Communication from the Commission - An overall view of energy policy and actions
Date: 1997-04-23
Institutions: European Commission
Subjects: competitiveness, energy industry, energy policy, environmental protection, security of supply

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 23.04.1997 
COM(97) 167  final 

COMMUNICATION FROM THE COMMISSION 

AN OVERALL VIEW OF 
ENERGY 
POLICY AND ACTIONS 

WliÈ^reoi^i^ 

Introduction 

A. 

B. 

C. 

The strategic energy challenges 

The need for an overall energy policy response 

Objectives and range of the analysis 

L 

Energy co-operation 

A. 

B. 

Co-operation with Member States 

Co-operation with interested parties 

II. 

Community actions 

A. 

B. 

C. 

D. 

Security of supply and international energy co-operation 

Integrating energy markets 

Promoting sustainable development in the field of energy 

Promoting energy research and technological development 

Conclusions 

vf  *• 

ïNTROptîetïcîi 

Energy is the lifeblood of economic activity and social welfare. It is essential for achieving 
growth, competitiveness and employment.  Its production and use have a great impact on 
the environment. 

This central  role of energy is however generally  only experienced  and acknowledged by 
the  European  citizen  in  crisis  situations  (e.g.  oil  shocks,  Chernobyl,  Gulf  war). 
Nonetheless, the European Union will have to face strategic energy challenges in the years 
to  come  which  will  have  a  direct  impact  on  European  citizens  and  consumers.  It  is 
necessary, therefore, to respond with a suitable strategy. 

The Community already possesses a wide range of instruments in various policy contexts 
from  which energy actions are developed. As a follow-up to the White Paper "An Energy 
Policy  for  the  European  Union"l  and  in  response  to  a  request  expressly  made  by  the 
Council2,  this  Communication  presents  an  overall  view  of  energy  policy  and  the 
. instruments available for its implementation. It represents a first step which could open the 
way to a new and more coherent presentation of energy actions. The main components of 
energy  policy  are  listed  in the  table  at  Annex  1.  The financial instruments  available  at 
Community level are indicated in the table at Annex 2. 

A. 

THE STRATEGIC ENERGY CHALLENGES 

Following  an  intensive  debate  on  the  1995  Green  Paper  on  the  future  shape  of  a 
Community energy policy3, the Commission adopted the White Paper "An Energy Policy 
for  the European Union"1.  The broad policy orientations have been largely  endorsed by 
the  Council,  the  European  Parliament,  the  Economic  and  Social  Committee  and  the 
Committee  of  the  Regions.  It will  be  necessary  to  adapt  energy  policy  to  the  strategic 
challenges the European Union will have to face, taking account of the rapid development 
of markets and the international situation. 

The  table  in  Annex  I  shows  that  in  order  to  meet  the  challenges  listed  below,  it  is 
necessary to  deploy a panoply of actions, which can be undertaken in the context  of the 
different programmes. 

1. 

Managing external dependency to secure energy supply 

The external  energy  dependency  of the European Union currently  stands at approximately 
50%. It could well by 2020 increase to as much as 70%, 80% and 90% for natural gas, coal 
and oil  respectively4  if  appropriate  measures  are  not  taken.  This growing  external  energy 
dependency of the Union should be taken account of and analysed in the light of the political 
risks  in some supplier or transit countries and growing world energy consumption. Forecasts 
predict a tightening of energy supplies and an upward trend for energy prices. 

White Paper "An Energy Policy for  the European  Union", COM(95)  682 of  13.12.1995. 
Council  Resolution  of  08.07.1996  on  the  White  Paper  "An  Energy  Policy  for  the  European 
Union",  OJ N° C 224  of 01.08.1996,  p.l,  and  Council  Regulation  N°  ...of  14.04.1997  adopting 
a programme  to promote  international  cooperation  in the energy  sector  - SYNERGY  programme 
-(Art.  3). 
Green Paper "For a European  Union Energy Policy",  COM(94) 659 of  11.01.1995. 
"European Energy  to 2020. A  Scenario approach", European  Commission,  Spring  1996. 

M 

A major  challenge for  energy policy is therefore  to ensure security of supply.  Diversification 
and flexibility of  domestic  and  imported  supplies  should  be  encouraged  in  particular  by 
promoting the development of renewable energy resources and by achieving closer integration 
of the energy markets. 

There  is  also  scope  for  strengthening  security  of  supply  by  closer  cooperation  with  third 
countries and by developing a system which can respond quickly and flexibly to sudden energy 
supply breakdowns, in particular as regards oil and gas. The European Union is evolving in a 
world that is becoming more and more interlinked and interdependent. This raises issues such 
as the  conditions  of  access  of  energy  products  to  the  European  market  and  the  access  of 
European  energy  companies  to  third  countries'  markets.  In  its  external  relations  the 
Community  needs to  give  even  more  attention  to  energy  policy  if it  is to find appropriate 
responses to its large and growing external energy dependency, particularly since many energy 
issues have an international dimension. 

A coordinated  approach to external energy relations is thus necessary in order to ensure free 
and open trade and a secure framework for energy investments. Dialogue, assistance and co-
operation with non-member countries are realistic solutions for the simultaneous enhancing of 
energy  security,  achievement  of environmental  goals and  stimulation  of the  development  of 
appropriate energy technologies and their dissemination to third countries. 

2. 

Integration of the European energy markets to increase competitiveness 

One of the critical factors for the international competitiveness of European businesses is the 
cost of energy, in particular in the context of the growing globalisation of markets. 

Compared  to  the  USA,  European  industry  pays  far  more  for  energy.  For  instance,  it  is 
estimated that in the chemicals sector European companies pay up to 45% more than their US 
competitors5. Apart from differences in tax treatment, the lack of competition is a key factor in 
explaining  the  cost  differential.  For  instance,  it  is  expected  that  full  liberalization  of  the 
European  internal electricity market will provide substantial benefits which would  amount  to 
10-12 billion ECU per annum, or twice as much as gains anticipated from the opening already 
agreed. The introduction of third party access in gas would also lead to a cost reduction of 900 
million  ECU  per  annum  and  substantial  additional  gains  could  result  from  gas-to-gas 
competition. 

A key challenge for Energy Policy is therefore to ensure further integration of the Community 
energy market,  based  on  the principle  of open  and  competitive  markets.  This  is crucial  for 
European competitiveness. It is also essential for achieving flexibility, efficiency  and long-term 
security in the energy sector and for  enhancing economic and social cohesion.  The increased 
competitivity aimed at by the integration of the energy markets must not develop against the 
legitimate expectations of non-industrial consumers in favour of energy equipment and services 
guaranteeing  increased  safety,  quality,  and  durability,  available  at  affordable  prices.  This 
process of integration  is not  incompatible with  public service obligations undertaken  on  the 
basis of clearly defined criteria, transparently applied in the general interest. 

Fourth Report of the Competitiveness Advisory Group, December 1996. 

3. 

The compatibility  of energy  and  environmental  objectives  for  sustainable 
development 

Environmental  considerations  have emerged  at the top  of the political  agenda in response  to 
the  increasing  concern  of  the  European  citizen.  Energy,  which  is  a  key  factor  in  the 
achievement  of  sustainable  development,  must  be  given  political  priority  if  all  the 
environmental  objectives  are to  be  met.  For  instance,  in view  of  the  global  issue  of  climate 
change,  the  Community's  political  commitment  to  limit  greenhouse  gas  emissions  cannot 
realistically be achieved without energy policy measures. 

One major challenge for energy policy  is thus to  render energy and environmental  objectives 
more  compatible.  The  more  rational  use  of  energy  and  of  non-fossil  resources  such  as 
renewables should make a significant contribution to this goal. Wherever possible, the full cost 
of  energy  production  and  consumption,  including  external  costs,  should  be  established  in  a 
transparent manner and reflected in the price. 

Consumers,  and  indeed  industry,  should  also  play  their  part  in taking  up  the  challenge,  by 
realising  that  their  individual  choices  have  direct  consequences  on  the  quality  of  their 
environment.  It is thus  important  for  Union  and Member  States to  raise  the  awareness  and 
develop the interest of the European citizen, mainly by means of actions at local level. 

