Special Report No 17/98 on support for renewable energy sources in the shared-cost actions of the Joule-Thermie Programme and the pilot actions of the Altener Programme together with the Commission's replies (Submitted pursuant to Article 188c(4)(2) of the EC Treaty)
Date: 1998-09-23
Institutions: European Court of Auditors
Subjects: EU aid, EU financing, EU programme, European Commission, project evaluation, renewable energy

20.11.98

EN

Official  Journal  of  the  European  Communities

C  356/39

SPECIAL  REPORT  No  17/98

on  support  for  renewable  energy  sources  in  the  shared-cost  actions  of  the  JOULE-THERMIE
Programme  and  the  pilot  actions  of  the  Altener  Programme  together  with  the  Commission’s
replies

(Submitted  pursuant  to  Article  188c(4)(2)  of  the  EC  Treaty)

(98/C  356/03)

TABLE  OF  CONTENTS

Paragraph
reference

Page

1.  Scope  of  the  audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1 — 1.2

2.  Summary  of  the  main  audit  observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 — 2.12

3.  The  JOULE-THERMIE  Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.58

Legal  and  Organisational  Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.1 — 3.4

Programme  description  and  objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.5 — 3.9

Budgetary  execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.10 — 3.13

Programme  management  and  control

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

3.14 — 3.43

Project  selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.14 — 3.25

Project  management  and  control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.26 — 3.37

Programme  monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.38 — 3.41

Programme  management  costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.42 — 3.43

Project  execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.44 — 3.58

Project  coordination  by  European  Economic  Interest  Groupings . . . . . .

3.44 — 3.47

Difficulties  in  producing  correct  cost  statements . . . . . . . . . . . . . . . . . . .

3.48 — 3.55

Risk  of  abandoned  projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.56 — 3.58

4.  The  Altener  Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.1 — 4.16

Legal  and  organisational  framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.1 — 4.3

Programme  description  and  objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.4 — 4.7

Programme  management  and  control

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

4.8 — 4.16

Project  selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.8 — 4.10

Formal  decision  procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.11 — 4.12

Project  management

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

4.13 — 4.16

5.  Information  dissemination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1 — 5.2

6.  Coordination  of  JOULE-THERMIE  and  Altener  with  other  European  Union
and  Member  State  support  measures  in  the  area  of  renewable  sources  of
energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.1 — 6.8

7.  Conclusion  and  recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.1 — 7.9

Annex  1 —  Position  of  Renewable  Energy  Sources  in  the  Community  policies . . . . . . . . . . . . . . . .

Annex  2 —  Selection  procedures  in  the  JOULE  part  of  the  JOULE-THERMIE  programme . . . . .

40

40

41

41

41

42

42

42

44

46

46

47

47

47

48

48

48

49

49

49

49

50

50

50

52

56

57

Replies  of  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58

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1.  SCOPE  OF  THE  AUDIT

1.1. Within  the  JOULE-THERMIE  programme  (ECU
1 039  million)  the  shared-cost  actions (1)  for  renewable
energy  sources  represent  approximately  35 %  of  the
programme’s  budget.  The  Altener  pilot  projects  (ECU
28,8  million),  representing  approximately  66 %  of  the
programme’s  budget  (ECU  44  million)  cover  actions
similar  to  those  of  JOULE-THERMIE.

of 

and 

(DG  XII) 

1.2. The  aim  of  the  Court’s  audit  was  to  determine
whether  the  objectives,  as  defined  by  the  respective
Council  Decisions,  are  met  in  an  efficient  and  effective
way.  This  involved  an  examination  of  the  programme
and project management structures and procedures of the
Commission’s  Directorate-General  for  Science,  Research
and  Development 
the
Directorate-General  for  Energy  (DG  XVII).  To  examine
the  execution  of  the  JOULE-THERMIE  programme,  19
contractors  in  six  Member  States  (Belgium,  France,
Germany,  Spain,  Sweden  and  the  United  Kingdom),
involved  in  30  out  of  a  total  of  approximately  300
projects, were selected for audit. The selection focused on
solar  energy  and  biomass  projects,  although  some
projects  from  other  areas  were  included.  Selection  of  the
organisations  and  projects  audited  was  primarily  based
upon  the  size  of  Community  contributions,  but  also
types  of  beneficiaries
meant 
(universities,  research  institutes  and  private  companies,
including  SMEs).  The  audit  of  the  Altener  programme
was  based  upon  filereviews  at  DG  XVII.

include  different 

to 

2.3. Many  of  the  THERMIE  demonstration  projects
were found to lack a major innovative element; they had
only a limited European dimension and their funding did
not  meet  the  requirement  of  balanced  participation  of
partners  (see  paragraphs  3.22,  3.23  and  3.24).

