Proposal for a COUNCIL DECISION Concerning the Organisation of Cooperation Around Agreed Community Energy Objectives
Date: 1996-10-04
Institutions: European Commission
Subjects: EU policy, approximation of policies, cooperation policy, energy policy, single market

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels, 04.10 1996 
COM(96)431  final 

96/0218 (CNS) 

Proposal  for  a 

COUNCIL  DECISION 

Concerning 
the Organisation  of Cooperation Around Agreed  Community  Energy Objecti 

ves 

(presented  by the  Commission) 

Explanatory  Memorandum 

1. 

2. 

3. 

Introduction 

Energy  has always  played  an  important  role  in  the development  of  the  Community;  indeed 
two  out  of  the  three  founding  Treaties  of  the  Community  focused  on  energy.  The  vital 
importance  of  energy  for  the  economic  and  social  well-being  and  security  of  a  modern 
industrialised  economy  was  brought  home  again  by  the  two  oil  shocks  in  1973/74  and 
1979/80 which had far reaching  structural economic effects  particularly on the energy  sectors 
of  the Member  States.  Measures  to  ensure  a  coordinated  response  to external  shocks  were 
put  in place and  there was  a greater  cooperation  on  energy  matters at Community  level but 
the  failure  to  establish  a  comprehensive  Community  energy  policy  resulted  in  each  of  the 
Member  States  adopting  its  own  solutions  to  its  energy  supply  and  demand  situation.  The 
Community  is  still  living  with  this  situation  in  the  energy  sector  and  it  still  has  to  be 
reconciled  with  advances  in  the political  and  economic  integration  of  the  Community. 

Policy Developments 

A number of developments in the Community,  as well as external forces such as globalisation 
of  the world  economy  deserve particular  attention  in  an  evaluation  of  the present  situation 
with respect to a Community  energy policy.  In the mid-1980's,  the Community  through  the 
Single Act  set about  the creation  of a vast  single  market in  which  energy  must be  included. 
Indeed,  the  establishment  of  an  internal  energy  market  and  its  smooth  functioning  is  an 
essential  element  for  the  success  of  the  internal  market  and  for  the  attainment  of  the 
Community's  general  economic  objectives. 

More  recently,  the  Treaty  of  the  European  Union  (TEU)  gave  new  responsibilities  to  the 
Community  of  which  the objective  of  greater  economic  and political  union  and  in  particular 
the establishment  of Economic  and  Monetary  Union  (EMU)  is of particular  importance.  In 
the process of  economic convergence  which  is essential  for  achieving  EMU,  energy,  due to 
its  strategic  nature and  indispensable  character  for  economic  growth  and  welfare,  will  need 
to play an important role.  The TEU also recognised that environmental considerations which 
had  emerged  at  the  top  of  the  political  agenda  in  response  to  increasing  concerns  of  the 
general  public  need  to  be  integrated  into  the  economic  and  social  development  of  the 
Community.  Energy,  which  is a key  factor  in  the achievement  of  sustainable  development, 
cannot  be treated  as a  residual  if all  the environmental  challenges both  local and  global  are 
to  be  met.  As  regards  the  contribution  energy  can  make  to  the  Community's  overall 
competitiveness,  the Treaty,  in particular  Article  130(3), enables the Community  to propose 
measures that will contribute to supporting the competitiveness of the Community's  industry. 
This  provision,  particularly  in  view  of  the  proper  working  of  the  Community's  internal 
energy market, has important implications for the design and implementation of a Community 
energy  policy  framework. 

4. 

Finally,  the Community  is developing in a world  that is becoming  more and more interlinked 
and interdependent, particularly  after  the end of the cold war.  The Community has developed 
important  international  responsibilities,  particularly  through  its  network  of  bilateral  and 
multilateral  agreements.  Nevertheless,  it needs to give more attention  to the energy  aspect of 

1 

its external relations if it is to find solutions to problems stemming from  its large and growing 
external  energy  dependency  and  the  fact  that  many  energy  issues,  particularly  those  related 
to the environment,  have an  international  dimension. 