4. 

Developing  energy technology  and  research 

The development of new, cleaner and more efficient  energy technologies and their introduction 
on the energy markets is a strategic challenge insofar as this should allow the priority objectives 
of energy policy to be achieved more easily. 

The objective of actions in this area is to develop new technologies, for new energy sources to 
strengthen  security  of  supply  and diversification,  for  energy  saving  and  for  more  productive 
access  to  fossil  fuels.  Subsequent  exploitation  of  these  technologies  must  serve  the  priority 
interests of energy policy. 

In order to achieve this, closer links between the different stages of R&TD and the mechanisms 
of the  energy  market  will  have  to  be  ensured  by,  inter  alia,  improved  cooperation  between 
Member States and between the main actors in the different phases of this process. 

This also implies that the needs of the consumer and the respect  of the environment  must be 
integrated  at  each  step  of  energy  technology  research,  and  that  the  different  stages  of 
technology development need to be coordinated with measures taken to improve their market 
application. 

B. 

THE NEED FOR AN OVERALL ENERGY POLICY RESPONSE 

4 

A range  of  policy  measures  is  available  in  the field of  energy,  at  regional,  national  and 
Community level. The reasons for a more overall approach are  fivefold: 

1. 

The need for a clear and specific legal base 

The lack of such a base in the Treaty  establishing the European  Community compels the 
use of Article 235 or else moving, depending on the measures, from an Article concerning 
"Industry" to another concerning "the Environment" or the "Internal Market". 

The Commission recalls in this connection the position it took in its report to the Council 
of  3  April  19966,  in  which  it  stressed  that  the  continuity  of  coherence  of  Community 
action  in  the  energy  field  could  be  facilitated  by  the  introduction  into  the  Treaty  of 
provisions which would make such actions more efficient  and more visible. 

2. 

The need for greater transparency  in Community Energy Policy actions 

Community  actions  in  the  field  of  energy  are  currently  developed  under  a  series  of 
Community  policies 
(Energy  Policy,  External  Relations,  Environment,  R&TD, 
Competition,  Internal  Market,  Regional  Policy,  Agriculture,etc).  This  sometimes  results 
in a lack  of transparency  in  existing  actions, both for industry  and  for  political  decision 
makers. 

An overall Energy Policy framework would  optimise the  effectiveness  of the actions and 
help to implement a more transparent energy policy. 

3. 

The need for  better targeting 

The scattering of energy actions over a great number of Community policies also points to 
the need for better targeting of these actions to optimise the use of resources. The table at 
Annex 2 shows the volume and the range of the means deployed from the various policies. 

The primary concern should be to identify  any policy gaps, encourage synergies and avoid 
duplication  between  these  Community  measures  so  as  to  ensure  their  maximum 
effectiveness.  An overall energy policy framework  would  facilitate  better targeted  actions 
around the priority Community energy objectives. 

4. 

Tine need for closer eo-ojeration between t'ae Community and Member 
States 

Many energy policy measures  are taken  by Member  States, be  it  at  national,  regional  or 
local  level.  If the  priority  Community  energy  objectives  are  to  be  met,  it  is  essential  to 
establish  an  energy  co-operation  framework  between  the  Community  and  the  Member 
States.  The  objective  is  not  to  impose  choices  on  national  energy  policies.  On  the 
contrary,  the  aim  is  to  enable  Member  States  to  ensure  that  their  energy  choices  are 
compatible with the priority Community objectives and to help them to achieve this. 

Report  from  the  Commission  to  the  Council  on  Civil  Protection,  Tourism  and  Energy 
(SEC(96)496 final of 3 April  1996). 

This  co-operative  approach  with  Member  States  will  also  promote  exchanges  of 
information and experience,  help identify  issues of Community interest,  and facilitate the 
transfer of best practice. 

5. 

The need for fuller involvement of  ail interested parties 

The transparency and the effectiveness  of the Community's  energy  policy  could  also be 
improved by fuller  involvement  of  all  interested  parties.  More  dialogue  and partnership 
between these  parties and the  Community  can  facilitate  the  identification  of  needs,  the 
definition of appropriate policy actions and their implementation. 

C. 

OBJECTIVES AND RANGE OF THE ANALYSIS 

6 

1. 

Objectives 

The  aim  is  to  bring  together  all  Community  actions  for  energy  into  a  coherent  and 
comprehensive framework with two objectives: 

• 

• 

to ensure greater transparency of the Community's energy policy; 

to  examine ways of increasing the effectiveness  of the Community's  energy  policy, in 
particular by helping to identify  areas where Community  actions need to be  simplified, 
better co-ordinated or strengthened. 

2. 

Range 

The analysis covers all Community actions in the field of energy. Two types of actions are 
identified: 

•  actions to promote energy co-operation between Member States; 

•  Community actions developed both under the Community's specific Energy Policy and 
under  other  relevant  Community  policies  (e.g.  Structural  Funds,  R&TD,  External 
Relations, Competition, Environmental and Agricultural policies) and other instruments 
the  European  Investment  Bank,  European  Investment  Fund,  European 
(e.g. 
Development Fund). 

All  Community  measures  in  the  field  of  energy  are  classified  on  the  basis  of  the 
contribution they can make to the four followingpriority objectives: 

•  Securing supply and strengthening international energy co-operation; 

•  Integration of European energy markets; 

•  Promotion of sustainable development; 

•  Developing energy technology and research. 

The table at Annex  1 sets out  the  main  components  of energy  policy.  It  is  followed 
by  a  table  showing  the  main  sources  of  finance  for  Community  energy  actions 
(Annex 2). 

I^^M^BËMB^^^i^^^^^^^KS 

A. 

CO-OPERATION WITH MEMBER STATES 

Member  States  and  Commumty  share  common  energy  objectives.  A  list  of  these 
objectives  is  set  out  in  the  recent  draft  Decision  concerning  the  organisation  of  co 
operation around agreed  Community  energy  objectives.7  This list  of  objectives  sets  out 
policy guidelines - covering, inter alia, security of supply, competitiveness,  environmental 
protection,  external  energy  relations  and  the  promotion  of  energy  efficiency  and 
renewables - which have been periodically endorsed by Member States.8 

In  order  to  facilitate  the  achievement  of  these  common  energy  objectives,  it  is  thus 
essential to strengthen co-operation and co-ordination between Member States within an 
organised framework so  as  to  ensure  that  national  and Commumty  energy  policies  are 
compatible  with  those  objectives  As  a  response  to  the  Council's  request,  the  draft 
Decision  concerning the organisation of co-operation  around agreed  Commumty energy 
objectives sets out a framework for closer co-operation between Member States and the 
Community. 

It also  provides that  representatives  of the Member  States will  meet  regularly,  and will 
assist the Commission to assess the extent to which Member States' energy policies and 
Community  actions  contribute  to  the  agreed  energy  objectives.  These  meetings  will 
constitute a forum for facilitating the exchange of information, the identification  of issues 
of Community concern and the transfer of best practice. 

The  draft  Decision  requires  the  Commission  to  take  initiatives  to  facilitate  closer  co 
operation  and  co-ordination  between  Member  States.  This  includes  in  particular  the 
monitoring,  evaluation  and  exchange  of  information  on  energy  policy  matters.  On the 
basis of the information obtained from Member States, the Commission would be required 
to present a periodic report on the compatibility of energy policies in the Member States 
and the Community with the agreed common energy objectives.  This report will provide 
the basis for  an examination  of  energy  developments  in the Council  and will  enable the 
identification of the need for new energy policy measures. 

In order to facilitate this co-operation process, a framework should be defined for energy 
analyses and forecasts, to be shared by Member States and the Community. The European 
Energy  Observatory,  based  on  a  network  of  national  centres,  could  play  an important 
supportive  role  in  analysing  priority  issues.  This  analytical  work  -  covering  both energy 
market and policy developments - should target the priority energy objectives. For instance, 
security  of  supply  needs  to  be  kept  under  permanent  review,  in  particular  by  regular 
examination of the energy situation and global energy market developments. 