2.4. Scientific and financial management and monitoring
of  the  projects  were  weak  in  both  areas  although  the
widespread  use  of  external  assistance  in  THERMIE
ensures  a  closer  supervision  than  realised  in  JOULE  (see
paragraphs  3.26,  3.27,  3.28  and  3.29).

2.5.
Incompatibilities could arise in the areas of project
selection,  project  management  and  project  supervision  in
both JOULE and THERMIE (see paragraphs 3.17, 3.18,
3.30  and  3.31).

2.6. The  Commission  does  not  collect  and  evaluate
information  on  the  costs  of  the  management  of  the
programme or the costs of the selection and management
of  the  projects.  In  DG  XII  more  than  50 %  of  the  posts
financed 
for
JOULE-THERMIE  were  occupied  by  staff  working  on
tasks  outside  the  JOULE-THERMIE  programme  (see
paragraphs  3.21,  3.41,  3.42  and  3.43).

the  budget  appropriations 

through 

2.7. A large number of THERMIE projects, especially in
the  biomass  area,  are  seriously  delayed  or  even
abandoned  (see  paragraphs  3.56  to  3.58).

2.8. There  were  numerous  problems  in  the  contractor’s
costs claims and insufficient checking by the Commission
services  (see  paragraphs  3.32,  3.48  to  3.55).

2.  SUMMARY  OF  THE  MAIN  AUDIT  OBSERVATIONS

2.9. Financing decisions for the Altener programme have
not  been  properly  taken  (see  paragraphs  4.11  to  4.12).

2.1. Despite  the  Council  decision  to  merge  the  Research
and Technological Development Programme JOULE and
the  Demonstration  Programme  THERMIE,  neither  the
project selection, nor the project management procedures
in  the  two  managing  DGs  have  been  harmonised.  The
fundamental objective of the merger — to bridge the gap
between  Research  and  Demonstration  —  has  not  been
achieved  (see  paragraphs  3.04,  3.16,  3.24  and  3.29).

2.2. While  the  project  selection  process  of  THERMIE
lacks clarity, progress has been noted in the JOULE part
of  the  programme,  since  the  first  call  for  proposals  (see
paragraphs  3.15  and  3.16).

(1)  Shared  cost  actions  are  RTD  or  demonstration  projects
whereby  the  Commission  reimburses  part  of  the  costs  of  the
project  contractors.

2.10. Delegation  of  part  of  the  selection  process  in  the
Altener  programme  to  the  Member  States  is  neither
coordinated,  guided  nor  monitored  by  the  Commission.
This  means  that  the  process  is  not  transparent  and  that
fair  selection  is  not  ensured  (see  paragraphs  4.08  to
4.10).

2.11. The 
information
large  number  of  parallel 
networks  and  points  disseminating  information  on  the
audited  programmes  adversely  affects  the  efficiency  and
effectiveness  of  the  information  policy  (see  paragraphs
5.01  to  5.02).

2.12. The  lack  of  a  comprehensive  inventory  of  all
Community  supported  RES  projects,  in  particular  in  the
Structural  Funds,  is  an  obstacle  to  efficient  coordination
between  programmes  and  services  (see  paragraphs  6.2  to
6.4).

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3.  THE  JOULE-THERMIE  PROGRAMME

Programme  description  and  objectives

Legal  and  organisational  framework

3.1. Prior  to  1994  the  type  of  support  provided  by
JOULE-THERMIE  was  delivered  through  two  separate
programmes. The JOULE programme, one of the specific
programmes  of  the  Third  Research  and  Technological
Development  (RTD)  Framework  Programme  supported
the  research  actions  (DG  XII),  whilst  the  demonstration
activities were financed by the THERMIE programme, as
part  of  the  Energy  policy  (DG  XVII).

3.2. Under  paragraph  3  of  Article  130f  of 
the
Maastricht Treaty, demonstration projects became part of
Title  XV  which  governed  Research  and  Technological
Development.  A  logical  consequence  of  this  was  that
demonstration  projects  were  incorporated  in  the  RTD
Framework  Programme.  This  meant  that  from  the
commencement  of  the  Fourth  Framework  Programme
(4th  FWP),  the  demonstration  part  of  THERMIE  was
merged  with  JOULE  in  JOULE-THERMIE.