Justification  for Proposal 

In this context the Commission  felt  that it was necessary,  and  urgent,  to relaunch  the debate 
on  the possible future  shape of  a  Community  Energy  Policy.  The publication  of  the  Green 
launched  an 
Paper  "For  A  European  Union  Energy  Policy"  at  the  beginning  of  1995 
intensive debate with all concerned  actors in the energy  sector,  other Community  Institutions 
and  the  Member  States  on  this  subject.  On  the  basis  of  the  results  of 
this  debate,  the 
Commission  adopted  the  White  Paper  "An  Energy  Policy  for  the  European  Union"  on  13 
December  1995  which  represents  an  important  milestone  in  the  development  of  an  energy 
policy  framework  at  the  Community  level.  This  White  Paper  presents  the  Commission's 
views on how energy policy  at the Community  level  should  develop.  The White Paper  sets 
out  detailed  arguments  on  why  putting  in  place  a  Community energy  policy  framework  is 
necessary  if  overall  Community  objectives  are  to  be  achieved.  The  aims  of  the  attached 
proposal is to set out broadly-based  Community  energy  objectives,  to establish  a  framework 
for  cooperation  around  these  agreed  energy  objectives.  This  position  is  supported  by  the 
Resolution  of  the Energy  Council  of  7 May  1996 on  the White Paper  which  "considers  that 
the agreed common energy objectives  identified  in the Resolution on the Green Paper  should 
be implemented  at Community  level and  invites  the Commission  to put  in place a process of 
cooperation  between  the Community  and  Member  States in order  to ensure that  Community 
and  national  energy  policies  are compatible  with  these  objectives". 

Arguments for a more coherent approach  to energy policy at the Community  level  were also 
advanced  in  the  Commission's  report  to  the IGC  on  Civil  Protection,  Tourism  and  Energy 
(SEC(96)496  final).  This  report  underlined  the  need  for  a  better  utilisation  of  existing 
instruments  in the energy  sector  so as to ensure overall  coherence.  It indicated  that it is not 
asking for new powers but that in its view either a consolidation of existing legal bases in the 
Treaties in  a single chapter  or  an Energy  Chapter  in  the Treaty  could  be  ways of  achieving 
this end. 

In the past,  Community  energy  policy  initiatives  set  sectoral  objectives  for  the  Community. 
Such  objectives  quite  correctly  reflected  the  concerns  of  the  period,  in  particular  over-
dependence  on  one  fuel  source  and  it  became  clear  that  such  objectives  were  of  limited 
usefulness  as  they  were  soon  overtaken  by  events.  Moreover,  such  objectives  while  they 
fostered  increasing  cooperation  at  Community  level  based  on  a  growing  interdependence, 
were not  fashioned  to respond  to the increasing  economic  integration  of  the  Member  States 
and  the  need  for,  in  many  instances,  a  Community  response  to  energy  issues  that  were 
constantly  evolving. 

Proposed Action 

A  key  element  of  this proposal  is  the  establishment  of  a  list  of  agreed  Community  energy 
objectives.  On  the  basis  of  past  experience,  it  would  be  inappropriate  to  establish  rigid 
sectoral  energy  objectives;  the  focus  should  be  more  on  the  energy  cooperation  policy 
process.  The aim is not to put national energy policies into a Community  straightjacket  but 

rather  to  ensure  that  national  energy  policies  and  measures  are  consistent  with  agreed 
Community  energy  objectives.  The  energy  sectors  of  the Member  States  will  continue  to 
reflect  resource endowment,  policy  choices and  social and  economic conditions,  indeed  this 
diversity  can be seen as a strength  but it  must be consistent with internal  market obligations, 
environmental  goals etc.  that are defined  in  common  at  Community  level. 

9. 

A list  of  energy  objectives  based  on  the White  Paper  "An  Energy  Policy  for  the  European 
Union"  is  set out  in  the draft  decision  establishing  a  Community  energy  policy  framework. 
This  list  of  objectives  sets  out  broad  general  policy  guidelines  covering,  inter  alia, 
competitiveness,  environmental  protection,  security of  supply,  external energy  relations and 
the promotion of energy efficiency  and renewables which have been periodically endorsed by 
the  Member  States,  and  most  recently  in  the  Council  Resolution  on  the White  Paper  at  the 
May 7 Energy  Council.  Mention is also made of the major  Community instruments  that can 
contribute  to the achievement  of  these  objectives. 

