca  q)CO~.i.'io  J:!'l:;':!or  by  en  o.ppl"vl)!'i~to  b=:.1y  ( (::15~.':- ~ 
uill ~o·t  b6 ~i:-i:.:6:1  into  cc:1oidcr~tic:1  in thio  dom"..!':.:nt. 

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c~i.co ~:°l;iQ,t\-!Q"n  c.liffo:-~:-:r~  c~ncurco  clopc-r,1:,  on  t:~:.>  to2.1.G:rir:::::  r-· 
tho .ic.!,:lQl~i;r:.:.19-0  of  tba  c:t-'caiu~bla  cc~::~::lY  (  r~cluotic.:l ·cz  ?.:,~c:::;) 
rolrrti9:.. .;t9. :ito  coot  ( invoc·tn.o·~a  to  bet  rr-1ort::~:c::l} ~ 

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- tho  1!2:tv..r-:i  01  the  C:)°thctl  to "bo  t1:::cd  (f'l07.ibility11  vc:::oib:i.J::.'..·~-:· 

CO!ltl"·Ol \;~~:: i 

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0~ C,._i= ➔ :t.,~,:i'~i-;, • ..,.,,.  C:::l  co~-,...,·r'!•r-~··ic::1  o--:"  C,.U  1:••·',11H"'--::J  {O  c-'·•··· 
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r;;::.tc:..~c-lc1  ·ct~C~1-Gt:,',~  proco=:c:c3  lifo c-2  v~~~:l;  c:..:':i.~~:J  e: 
or ~f~dh'hio :i :· 
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C 

~~".J!'fel.r-tr-~,;j~=  rcc':.l'..,'0-:Y  of t'C~i1ur.1  hoo.to  c~il'':''~ · r~-:~.:.~-~-~r :. ~ 

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I 
. ·/ .. 

- 63  -

The  achievcr:iont  of  Community  Policy 
A  first  stage  for  establishing  a  policy  for  the  rational  use  of 

energy  consists  of: 

- defining  priorities  in  each  sector  so  as  to  permit  an  action  programme 
to  be  started; 

indicating  exactly  the  methods  and  means  of  action  and  the  time  scale 

-
v1i thin  which  they  should  be  developed  and  put  into  effect; 

- calculating  estimated  economic  balances  showing  the  effects  of  the 
proposed  actions. 

The  Energy  Committee,  at  the  Commission's  insistence,  has  set  up 

a  group  of  national  experts  responsible  for  helping  the  Commission  with 
this  first  stage. 

Based  on  the  conclusions  of  this  group  of  experts,  which  should  be 
ready.for  presentation  by  the  end  of  July,  the  Commission  will  subsequently 
£ormulate  it's  proposals  for  transmission  to  the  Council. 

•. 

! ..  ~. 

~ 

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