Proposal  for  a Council Decision  Concerning  the Organisation  of Cooperation  Around Agreed 
Community Energy Objectives, OJ N° C 27 of 28.01.1997, p.9. 
Most recently, in the Council Resolution of 08.Q7.1996 on the White Paper "An Energy Policy 
for the European Union", OJ N° C 224 of 01.08.1996, p. 1. 

This  action  would  take  account  of  the  similar  work  carried  out  for  the  new  energy 
technologies  in the framework  of the activities of the JOULE-THERMIE Programme and 
of the co-ordination  of R&TD policy  provided  for in the 4th Framework  Programme. 

B. 

CO-OPERATION WITH INTERESTED PARTIES 

In the  framework  of  preparing  the  Green  and White  Papers  on  European  Energy  Policy, 
the  comments  of  industrial  and  consumer  bodies  as  well  as  other  organisations  on  the 
future  shape  of  Community  Energy  Policy  have  been  very  useful.  These  organisations 
have also emphasised  the importance they attach to this dialogue and to transparency,  and 
they  have  expressed  their  wish  that  this  process  should  be  continued  and  deepened.  The 
Council  has  endorsed  this  request  by  calling  upon  the  Commission  to  pursue  this 
consultation process in a Community energy framework9. 

The main purpose of closer co-operation with interested parties is to  provide the basis  for 
an  open  and  transparent  dialogue  whereby  the  Commission  can  take  into  account  the 
views  of  all  parties  concerned  when  preparing  proposals  for  energy  policy  decisions  of 
interest to them. 

An  Energy  Consultative  Committee  is  being  set  up,  under  Commission  auspices, 
consisting  of  representatives  of  the  principal  economic  and  social  actors  in  the  energy 
sector.  10  The  principal  tasks  of  this  Committee  consist  of  (a)  identifying  areas  in  which 
Community  action  is  needed,  (b)  delivering  opinions  on  Commission  proposals  before 
they  are  officially  adopted,  and  (c)  formulating  recommendations  on  how  to  implement 
energy policy actions. 

9 

10 

Council  Resolution  of ©8.07.1996 on  the  White Paper "An Energy  Policy  for  the European 
Union", OJ N° C 224 of 01.08.1996, p. 1. 
Commission Decision N° 96/642#ïC of  8 November  1996 setting up an Energy Consultative 
Cammittoe, OJ N° L292, 15.11.1#96, p. 34. 

i^^ 

A. 

SECURITY OF ENERGY  SUPPLY AND INTERNATIONAL  ENERGY 
COOPERATION 

The external energy dependency of the European Union, of approximately 50% at present, is 
likely to  continue  increasing  and  reach  70%  in  2020.  The  growth  of  external  dependency 
requires  security of energy  supply to  be  a  major  priority  for  Community  policy.  Measures 
should include : the diversification  of energy supply and sources ; action on energy demand ; 
cooperation programmes ; the preparation of the accession of new states  ; cooperation with 
international institutions and crisis measures. 

1. 

Actions on the diversification  of energy supply 

The  diversification  of  energy  supply  requires  actions  both  as  regards  the  variety  of 
partners  supplying energy to the Union,  and  as regards the diversity of energy  resources 
available. 

•  The development of relations with the supplier  countries 

The relations of the European  Community with its current and potential  suppliers require 
the  progressive  establishment  of  a  suitable  legal  framework  which  covers  bilateral  and 
multilateral agreements, together with the strengthening of infrastructures. 

The  Energy  Charter  has  become  the  main  framework  for  pan-European  energy 
cooperation n.  The Treaty, which was concluded in December  1994, is the first economic 
agreement  covering  all the NIS  republics,  the  countries  of  Central  and  Eastern  Europe, 
the European  Community,  its fifteen Member  States,  and  some countries  of the  OECD. 
Its main aim* is to facilitate  and develop trade  and to  protect  and promote  investments in 
the energy  sector.  The ratification  of the Charter  Treaty by all its signatories  is of  major 
importance for East-West cooperation in the energy sector. 

Energy and  nuclear  safety  appear as priority  issues in the agreements concluded  with the 
Central  and  Eastern  European  countries  but  also  in  those  concluded  with  a  majority  of 
republics of the NIS and other third  countries.  The emergence of Central  Asia and  of the 
Caspian  Sea  Basin  as gas  and  oil  producers  offers  a  strong  potential  for  exports  to  the 
European Union. The bilateral agreements with Asia and Latin America give an important 
role to cooperation in the field of energy and in particular to the search for greater energy 
efficiency.  Cooperation  with  the  countries  of  the  Gulf  is  another  major  component  of  the 
security of the energy supply of the European Union. Protocols signed with the Mediterranean 
third countries envisage actions for energy, and energy is an explicit aspect of the reform of the 
economic and social structures within the framework  of the Euro-Mediterranean  partnership. 
Lastly, the Lomé convention  contains, among  its  other  provisions,  a  section  devoted  to  the 
development of energy production, both fossil and renewable, in the ACP countries. 

11 

Council Decisions 94/998/EC and 94/1067/Euratom of  15.12.1994 on the provisional  application 
of the Energy Charter Treaty by the European Community. OJ N° L 380 of 31.12.1994, p.l. 

10 

The increase in the infrastructures  for  transport  of energy to the European  Union  is a decisive 
condition  of security  of energy  supply.  Within  the framework of actions for  the promotion  of 
the  Trans-European  Energy  Networks12,  the  Commission  will  support  the  process  of 
identification  of projects  of mutual  interest  with  the third  countries  concerned,  as proposed 
in its new Communication  on the external dimension  of the Trans-European Energy networks. 

•  Diversification  of energy  resources 

The  diversification  of  energy  resources,  in  particular  the  use  of  new  and  renewable 
sources,  should  make  it  possible,  by  an  increase  in  supply,  to  increase  the  energy  security 
of the European  Union.  The same is true with  regard  to the  contribution  of nuclear  energy 
and  energy  products  of  European  origin,  provided  these  are  economically  competitive. 
Energy  saving  and  cogeneration  also  contribute to  reducing external  dependency. 

The  European  Community  supports  new  energy  sources  and  renewables  (hydro-electric, 
solar,  wind  and  geothermal)  and  encourages  biofiiels.  The  ALTENER13  and  JOULE-
THERMIE14  Programmes  play  a  leading  part  in  promoting  this  process.  The  relatively 
high  costs  of  putting  the  biomass  products  to  energy  use  should  not  obscure  the 
advantages  of  these  technologies,  not  only  for  Community  energy  policy  but  also  as 
regards job  creation,  environment  and  future  developments  in  agriculture.  The  Common 
Agricultural  Policy  supports  the  production  of  raw  materials  for  purposes  other  than 
human or animal consumption;  most  of this non-food  production  is for  biofiiels. 

The  nuclear  sector  represents  more  than  30%  of  the  electricity  production  of  the 
European  Union,  and  consequently  contributes  to  lower  external  energy  dependency.  Use 
of  nuclear  energy  must  take  into  account  the  imperatives  of  non-proliferation,  of  nuclear 
safety,  of  health  and  of  waste  treatment.  Under  the  EURATOM  Treaty,  the  Community 
institutions  have  a  role  in  the  development  of  nuclear  energy,  in  particular  by  the 
publication  of  the  PINC15  (Illustrative  Nuclear  Programmes  which  give  guidance  to 
investors  in  this  field),  by  the  implementation  of  provisions  concerning  the  supply  of 
nuclear  materials  and  safeguard  provisions,  by  the  protection  of  workers  and  the 
population  against  risks  due  to  ionising  radiation,  and  by  the  conclusion  with  third 
countries  of  agreements  on  nuclear  trade.  In  this  connection,  mention  should  be  made  of 
the measures taken  to  combat  illegal  traffic  in nuclear  materials (essentially,  those  diverted 
from  military uses), including their customs  and judicial co-operation  aspects. 