10.  Quantitative targets were considered  for energy efficiency  and renewables but in spite of their 
attractiveness  there  were  sound  reasons  for  not  adopting  such  firm  objectives.  As  regards 
energy  efficiency  this represents  one  of  the  most  cost  effective  and  environmentally  benign 
energy  "resources" available.  In the  1970's and  1980's the Community benefited  from  major 
energy  savings, particularly  in the industrial  sector,  where following  the oil shocks structural 
changes  and  rising  fuel  prices  prompted  industries  to develop and  implement  more  efficient 
process  techniques.  However,  it  is  difficult  to  establish  a  precise  policy  indicator  which 
encapsulates efficiency  gains in a  single figure  for  the Community.  Traditional  measures of 
energy  efficiency,  energy  intensity  indicators,  can vary considerably  due to shifts  in cyclical 
economic  activity  and,  it  is  also  difficult  to  identify  efficiency  gains  resulting  from  public 
policy changes (fiscal,  regulatory,  incentive) from  those resulting from  advancing technology 
and  capital  stock replacement  particularly  in  the power generation  sector.  Energy  efficiency 
gains also vary  substantially  across sectors.  For  these reasons it was thought best not to set 
a precise quantitative target  for  energy  efficiency.  The focus  of policy  should  be on how to 
achieve  regular  and  cost  effective  efficiency  improvements  and  this  message is  reflected  in 
the objective  on energy  efficiency. 

11. 

Particular  attention  has  been  given  to  the  objective  of  new  and  renewable  energies.  It  is 
recognised that these innovative energy  sources need a kickstart through public sector support 
in order to gain  market acceptance and their commercialisation  so that subsequently  they can 
enhance  the  Community's  competitiveness,  create jobs,  reduce  reliance  on  external  energy 
sources and improve the environment.  The analysis presented by  "European Energy in 2020: 
A  Scenario  Approach"  shows  that  in  the  EU  the use of  renewables  is currently  quite low  -
+1-5%  of  primary  energy  production  in  the  EU  -  compared  to  other  parts  of  the  world. 
There  is  therefore  scope  for  increasing  this  share.  Although  in  the  medium  term  the 
challenge will be to realise the potential of renewables in the face of very attractive fossil  fuel 
costs.  The  Madrid  declaration  on  the  promotion  of  renewable  energies  indicated  that  a 
renewables  could  account  for  15% of primary  energy  production  by  the year 2010 provided 
appropriate  policies  are pursued  and  so could  provide  a useful  benchmark.  In  this  context, 
it  seems  worthwhile  establishing  an  ambitious  global  Community  objective  for  renewables 
which  could  be inspired  by  this  declaration. 

12. 

13. 

14. 

In  order  to  achieve  the  agreed  energy  objectives  the  Commission  will  monitor  how 
Community  energy actions have contributed  to supporting  measures  taken in Member  States 
and how this contributes to achieving agreed  objectives.  This would be done on the basis of 
Commission  reports  which  would  examine  to  what  extent  national  energy  policies  and 
Community  policies  are consistent  with  each  other.  The  reports  would  be  submitted  to  the 
Council  and  provide  the  basis  for  an  in-depth  examination  of  energy  developments  in  the 
In  order  to  assist  the  Commission  in  this  task  a  Committee 
Union  at  Ministerial  level. 
consisting  of  Member  States  representatives  will  be  established. 
In  such  a  framework  of 
policy  cooperation,  Community  and  national  energy  measures  can  be  given  the  necessary 
transparency  so that  Member  States energy  choices can be  reconciled. 

The establishment of an energy  cooperation  framework  around  agreed  energy objectives  will 
facilitate  the implementation  of certain  Community  energy  policy  actions.  The  Commission 
will seek to ensure that the Community's  energy  measures are compatible with  these agreed 
objectives  and in  support  of  measures  taken  in Member  States.  Member  States  will  be  able 
to ensure that  the energy  choices  they  have  made and  the priorities  they  have established  in 
their  own  energy  sectors  are compatible  with  the agreed  Community  objectives. 

This  framework  will  provide  for  continuing  work  in  the  energy  field  which  currently 
underpins discussions and evaluation of energy policy development in the Member  States and 
the  Community.  The  Council  Resolutions  on  the  White  and  Green  Papers  regarding  the 
development  of  Community  methods  of  analysis  point  to  the  need  for  taking  a  long-term 
cooperative approach  with Member  States,  industry and research  centres in order  to promote 
exchanges  of  information  and  experience,  to  identify  issues  of  Community  concern  and  to 
transfer  best analytical practice.  This shared approach  to agreeing  on the different  elements 
will  foster  the  development  of  partnership-based  relations  between  the  Commission,  the 
Member  States  and  the other  players  in  the energy  sector  and  result  in  a  work  programme 
which  is  relevant  to  the  wider  energy  community.  The  initiative  will  contribute  to  the 
development of coherent energy  analysis procedures,  which in turn  will help to highlight  the 
key  issues  in  relation  to  the  three  pillars  of  energy  policy  namely,  competitiveness, 
environment  and  security  of  supply. 

Conclusions 

15. 