3.3.
JOULE-THERMIE  (1994  to  1998)  is  governed  by
the  decision  regarding  the  4th  FWP (2)  and  by  the
decision  concerning  the  specific  programme  for  research
and  technological  development,  including  demonstration,
in  the  field  of  non-nuclear  energy (3).

3.5. The  supported  shared-cost  actions  are  generally
projects,  executed  by  a  consortium  of  contractors  from
several  Member  States  with  the  aim  of  researching  or
building  a  demonstration  installation  in  one  of  the
following areas;

(a)  integration  of  renewable  energies  (research  only);

(b) solar photovoltaic;

(c)  renewable  energies  in  buildings;

(d) wind  energy;

(e)  energy  from  biomass  and  waste;

(f)  hydro-electric  plants  (demonstration  only);

(g)  geothermal energy;

(h) energy  storage  and  further  options  (e.g.  fuel  cells,

solar  thermal  energy).

energy 

efficient 

technologies, 

3.6. The general objectives of JOULE-THERMIE are to
encourage energy security, sustainable development, clean
industrial
and 
competitiveness  and  social  cohesion.  For  the  Renewable
Energy  Sources  (RES)  area  the  main  objective  is  to
increase the cost-competitiveness and reliability of RES as
well  as  the  confidence  of  the  relevant  operators  with  a
view to introducing RES into the energy supply system at
a  significant  level.  An  additional  objective  is  to  enhance
the  integration  of  RES  into  the  economy  and  everyday
life  of  society.

3.4. Although  JOULE-THERMIE  has  become  one
programme  in  the  Regulations,  within  the  Commission’s
organisation  chart  the  two  original  parts  (JOULE  and
THERMIE)  are  still  managed  by  two  DGs,  XII  and
XVII,  under  the  authority  of  two  Commissioners.  In  DG
XII  the  programme  is  managed  in  Directorate  F-Energy,
where  a  separate  unit  is  responsible  for  the  renewable
energy  area.  In  DG  XVII  the  programme  is  managed  in
Directorate  D-Energy  Technology,  where  unit  D3  is  in
charge  of  renewable  energy  related  projects.

for  all  components  of 

3.7. While  these  objectives  are  valid  for  the  whole
programme,  the  Council  Decision  also  sets  separate
objectives 
the  programme
mentioned above. For JOULE emphasis is on state of the
art technologies which, except for a few cases, are still far
from  the  market.  The  objective  of  the  THERMIE
demonstration  projects  is  to  prove  the  technical  viability
of  a  new  technology,  together  with,  as  appropriate,  its
possible  economic  advantages.

(2)  Decision No 1110/94/EC of the European Parliament and of
the  Council  of  26  April  1994  concerning  the  Fourth
the  European  Community
Framework  Programme  of 
activities 
technological
development  and  demonstration  (1994  to  1998)  (OJ  L  126,
18.5.1994,  p.  1).

field  of  research  and 

the 

in 

in 

the  Commission’s  work  programme 

3.8. These  objectives  are  integrated  and  translated  into
for
tasks 
JOULE-THERMIE,  which 
the  basic
documentation  provided  to  all  parties  who  are  interested
in  submitting  a  project  proposal.

is  part  of 

(3)  Council Decision 94/806/EC of 23 November 1994 adopting
technological
a  specific  programme 
development, 
in  the  field  of
non-nuclear  energy  (1994  to  1998)  (OJ  L  334,  22.12.1994,
p.  87).

including  demonstration, 

for  research  and 

3.9. The  objectives  for  specific  areas  and  energy  sources
are  reasonably  precise  and  specific.  However,  the  more
the
such  as 
strategic  objectives 

improvement  of 

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competitiveness  of  European  industries  or  improvement
of  economic  and  social  cohesion  are  so  vague  that  they
cannot  be  used  as  a  basis  against  which  the  actual
outcome  of  the  programme  can  be  assessed.

RES is getting in line with the Council’s indicative target.
This  is  not  the  case  for  specific  SME  support  measures,
which  with  a  mere  1,28 %,  stay  far  below  the  limit  of
5 %.