12 

13 

14 

15 

Decision  1254/96/CE of the European Parliament and of the Council of 5 June  1996 laying down 
a series of guidelines for Trans-European  Energy networks, OJ N° L  161, 29.06.1996, p. 147. 
Council  Decision  93/500/EEC  of  13  September  1993  concerning  the  promotion  of  renewable 
energies in the Community (ALTENER), OJ N° L 235 of  18.09.1993, p. 14. 
Draft  Council  Decision  concerning  a  multiannual  programme  for  the  promotion  of  renewable 
energy sources in the Community. ALTENER II, COM(97) of  12 03.1997. 
The  presentation  of  JOULE-THERMIE  in  its  legal  context  of  the  4th  RDT  framework 
programme is in  Chapter D. 1. 
Based  on  Article  40  of  the  EURATOM  Treaty,  the  publication  of  the  last  PINC  took  place  in 
1996, COM(96) 0339 final  of 25.09.1996. 

2. 

Actions on energy detaaitid 

11 

The decreasing of dependency on imported energy necessitates additional action to reduce 
energy demand. 
Through SAVE16, JOULE-THERMIE and the local energy agencies, the European Union 
aims  to  promote  energy  saving  and  develop  a  culture  of  energy-saving  behaviour  and 
rational energy consumption. 

Techniques  offering  a  high  technological  output  have  also  fully  to  be  exploited.  In  this 
connection, the contribution of JOULE and THERMIE to technological  development and 
demonstration projects concerning energy efficiency  should be highlighted. 

3. 

International aid and cooperation programmes 

International  cooperation  is  a  vital  aspect  of  a  coherent  energy  policy.  Energy 
dependency,  as well as the planetary  character  of climatic change,  have in fact  made any 
geographically limited attempts to grapple with energy questions out of date. 

•  Technical assistance programmes 

The most important programmes in this domain (PHARE,  TAOS17 and MED A18) allow, 
in particular,  the undertaking  of technical  assistance  programmes but  also co-financing  in 
the energy sector. The development  of an effective  energy policy is a preliminary,  for  the 
countries  involved,  to  their  economic  development.  In  line  with  the  policy  priorities 
towards the regions concerned, every effort  is made to strengthen the contribution  of their 
programmes towards the  setting-up  in these  countries  of effective  energy  structures,  and 
to carry out the necessary  reforms. 

In its relations with the developing countries of Latin America and of Asia (DC-ALA), the 
Community has defined  a precise framework19 for  this cooperation  which  has resulted, in 
the field of energy, in a cooperation  strategy between Europe and Asia on the one  hand20 
and, as regards Latin America, in the recent  launching of the ALURE Programme, aimed 
at encouraging the optimum use of energy resources in this region. 

16 

17 
18 

19 

20 

Council Decision  96/737/EC of  16 December  1996 concerning a pluriannual  programme  for  the 
promotion of energy efficiency  in the Community  (SAVE II), OJ N° L 335 of 24  12.1996, p.50. 
The closure of Chernobyl should be partly financed  by a EURATOM  loan and TACIS subsidies. 
Council  Regulation  N°  1488/96/EC  of  23  July  1996  on  financial  and  technical  measures  to 
accompany (MED A) the reform  of economic and social structures  in the framework  of the Euro-
Mediterranean partnership, OJ N° LI89,  30.07.1996, p. 1. 
Council Regulation N° 443/92/EEC of 25 February  1992 on financial  and technical  assistance to, 
and  economic  cooperation  with,  the  developing  countries  in  Asia  and  Latin  America,  OJ  N° L 
52, 27.02.1992, p. 1. 
Council  Regulation  N° 213/96/EC of  29  January  Î996  on  the  implementation  of  the  European 
Communities investment  partners financial  instrument  for  the countries of Latin  America,  Asia, 
the Mediterranean  region and South Africa.  OJ N° L 28, 06.02.1996, p.2. 
Communication  from  Uie  Commission  on  an  Europe-Asia  Cooperation  strategy  for  energy, 
COM(96)308 final of  18.07.1996. 

12 

Relations  with  the  ACP  countries  are  organised  within  the  framework  of  the  funds 
provided  under  the  Lome  agreements,  in  particular  the  European  Development  Fund 
(EDF). Actions in the field of energy could  receive new impetus, in particular with regard 
to  renewables,  so  as to  tackle  problems  of water  supply  and  of desertification,  to  favour 
economic  takeoff,  to  limit  external  constraints  on  imports  of energy  and  to  improve  the 
quality of life of the rural populations of these countries. 

•  Taking European priorities into account 

SYNERGY is the tool for international  cooperation which is specific to the energy sector 
and which takes full account of the needs of the European energy industry in their external 
aspect.  The  implementation  of the  SYNERGY  Programme  is  responding  to  an  obvious 
specific  need  for  international  cooperation  in the  energy  sector.  This  programme  covers 
cooperation with third countries for the definition  of energy policy and its implementation. 

The  programme  concerns the  countries  of  Central  and  Eastern  Europe,  the  republics  of 
the NIS and the Mediterranean  countries,  Asia, Latin  America  and  Africa.  A key  feature 
of this programme is that  it takes account  as a priority  of the specific  needs of European 
energy policy development. 

Among  cooperative  efforts 
the  creation  of  the  Euro-
initiated  by  SYNERGY, 
Mediterranean  Forum21,  the setting up of the Balkans  Task Force,  similar actions  for  the 
Baltic States and the new China-European Community Group represent major activities. 

•  External aspect of R&TD and environmental  policies 

International  cooperation  in the  energy field is  also  based  on  a  specific  external  aspect 
deriving  partly  from  R&TD  policy  (the  INCO  Programme  and  the  specific  JOULE-
THERMIE Programme)  and  partly from energy  actions  carried  out  in the framework of 
environmental policy. In the framework of  the INCO Programme, synergy is ensured with 
the  JOULE-THERMEE  Programme  so  as  best  to  exploit  partnership  and  cooperation 
possibilities  with  third  countries  as  regards  energy  technology.  Joint  energy  research 
projects are also .undertaken with the developing countries. 

•  Links between the different  programmes 

Emphasis is placed on seeking complementarities between programmes. The imperative of 
complementarity  was  particularly  evident  when  redefining  the  role  of  SYNERGY.  This 
programme,  as  now  defined,  will  place  priority  on  European  energy  interests  at 
international  level,  complementing  the  actions  of  the  energy  industry.  This  approach 
differs from that of PHARE/TACIS and the Lomé Convention, under which actions to be 
financed  are  defined  by  the  Commission  on  the  basis  of  requests  linked  to  the  needs 
expressed by third countries 

21 

Communication  from  the  Commission  to  the European  Parliament  and  the  Council  concerning 
the Euro-Mediterranean  partnership in the energy sector, COM(96)149 final of 03.04.1996. 

4. 

Preparing for the accession of new States 

13 

At the  European  Council  of  Essen  of  December  1994, the  pre-accession  strategy22  was 
adopted  which  contains  policy  initiatives  to  prepare  the  associated  CEECs  for  their 
accession  to  the  European  Community.  In  this  context,  a  structured  political  dialogue 
between the European Community and the applicant countries makes it possible to discuss 
questions  of  mutual  interest  including  energy.  This  strategy  of  pre-accession  results,  in 
the field of energy,  in harmonization  of energy policies,  reform  of legislation  in line with 
the "acquis communautaire" and restructuring of the energy sectors. 

5. 

Cooperation with international organizations 

Energy  questions  are  also  treated  within  specialized  organizations  such  as  the 
International  Energy  Agency  (DEA) - in particular  for  crisis measures -,  the  International 
Atomic Energy  Agency (IAEA)  - as regards  all the  applications  of nuclear  energy  and in 
particular  the  monitoring  of  nuclear  materials  use  (safeguards)  and  assistance  to  CEECs 
and to the NIS - and the Agency of the OECD for  nuclear energy. Energy also represents 
an  important  aspect  of  the  activities  of  the  European  Bank  for  Reconstruction  and 
Development (EBRD) and of the World Bank, in particular for the technical and  financial 
assistance aspects and for the encouragement of the rational use of energy. 

The Commission attaches a great deal of importance to its collaboration  and  coordination 
with  these  international  organizations,  in  view  of  the  increased  convergence  of  energy 
objectives and in view of the complementarity of the means to be employed. 

6. 