In  conclusion,  the  Commission  believes  that  this  cooperative  framework  on  energy  matters 
can be a valuable tool in  achieving  agreed policy  goals and  ensuring  coherence between  the 
various policies pursued  by the Member  States and  the Community.  As well as providing a 
key instrument  for consultation  and cooperation  on energy  matters between  the  Commission 
and the Member States this process will be the vehicle for the Commission  to support actions 
taken in Member  States.  A timely  implementation  of the attached proposal  for  establishing 
this framework  is necessary in order to ensure that the necessary transparency  of  Community 
energy actions,  mapped  out in the Indicative Work Programme,  annexed  to the White Paper 
"An Energy  Policy  for  the European  Union",  as well  as  national  ones are  achieved. 

Proposal for a 

COUNCIL DECISION 

Concerning 
the Organisation of Cooperation Around Agreed Community Energy Objectives 

THE COUNCIL OF THE EUROPEAN UNION 

Having regard to the Treaties, and in particular Article 130(3) of the Treaty establishing the 
European Community, 

Having regard to the proposal from  the Commission/0 

Having regard to the opinion of the European Parliament,® 

Having regard to the opinion of the Economic and Social Committee,*3* 

Whereas, at the Energy Council of 7 May  1996, the Council, in its Resolution on the White 
Paper "An Energy Policy for the European Union",  invited the Commission to put in place 
a process of co-operation between the Community and the Member States in order to ensure 
that  Community  and national  energy  policies  are compatible with  agreed  common  energy 
objectives; 

Whereas,  this process needs to be placed  in the context of a shared  analysis of  the energy 
situation and of future trends through cooperation at the Community level between Member 
States on energy studies; 

Whereas the promotion of the internal energy market being a priority task for the Community 
and the Member States, it is important for the internal energy market that energy trends and 
issues be analyzed at the Community level, through cooperation with the energy sector and 
by mobilising all the local, regional, national and Community elements concerned; 

Whereas, this process of cooperation,  with due regard to the principle of subsidiarity, must 
ensure a maximum of coherence and convergence in relation to agreed energy objectives if 
the Community's economic and environmental policy goals are to be achieved; 

Whereas, the Community  has a wide range of competencies in the energy  sector under the 
existing Treaties but there is still no comprehensive energy policy  framework; 

Whereas, the RTD Framework Programmes based on the EC Treaty and the Euratom Treaty 
ensure the development of new energy  technologies related  to the non-nuclear  and nuclear 
energy; 

(1)  OJ N*  c... 

m  OJ NT  c... 

(3>  OJ N*  C... 

Whereas, without prejudice to the existing  responsibilities of Member States as regards their 
own energy  sectors,  the White Paper proposes à new approach to energy policy  cooperation 
around agreed energy policy  objectives and a new approach to monitoring energy  trends, in 
cooperation with the Member States, which would add value by pinpointing and encouraging 
best practices,  by promoting  a cooperative  approach  to energy  studies and analysis  and by 
exchanging relevant experience; 

Whereas,  a firm commitment  to  Community  energy  objectives  by  Member  States  requires 
effective cooperation at Community level to ensure that both national and Community energy 
policies contribute to their attainment; 

Whereas,  in the framework  of  this cooperation,  the Commission needs to have regular and 
appropriate information  from  Member States so that it can establish periodic  reports on the 
extent  to  which  Member  States*  energy  policies  and  Community  actions  contribute  to 
Community energy objectives; 

Whereas these periodic  reports  that evaluate energy  developments  in a global  manner  will 
provide  the  basis  for  an  examination  of  energy  developments  in  the  Council  and  for  the 
Commission  to make appropriate new legislative proposals; 

Whereas,  in order to take account of the changing energy  situation the Community,  on the 
basis  of  a  Commission  proposal,  needs  to  examine periodically,  and  where  necessary  to 
update the agreed common objectives; 

Has decided as follows: 

Article  I 

A  framework  for  energy  cooperation  between  the  Community  and  the  Member  States  is 
hereby established around agreed Community energy objectives which are set out in annex, 
and which,  while constituting  specific  measures in support of actions taken in the Member 
States, will  notably contribute to: 

increasing  security of  supply; 

-  achieving  a high  level  of competitiveness  in the Community; 
- 
-  protecting  the environment, 
-  promoting  the rational  and efficient  use of  energy  resources and new  and renewable 

energy; 

-  promoting international  energy cooperation and liberalisation; 
- 
-  developing  an analysis and monitoring of  the energy market. 

ensuring  transparency  of  national and Community energy policy actions; 

Article 2 

1. 

In order to achieve the agreed energy objectives described in Article  1, the Commission will 
ensure the following: 

1. 

2. 

3. 

4. 
. 5. 

the  monitoring  of  the  impact  of  agreed  common  energy  objectives  of  energy  policy 
developments  in Member States and of  the evolution  or* the global  energy  situation in 
view  of  a possible adaptation of  the  common energy objectives  set out in annex; 
the scrutiny of Community and national actions in the energy field and the exchange of 
best practices; 
the  monitoring, evaluation and exchange of energy related information on all aspects of 
energy activity; 
the development of cooperation and linkages in the energy field; 
the encouragement of the broad dissemination of the results obtained from the measures 
in 3 and 4. 

-

2. 

The  Commission  will  examine  the  necessity  of  specific  Community  actions  in  support  of 
measures taken in the Member States; 

Article 3 

1.  The Commission shall be informed annually of the measures taken by Member States for 
achieving the agreed common energy objectives referred to in the annex and on any other 
measure relevant to these objectives. 

2.  The  Commission  will  prepare  on  the  basis  of  the  information  obtained,  where 
appropriate,  a report in  the form of  a Communication,  on  the compatibility  of  energy 
policies in the Member States and Community actions in the energy field with the agreed 
common energy objectives.  This report shall be forwarded to the European Parliament, 
the Council,  the Economic and Social Committee and the Committee of  the Regions; 

Article 4 

This Decision  shall enter into force on....  ; 

Article 5 

This Decision  shall be published  in the Official  Journal of  the European Communities. 

Done at Brussels, 
For the Council, 
The President 

Annex 

AGREED  COMMON ENERGY  OBJECTIVES 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

Energy  policy  at the Community  level  should  contribute to the achievement  of  the various 
energy objectives set out in the Treaties notably, market integration, sustainable development, 
environmental protection and security of  supply. 

The  integration  of  the  Community  energy  market,  based  on  the  principle  of  open  and 
competitive markets, is essential  for achieving  flexibility,  efficiency  and long-term  security 
in  the  energy  sector.  Integration  should  take  into  account  the  diverse  energy  mix  of  the 
Member  States,  both  fossil  and  non-fossil,  and  enhance  economic  and  social  cohesion 
particularly  through the development of  trans-European networks. 

Transparent and undistorted energy prices with the aim of ensuring that markets for all fuels 
in the Community  work efficiently  and are fully  competitive. 

In  order  to  achieve  the  Treaty  objective  of  sustainable  development,  energy  and 
environmental  objectives  need  to  be  integrated.Wherever  possible  the  full  cost  of  energy 
production and consumption should be reflected in the price. Economic non-fossil fuels such 
as renewables and  nuclear incorporating the highest safety standards, can make an important 
contribution to this goal. 

The strengthening  of  security  of  supply  through  improved  diversification  and  flexibility  of 
domestic  and  imported  supplies,  by  developing  environmentally  sound  indigenous  energy 
resources and by ensuring energy  have the ability  to respond quickly and flexibly  to supply 
emergencies,  notably  with respect to oil and gas. 

A coordinated  approach to external  energy  relations in order to ensure free  and open trade 
and a  secure framework  for  energy  investments.  Co-operation  with  non-member  countries 
should  be  developed  to  enhance  energy  security,  to  achieve  environmental  goals  and  to 
stimulate  the  development  and  dissemination  of  appropriate  energy  technologies  to  third 
countries. 

The  promotion  of  renewable  energy  resources  through  supportive  measures  at  both 
Community and national level  with the aim of achieving  for mis fuel a  significant  share of 
primary energy production in the Community by 2010. 

A significant  improvement in energy efficiency  in the Community by the year 2010 through 
an improved coordination of  both national and Community measures. 

* * * * * * * * * * * * * * * * * * * * * ** 

In order to contribute to the achievement of  the above objectives the Community will use the 
large range of  instruments in the energy, sector that are available to it,  notably 

research  and  development  and  the  dissemination  of  new  and  improved  energy 
technologies, 
harmonising  the fiscal  structure on energy products to avoid distortions, 
applying  the  competition  rules  of  the  Treaties  with  a  maximum  of  transparency  and 
consistency, 
standardisation in the energy  sector, 
monitoring  of  the internal market, 
instruments for cooperation and assistance with third countries, 
development  of  cost-effective  instruments  for limiting  the negative environmental  side 
effects  of  the production,  transport and use of energy. 

ISSN 0254-1475 

COM(96) 431 final 

DOCUMENTS 

EN 

12 

Catalogue number  : CB-CO-96-433-EN-C 

ISBN 92-78-08537-5 

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