Crisis measures 

In order to  alleviate  potential  difficulties  in the  supply  of energy resources,  an  obligation 
for Member States to maintain a minimum crude oil and/or petroleum product  stock  level 
was established  in  196823. Complementary  crisis measures (levies on stocks,  reduction of 
consumption,  distribution  between  Member  States)  have  been  taken  since  1973  24.  In 
connection  with  the  initiatives  developed  on  this  point  within  the  I.E.A.,  the  current 
framework  of stocks and crisis measures has to be adapted to integrate all the components 
of  the  internal  energy  market  as  it  takes  shape,  together  with  the  development  of  the 
world market. 

22 

23 

24 

White  Paper  -  Preparation  of  the  associated  countries  of  central  and  Eastern  Europe  for 
integration  into  the  internal  market  of the Union.  COM(95)163  final  of 03.05.1995. 
Council  Directive 68/414/EEC of 20 December  1968 (OJ  N° L308 of 23.12.1968,  p. 14) fixed  this 
level  at  a  quantity  corresponding  to  65  days  of  average  consumption;  Directive  72/425/EEC  of 
19.12.1972  (OJ  N°  L 291 of  28.12.1972,  p. 154) carried  this  level  to 90 days of consumf  consumption. 
Council  Directive  73/23 8/EEC  of  24  July  1973  on  measures  to  mitigate  the  effects  of  difficulties 
in  the  supply  of crude  oil  supply  and  petroleum  products  , OJ  N° L 228,  16.08.1973,  p. 1. 
Council  Decision  77/706/EEC  of  7  November  1977  on  the  setting  of  a  Community  target  for  a 
reduction  in  the  consumption  of  primary  sources  of  energy  in  the  event  of  difficulties  in  the 
supply  of crude  oil  and  petroleum  products,.  OJ N° L  292  of  16.11.1977, p.9. 

B. 

INTEGRATING  ENERGY  MARKETS 

14 

The  internal  energy  market  represents  an essential  priority  for  energy  policy and  for  the 
European  Union  in  general;  it  opens  up  prospects  for  increases  in  competitiveness  for 
companies and for the reduction of prices to the European citizen. 

1. 

The achievement of the Internal Energy Market 

The  internal  energy  market  requires  the  adoption  of  a  number  of  operating  rules  and 
means for its development. 

The  structures  of the  electricity  sector  are changing  in numerous  countries  of the  world 
and  in  several  countries  of  the  European  Union;  this  involves  primarily  a  process  of 
modernization, of liberalization and of the introduction of competition. 

The directive on the internal market in electricity, adopted  by the co-decision  procedure 
at the end  of  1996 25,  aims at  establishing  real  competition  among the  energy  producers 
and at giving consumers a choice for their electricity supply. It represents a decisive  step 
in the achievement of the internal market. This Directive also recognises the public service 
obligations specific to the electricity sector and is fully  in keeping with the  Commission's 
Communication  on  services  of  general  economic  interest  26.The  discussion  of  the  rules 
concerning the internal  market in gas 27are now entering a decisive phase in a  favourable 
negotiating climate. 

The directive on the internal market in electricity, which entered into force  early in 1997, 
will  open  up  as  a  mimmum  a third  of  the  market  in  six years,  which  corresponds  to  a 
volume of 45 billion ECU turnover. It represents a significant  opening-up to competition. 
The  full  implementation  of  the  internal  market  and  a  rigorous  application  of  the 
competition rules will create a level playing field  for  the development  of energy sources. 
State aid to the companies and other organizations in the energy  sector has to follow  the 
general  provisions  on  state  aid  except  in  the  case  of  the  coal  industry  where  special 
provisions28 have been adopted, taking into account the decline of the sector and the need 
for environmental  protection. 

The networks for  transport of energy constitute an essential infrastructure  element for the 
internal  market.  The  interconnection  of these  networks  is largely  operational  at  national 
and  regional  levels. It  is being achieved  at Trans-European  level. There nevertheless  still 
exist,  at  all levels, missing connections  and  insufficient  capacities.  Moreover,  it  has been 
necessary  to  build  new  pipelines  from  the  gasfields  to  meet  the  increasing  demand  for 
natural  gas. Decisions29 taken  in  1996 as regards  Trans-European  Networks  provide the 

25 

26 

27 

28 

29 

Directive  96/92/EC  of  the  European  Parliament  and  of  the  Council  of  19  December  1996 
concerning common rules for the internal market in electricity, OJ N° L 27 of 30.01.1997, p. 20. 
Communication  from  the  Commission  on  services  of  general  interest  in  Europe,  COM(96)443 
final of  11.09.1996. 
Amended  proposal  for  a European  Parliament  and  Council  Directive  concerning  common  rules 
for the internal  market in natural gas, OJ N° C123, 04.05.1994, p.26. 
Commission Decision N° 3632/93/ECSC of 28 December  1993 establishing Community rules for 
State aid to the coal industry, OJ N° L329, 30.12.1993, p. 12. 
Council  Decision  N°  96/391/EC of  28 March  1996 laying down a  series  of  measures  aimed  at 
creating  a  more  favourable  context  for  the  development  of  Trans-European  Networks  in  the 
energy  sector.  OJ  N°  L161,  29.06.1996,  p.  154.  Decision  N°  1254/96/EC  of  the  European 
Parliament  and  of  the  Council  of  5  June  1996  laying  down  a  series  of  guidelines  for  Trans-
European Energy Networks, OJ N° L  161, 29.06.1996, p.147. 

15 

framework,  guidelines  and  means  for  securing  a  sound  basis  for  trade  and  for  the 
operation of the internal energy market. 

is  an  important  factor  in  the  achievement  of  the  internal 
Taxation  of  energy  products 
market.  The  Directives  relating  to  excise  duties  on  mineral  oils  30  together  with  that 
relating to the free circulation of these products31  have allowed the creation, by a process 
of  harmonization,  of  a  true  internal  market  in  mineral  oils.  The  Commission  sent  the 
Council,  on  12  March  1997,  a  draft  Directive  aimed  at  completing  the  first  of  these 
provisions  and  at  thus  strengthening  the  internal  market  in  energy  products  32.  This 
proposal  widens  the  application  of  the  Community  system  of  minimum  rates to  cover  all 
energy  products.  It will  allow the ending of distorsions  of competition  which today  affect 
the  energy  markets,  while  promoting  the  principle  of  fiscal  neutrality.  This  proposal  also 
takes  account  of  the  need  to  encourage,  by  fiscal  incentives,  the  development  of 
renewable energies,  and the internalization  of environmental  costs. 

Transparency  is  a  very  important  condition  for  the  smooth  operation  of  the  internal 
energy market and is likely to create a climate favourable to investment.  This transparency 
should  extend to the energy policies  pursued,  to  the rules applied,  to the quantities33  and 
prices  of  energy  products,  and  to  investments.  It  was  significant,  for  example,  that  the 
transparency  of  prices to  the  industrial final gas  and electricity  consumer  was  achieved  in 
this context.34 

Standardization  contributes to the integration  of the  energy  sector.  Standardization  work 
covers the  energy products themselves,  their production,  their transport,  their  distribution 
and also  appliances or equipment  which  are energy-consuming.  It is in particular with the 
support of SAVE and ALTENER that standardization directives are drawn up in the fields 
of energy efficiency  and the labelling of energy-consuming appliances35. 

30 

31 

32 

33 

34 

35 

Council  Directive  92/81/EEC  of  19  October  1992  on  the  harmonization  of  the  structures  of 
excise duties on mineral oils, OJ N° L 316 of 31.10.1992, p.  12. Council Directive 92/82/EEC of 
19 October  1992 on the approximation of the rates of excise duties on mineral oils, OJ No L 316 
of 31.10.1992, p.  19, modified  by  Council  Directive  94/74/EC of 22 December  1994, OJ  No L 
365 of 31.12.1994, p. 46. 
Council  Directive  92/12/EEC  of  25  February  1992  on  the  general  arrangements  for  products 
subject  to excise duty and on the holding,  movement and  monitoring of such products, OJ N° L 
76 of 23.03.1992, p.l. 
Draft  Directive  restructuring  the  Community  framework  for  the  taxation  of  energy  products, 
COM (97) 30. 
Council  Regulation  95/2964/CE  of  20  December  1995  introducing  registration  for  crude  oil 
imports and  deliveries in the Community, OJ N° L 310, 22.12.1995, p.5. 
Council  Directive  90/377/EEC of 29 June  1990 concerning  a  Community  procedure  to  improve 
the  transparency  of  gas  and  electricity  prices  charged  to  industrial  end-users,  OJ  N°  L  185, 
17.07.1990, p. 16. 
Council  Directive  92/42/EEC  of  21  May  1992  on  efficiency  requirements  for  new  hot-water 
boilers fired with liquid or gaseous fuels,  OJ N° L  167 of 22.06.1992, p.  17. Directive 96/57/EC 
of  the  European  Parliament  and  of  the  Council  of  3  September  1996  on  energy  efficiency 
requirements  for  household  electric  refrigerators,  freezers  and  combinations  thereof,  OJ  N°  L 
236,  18.09.1996, p. 36. 

2. 

Energy and economic and social cohesion 

16 

Energy  policy  is  also  concerned  with  Community  action  in  the field of  economic  and 
social cohesion36. The possibility of having sufficient  energy available at affordable prices 
is  an  important  condition  for  the  competitiveness  of  underdeveloped  regions.  A  good 
energy  balance,  rational  energy  use  and  emphasis  on  the  development  of  renewable 
energies  are  also  important  considerations  for  European  regional  planning  The  energy 
programmes include this aim of cohesion; it is thus for example that a third of the actions 
under THERMIE and nearly half of the local  and regional  energy centres are located in 
the regions of Objective  1 (support to the less developed regions) and more than 20 % in 
the regions of Objective 2 (regions in industrial decline) and 5b (rural areas). 

As regards the Structural Funds, the Community Support Frameworks almost all envisage 
an "energy component".  In the Objective  1 budget,  the amount for  projects  concerning 
energy  represents  2.5  billion  ECU.  Some  of  the  Community  initiative  programmes 
concern energy directly,  in particular INTERREG II/REGEN (cross-border  cooperation 
and energy networks) and REGIS II (integration of the more remote regions). 

The Cohesion Fund, for its part, finances environmental projects and projects for transport 
infrastructure which are indirectly connected with energy. 

3. 

The financing of energy investments 

In addition to the financing provided by the Structural Funds or within the framework of 
the Trans-European Networks, the energy sector enjoys the financial support of the EDB, 
the EIF and ECSC  and EURATOM  aid  and loans.  The table  entitled  "main sources  of 
finance  for  Community  energy  actions"(see  Annex  2)  provides  an  overview  of  all  the 
financing  granted to the energy actions. 

Loans from  the  European Investment Bank  (EIB) to  the  energy  sector  account  for 
approximately  20% of  the financing granted  by the  EIB.  The  objectives  of  the  energy 
policy  of  the  European  Community  constitute  eligibility  criteria  for  the  EIB.  The 
achievement of the internal market also results in emphasis on the interconnection of the 
gas and electricity networks both within the European Union and outside it. 

The Edinburgh mechanism was introduced by the European Council at the end of 1992 to 
support,  inter  alia,  the financing of  investments  in  Trans-European  Energy  Networks, 
equipment  in the  energy  production  sector  and other  investments  making it  possible  to 
improve  the  access  of  the  regions  concerned  to  the  Trans-European  Energy  Networks 
(the amounts granted are included in the data given in Annex 2 concerning EIB loans). 

The European Investment Fund (EIF)  centres its interventions on the granting of  financial 
guarantees to the banks in support of medium and long term investments of interest to the 
Trans-European Networks. 

36 

Communication  from  the  Commission  to  the  Council,  the  European  Parliament  and  the 
Economic  and  Social  Committee  on  Energy  and  economic  and  social  cohesion,  COM(93)645 
final of  14.02.1994. 

17 

The ECSC finances actions concerning in particular the retraining of workers and research 
programmes  in  the  coal  and  steel  sectors;  it  grants  interest  rebates  on  industrial 
readjustment  loans.  Moreover,  the  ECSC  makes  loans,  mainly  to  the  coal  industry,  to 
thermal power stations and to Community steel. 

C. 

PROMOTING SUSTAINABLE DEVELOPMENT IN THE ENERGY FIELD 

"Sustainable" economic and  social progress can be achieved  only if all policies and, first 
and foremost,  energy policy, fully integrate environmental concerns. 

1. 

The compatibility of energy and environmental objectives 

The energy sector plays a major  role as regards the environment.  Indeed, the production, 
transport  and  use  of  energy  have  incidences,  in  most  cases,  on  our  environment;  these 
incidences  may  be  local,  when  they  concern  air  quality  in  towns,  discharge,  nuclear 
storage  or  noise;  they  may  cover  several  regions  or  states  and  thus  have  continental 
dimensions,  in  the  case  of  emissions  which  have  consequences  beyond  their  place  of 
origin.  Emissions  of  greenhouse  gases  such  as  CO2  constitute  a  world-wide  concern, 
which was the subject  of the United Nations Framework  Convention  on Climate Change. 
All actions aimed at reducing emissions and developing safer energy techniques bring with 
them benefits to health. Since 1991, the reduction of CO2 emissions has been raised by the 
Council to the rank of strategic concern37 and will represent the major topic for  discussion 
at the Kyoto Summit in December  1997. On 3 March  1997, Council conclusions indicated 
the objective of reducing by  15% emissions of the main greenhouse gases before  the year 
2010.  Against  this  background,  the  Commission  is  preparing  a  Communication  on  the 
energy dimension of climate change. 

Taxation, voluntary'agreements and R&TD are some of the means available, in addition to 
legislation,  for  making  energy  and  environmental  objectives  compatible.  This  dimension 
has  been  taken  into  account  by  the  Commission  in  its  draft  Directive  restructuring  the 
Community  taxation  framework  for  energy  products38,  which  aims  at  completing  the 
internal  market  while  allowing  Member  States  to  implement  environmental  policies 
adapted  to  their  national  contexts.  Furthermore,  the Commission  is negotiating  with  the 
car industry with the aim of reaching an agreement on significant  reductions in the average 
CO2  emissions  from  new  cars.  In  addition,  specific  programmes  can  enable  the 
Commission  and  the  energy  industry  to  work  together.  For  example,  the  Auto-Oil 
programme  involved  the  petroleum  and  automobile  sectors  in  seeking  the  best  way  of 
economically  attaining  air  quality  objectives,  working  simultaneously  on  the  aspects 
relating to fuels and to engines39. 

37 

38 

39 

At  its  meeting  on  29  October  1990,  the  Council  regarded  it  as  a  goal  to  stabilize  total  CO  2 
emissions  between now and the year 2000 at the  1990 level throughout the Community. Also see 
the amended proposal for a Council Directive introducing a tax on carbon dioxide emissions and 
energy, COM(95)172 final of 10.05.1995. 
Draft  Directive  restructuring  the  Community  framework  for  the  taxation  of  energy  products 
(COM (97) 30). 
The  Communication  from  the  Commission  to  the  European  Parliament  and  the  Council  on  a 
future  strategy  for  the  control  of atmospheric emissions  from  road  transport  takes  into  account 
the results from the Auto/Oil Programme, COM(96)248 final of 18.06.1996. 

IK 

2. 

The rational and efficient  use of energy resources 

The  achievement  of  the  Community's  environmental  objectives  and  the  reduction  of 
energy dependency  necessitate rational  and  efficient  use of energy  resources.  The  SAVE 
Programme  provides  an overall  framework  for  the European  Community  for  stimulating 
measures on  energy efficiency,  for  encouraging investment  by industry  and  consumers in 
energy  conservation,  and  for  creating the  conditions  for  the improvement  of the  energy-
intensiveness  of  final  consumption.  Complementing 
this,  the  JOULE-THERMDE 
Programmes  provide  financial  support  for  the  development  of  clean  and  efficient 
technologies in this  field. 

Energy  saving  at  the  local  and  urban  levels  is increased  by the  improvement  of  demand 
management,  by  the  promotion  of  energy  efficiency  and  by  better  use  of  regional 
resources. Following  pilot  projects  for  the  regions,  for  the  cities  and  for  the  islands, the 
Commission  has  concentrated  its  action  on  the  local  or  regional  agencies  for  energy 
saving,  the  creation  of  which  is  supported  by  SAVE.  The  value  added  by  setting  good 
examples  and  by  successful  cooperation  in  this  field  across  national  boundaries  are 
especially  noteworthy.  The  potential  number  of  local  or  regional  agencies  which  could 
usefully  operate is estimated at  1600 in the European Union. 

3. 

The promotion of new and renewable energy sources 

Renewable energy sources are clean, contribute relatively little to climate change, and  are 
indigenous and generally  easily available. Increasing their  share in the Community  energy 
balance would contribute to environmental protection  and to security of supply, as well as 
having  other  advantages.  These  energy  sources  will  be  more  intensely  developed  in  the 
future,  given the progress being made in the technology  and  the  costs.  The  Commission 
has just  submitted  a Green Paper  on renewable energy  sources, which will be the  subject 
of  a  wide-ranging  debate  associating  all  the  interested  parties40.  A  White  Paper, 
accompanied by an action plan, will be adopted before the end of 1997. 

The  ALTENER  Programme  is  a  particularly  important  tool  for  promoting  renewable 
energies. By encouraging  market  penetration,  it aims at increasing the share of renewable 
energies  in  total  energy  supply  as  well  as  at  increasing  the  use  of  biofiiels  by  motor 
vehicles.  The  support  of  the  technological  development  of  renewables  is  provided  by 
JOULE-THERMIE but also by FAIR 41. 

4. 

Links between the different  programmes 

The  various  energy  programmes  have  different  purposes.  In  drawing  up  programmes 
which  have  been  recently  adopted  (SAVE  II)  or  are  in  the  process  of  being  adopted 
(ALTENER II), the Commission  has made sure that overlappings  are avoided.  A number 
of steps have also been, or will be taken to avoid duplications at the operational  level. An 
example  is the  cross-participation  by the  managers  of the  different  programmes  -  at  the 
level of the preparation of measures, as well as in the evaluation  and selection  committees 
- which allows potential duplications in practice to be detected. These are first steps which 

40 

41 

Communication  from  the  Commission  on  "Energy  for  the  future  :  renewable  energy  sources  : 
Green Paper for a Community strategy", COM (96)576 of 20.11.1996. 
Council  Decision  94/805/EC of 23 November  1994 adopting  a  specific  programme  of  research, 
technological  development  and demonstration  in the field of agriculture and fisheries,  including 
agro-industry, food technologies, forestry,  aquaculture and rural development (1994 to 1998). 

19 

may  need  to  be  further  extended.  The  tables  annexed  to  this  Communication  provide  a 
tool  for further  analysis  as to  potential  overlaps,  and will  enable the necessary  steps to  be 
taken. 

J>. 

PROMOTING  RESEARCH  AND TECHNOLOGICAL  DEVELOPMENT 

Research  and  technological  development,  including  demonstration  projects,  play  an 
essential  role  in  the  development  of  methods  which  yield  high  energy  efficiency  and  of 
new  technologies  for  the  exploitation  of  fossil  fuels,  nuclear  energy  or  renewable  energy 
sources. The R&TD Framework  programme has a Research and Development  component 
(JOULE)  and  a  Demonstration  component  (THERMIE).  These  allow  substantial  efforts 
to  be  undertaken  on  new  energy  technologies  by  industry,  research  centres  and 
Universities in the Member States.  An R&TD programme in the area of nuclear safety  and 
controlled  nuclear  fusion  based  on  the  EURATOM  Treaty  is  also  undertaken.  The  Joint 
Research Centre is associated with these efforts. 

1. 

Non-nuclear energy 

In  addition  to  the  general  objectives  of  technological  development,  the  JOULE-
THERMIE42  Programmes  have  as  a  focus  objectives  of  energy  security  (in  the  large 
sense,  i.e.  including  the  concept  of  economic  competitivity  and  sustainable  growth), 
environmental  protection  (in  particular  Climate  Change),  and  coherence  between  R&TD 
and the energy markets. 

The  programme  has three  priorities:  the  rational  use  of  energy,  the  development  and  use 
of renewable energies and the improved use of fossil fiiels. It is completed by a component 
supporting R&TD strategy which also covers research into modelling. 

As  regards  the  improvement  of  energy  use  and  the  conversion  of  fossil  fuels,  the  aim  is 
primarily  to  reduce  polluting  emissions  and to  increase  energy  efficiency  with  a  positive 
impact  on  the  competitiveness  of  enterprises.  In  addition,  the  Community  finances 
research  activities  in  the  solid  fuels  field  (coal,  lignite  and  peat).  The  Commission  will 
present a Communication  on the role of solid fuels  in energy policy,  taking  account  of the 
technological  aspects and of the clean and efficient  use of these fuels,  and looking  beyond 
the ECSC Treaty, taking also into account future enlargement. 

With  regard  to  renewable  energies,  the  actions  financed  cover  various  energy  forms 
(conversion  of  biomass,  photovoltaic  electricity,  integration  of  solar  energy  in  buildings, 
new  generations  of  wind-turbines,  etc.)  and  also  deal  with  the  impact  on  the  social, 
economic and environmental  fabric of the new kinds of energy. 

Efforts  are  undertaken  to  co-ordinate  the  national  and  Community  R&TD  programmes. 
This  coordination  is  reinforced  by  joint  analyses  of  the  cost  and  potential  of  new 
technologies. 

42 

Council  Decision  94/806/EC of 23 November  1994 adopting  a specific  programme  for  research 
and  technological  development,  including  demonstration,  in  the  field  of  non-nuclear  energy 
(1994 to  1998), OJ N° L334, 22.12.1994, p.87. 

20 

It  is  important  to  continue  these  activities  and  also  to  add  new  innovative  projects,  in 
particular  that  relating  to  the "city  of  the  future"  for  which  research  and  demonstration 
activities centred in particular on energy efficiency  in buildings are envisaged. 

Other specific programmes of the 4th R&TD Framework Programme indirectly contribute 
to  the  improvement  of  the  efficiency  of  the  energy  system:  information  technology 
(ESPRIT),  industrial  technologies  (IMT),  technologies  of  transport  (IMT  and  "Car  of 
Tomorrow").  Activities  linked  to  the  production  of  biomass  (FAIR)  complement 
horizontally the energy-specific  activities of JOULE-THERMIE. 

The proposal  for  the  5th Framework  Programme  covering  the  period  1998-2002 has been 
adopted by the Commission. One of its key actions, "advanced energy systems and services", is 
intended  to  have as an objective  a contribution  towards  satisfying  the  Community's  energy 
needs, while reducing CO2 emissions and strengthening  competitivity by promoting, through 
targeted projects, the development of efficient  energy systems both as regards production and 
consumption. 

2. 

Nuclear energy 

In the  context  of the  Fourth  R&TD  Framework  Programme,  research  and  technological 
development  activities  as  regards  nuclear  fission  are  undertaken  on  reactor  safety,  the 
safety  and  security  of  the  whole  combustion  cycle  (including  waste-management),  the 
dismantling of nuclear facilities, the monitoring of nuclear materials, non-proliferation,  and 
the radiological  effect  on human  health  and the environment.  The study  of the  effects  of 
ionizing radiation also results in developments in medical applications. 

The  second  aspect  of  research  in  the  field  of  nuclear  energy  concerns  controlled 
thermonuclear  fusion,  which constitutes  an option that  merits serious consideration,  as it 
has practically inexhaustible potential as an energy source.43 

43 

Following JET (Joint European Torus), the experimental  ITER (International Thermonuclear 
Experimental Reactor) reactor has entered its detailed project phase; its objective is to show the 
scientific and technological feasibility of fusion energy for peaceful uses. 

21 

CONCLUSIONS 

1.  This Communication  aims to  improve the transparency  of Community  energy  policy. 
It presents, for  the first time, a complete picture, giving an overall view of the actions 
of  the  European  Community  in  the  energy  field,  including  both  cooperation  with 
Member States and the Community's own actions. 

It  represents  a  first  step  towards  a  complete  analysis  of  the  different  components  of 
energy policy. With regard  to the links between the specific  energy  policy  actions and 
other  Community  policies,  further  analysis  will  have  to  be  undertaken,  based  on  the 
specific  nature of each programme,  methods of implementation  and the  level  at  which 
Member States, their regions or third countries are involved. These factors  are essential 
to a correct understanding  of the  Structural Funds or of programmes such as PHARE/ 
TACIS/MEDA. 

2.  Apart  from  increased  transparency,  this  Communication  allows  two  operational 

conclusions to be drawn as regards the policy which could be followed  in future: 

•  Energy actions should be strengthened  so as better to respond  to the expected 
significant  increase in external dependency, to the objective of competitiveness, 
and  to  the  need  to  respect  the  environment.  The  aim  will  be  to  encourage 
greater  cooperation  between  Member  States  around  common  energy 
objectives.  There  will  also  be  a  need  to  improve  the  targeting  of  Community 
actions - whether developed  in the framework of Energy Policy or that of other 
Community  policies  -  on  the  basis  of  these  priority  objectives.  The  measures 
undertaken  should  aim to  increase  the  efficiency  of Community  action  and  to 
optimise the use of financial  resources by the encouraging  of synergies and  the 
identification  of  the  areas 
in  which  energy  policy  actions  should  be 
strengthened; 

•  With  a  view  to  increased  efficiency,  and  without  prejudice  to  the  question  of 
inserting  a  specific  legal  base  for  energy  in the  new  Treaty,  efforts  should  be 
made  at  clarification  and  streamlining.  Community  Energy  Policy  needs  a 
coherent  framework  to  allow  it  to  fulfil  its  priority  purposes  with  adequate 
means. 

In  fact,  the  major  challenges  of  security  of  supply,  competitiveness  which  respects  the 
rights and legitimate expectations of consumers, and of sustainable development  represent 
major  issues  for  the  citizens  of  Europe,  both  as  regards  the  way  they  live  and  their 
standard of living. It is therefore a matter of urgency to prepare to meet them by facing up 
to the changes taking place both within and outside the Union. 

ANNEX  1 
AN OVERALL VTEW OF ENERGY POLICY AND INSTRUMENTS 

t  EJSKKGV COOPERATION 

Objectives and Actions 

Implementation/ Financing 

cooperation with Member States 
cooperation with interested parties 

•  cooperation  framework 
•  consultative committee 

m 
Objectives and Actions 

i.  Security of supply and international energy cooperation 

Implementation/Financing 

diversification  of energy supply 
- relations with supplier countries 

- energy sources 

European Energy Charter 
bilateral agreements 
renewables, biofiiels, nuclear 

actions on demand side management 

SAVE/THERMIE 

aid and cooperation  programmes 
- technical assistance programmes 

- taking account of European  priorities 
in international energy cooperation 

preparing the accession of new States 

PHARE, TACIS, MEDA 
Asia, Latin America (ALURE), EDF 
SYNERGY, including Euromediterranean  Forum 
+ Balkans Task Force, China-ETJ Group 

energy policy convergence 
international development of networks 

cooperation with international  institutions 

IEA, IAEA, EBRD, WB 

crisis measures 

adaptation of existing  framework 

2. Integrating energy markets 

creating the internal energy market 

contributing to social and economic cohesion 
financing energy investments 

3. Promoting sustainable development in the energy field 

rational  and  efficient  use  of  energy 

encouraging 
resources 
promoting new and renewable energy sources 
compatibility 
objectives 

between 

energy 

and 

environment 

internal markets for gas and electricity 
Trans-European Energy Networks 
competition policy 
energy taxation 
transparency of the energy market 
standardisation 
Structura! Funds / Cohesion Fund 
EÏB/EIF, ECSC 

• 

SAVE,  including  regional  and  local  agencies 

• 

Renewables strategy,  ALTENER 
climate change / auto-oil proposals / 
cooperation with industry for C02  reduction 

4. Promoting energy research and technological development 

promoting energy research and the 
demonstration, dissemination of energy technology 
nuclear research 

JOULEmffiRMIE/INCO 
EURATOM 

<£? 

ANNEX  2 
MAIN SOURCES OF FINANCE FOR COMMUNITY ENERGY ACTIONS 

v  j ^ g r ^ ^ o r a c f & H* 

F r wl 

A.  Financing of energy policy actions 

, * '« 

1.  THERMIE (management / implementation) 
2.  SAVEÏÏ 
3.  ALTENER 
4.  SYNERGY 
5.  Observatory 

B. Financing of Trans-European Energy Networks 
C  Energy R&TD 

1.  JOULE 
2.  THERMIE 
3.  Safety of nuclear fission 
4.  Thermo-nuclear fusion 
5.  Joint Research Centre 
6. INCO (External R & T D) 

D. Structural Funds 

1.  Community Support Frameworks 
2.  Community initiatives (REGEN, REGIS) 

K  Financing of international cooperation 

1.  PHARE (Central and Eastern Europe) 
2.  TACIS (NIS and Mongolia) 
3.  MED A (Mediterranean) 
4.  Developing countries in Asia 
5.  Developing 

countries 

in  Latin-America 

(including ALURE) 

6.  European Development Fund (ACP) 
7.  SYNERGY 
8.  External aspect of environmental policy 

F  EURATOM safeguards 
G. ECSC support for  coal 

1.  Support for  readjustment 
2.  Support for  research 
3.  Coal social measures 

H. European Investment Bank Loans 
1.  European Union 
2.  Third Countries 

/  ECSC Loans 
J. EURATOM Loans 
K. European Investment Fund Guarantees 

1.  European Union 
2.  Third Countries 

1995 -1998 
1996 - 2000 
1993-1997 
1997 
1997 
1995 -1999 

(pt. C.2 below) 
45 
40 
7 
2 
112 

(a)(b) 
(a)(c) 
(e) 

JH. 

(a) 
(a) 
(a) 
(a) 
(a) 
(a) 

(f) 
SSL 

(d) 
(d) 
(g) 
(d) 
(d) 

(d) 

SSL 

(d) 
(d) 
SSL 

1995 -1998 
1995 - 1998 
1995 - 1998 
1995 -1998 
1995 - 1998 
1995 - 1998 

1994 -1999 
1994 - 1999 

1994 - 1996 
1994 -1996 
1995 - 1999 
1994 - 1996 
1994 - 1996 

1995 -1996 
1997 
1995 - 1996 
1997 

1994 - 1996 
1994-  1996 
1994-  1996 

1996 
1996 
1996 
Î996 

1996 
1996 

464 
566 
170.5 
846 
312.5 
30 

2500 
534 

158.7 
415.4 
p.m. 
20 
28.5 

18.2 

(pt. A.4 above) 

4.6 
15.8 

164.7 
69.6 
103.2 

4.975 

702.4 
97.3 

p.m. 

88 
182 

(a) 
(b) 
(c) 
(d) 
(e) 

(f) 
(g) 
(h) 

Reference amount provided for in the multiannuai programme concerned. 
In 1997, the Council will re-examine the financial reference amount for  1998-2000, on trie basis of a Commission proposal. 
The Commission has adopted a draft programme for ALTENER II (1998-2002)  with a budget of 30 MECU for  1998-1999. 
Amounts committed for annual actions over the whole of the period. 
Council's agreement has been obtained giving SYNERGY a legal base for  1997 and a budget of 6.9 MECU. From 
1993 to 1996, a cumulative amount of 38.8 MECU was committed for  this type of action. 
Amount resulting from energy sector actions provided for in the Objective  1  regions. 
No sectoral breakdown; no commitment to date. 
Indicative envelope agreed for the energy TENs within the overall reference amount of 2,345 MECU provided for the TENs as 
a whole (transport, energy, telecommunications). 

t\ 

ISSN 0254-1475 

COM(97) 167  final 

DOCUMENTS 

EN 

12 

Catalogue number  :  CB-CO-97-171-EN-C 

ISBN  92-78-18981-2 

Office  for Official  Publications of the European Communities 

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