Budgetary  execution

illustrates 

that  although 

3.10. Table  1 
the  1995
commitment appropriations were practically fully used in
the first year of the programme, payments started to flow
slowly.  This  was  a  consequence  of  the  duration  of  the
project selection and contract negotiation procedure. The
first  call  for  proposals  was  published  on  15  December
1994, with as deadline for receipt of proposals 24 March
1995.  The  first  contracts  were  signed  only  in  December
1995  and  therefore  most  advances  were  only  paid  in  the
financial  year  1996.

which 

Council 

Decision 

3.11. The 
governs
JOULE-THERMIE  gave  an  indicative  breakdown  of  the
programme’s budget to the JOULE and THERMIE parts
and,  within  each  part,  to  the  main  supported  areas.  It
also  dedicated  a  share  of  the  budget  to  accompanying
measures  and  to  administrative  expenses.  Table  2  shows
whether the actual commitments until 31 December 1997
the
have 
Council (4).

the  distribution 

indicated  by 

respected 

3.12. The  indicative  allocation  of  the  budget  to  the
different  areas  (RES,  Fossil  Fuels  and  Rational  Use  of
Energy) could not be realised immediately because of the
lack  of  acceptable  RES  projects  in  the  first  general  call
for  proposals  in  1995.  Therefore,  strongly  supported  by
the  European  Parliament,  at  the  end  of  1995  an
additional  call  for  proposals,  only  open  to  RES  projects
was  launched.  Table  2  illustrates  that  as  a  result  of  this
call,  at  31  December  1997,  the  percentage  allocated  to

(4)  Unfortunately, 

the  Commission’s  reports  and 

financial
system  do  not  allow  the  monitoring  of  the  adherence  to  the
limits  set  by  the  Council  in  a  satisfactory  way,  because  not
all  categories  defined  by  the  Council  have  their  own
sub-account number. In addition the classification of costs in
the categories administration, dissemination, SME support or
projects  leaves  much  room  for  interpretation.  Therefore,  the
figures  presented  in  Table  2  may  not  be  completely  reliable.
For  example,  the  costs  of  the  experts  who  assist  the
Commission  in  the  selection  or  management  of  the  projects
instead  of  administration.
are  recorded  under  projects, 
Therefore,  although  the  percentage  of  2 %,  which 
is
mentioned  for  administrative  expenditure  is  below  the  limit
of  2,15 %,  the  figure  is  not  complete.  The  expenditure
classified  in  the  table  under  ‘other’,  2,07 %,  which  is  a
selection of entries recorded in SINCOM under projects, also
concerns  mainly  administrative  costs.  The 
items
combined  exceed  the  limit  of  2,15 %.

two 

3.13. The  distribution  of  funds  to  the  different  subjects
within  JOULE  and  THERMIE  is  shown  in  Tables  2,  3
and  4.  One  ECU  4,5  million  JOULE  contract,  selected
for  audit,  was  found  to  have  been  reclassified  in  the
project  lists  from  the  Fossil  Fuel  area  to  the  RES  area  in
November 1996, 11 months after the start of the project.
The  project  concerned  coal-biomass  co-combustion,
which  in  the  work  programme,  as  well  as  the  Council
Decision,  is  clearly  mentioned  under  Fossil  Fuels  (Work
programme  1994  to  1995,  chapter  4.  Fossil  Fuels:
4.1.1.A.2  Fuel  mixtures:  combined  combustion  of  coal
blends  and  coal  with  biomass,  residues  and/or  wastes.
High  biomass  or  waste 
to  electricity  conversion
efficiencies  should  be  targeted  (i.e.  above  40 %)  for
commercial  scale  plants,  at  economically  attractive
conditions along with reduced levels of emissions of CO2
and  other  gaseous  or  solid  matter  and  with  neutral  or
useful  solid  residues.  Council  Decision  94/806/EC:  Fossil
Fuels:  3.1  R & D  —  Development  of  processes  for  the
combined  gasification  (or  combustion)  of  coal  with
biomass). The reclassification of this single project caused
a  reduction  of  the  commitments  in  the  JOULE  Fossil
Fuels area by 9 % and an increase of the commitments in
the  JOULE  RES  area  by  3 %.

Programme  management  and  control

Project  selection

3.14. The  preparation  of  a  project  proposal  involves  a
significant investment of the applicant’s time and money.
Information  provided  to  potential  applicants  on  how  to
write  a  proposal  has  improved  since  the  start  of  the
in  JOULE,  and  contractors
programme,  especially 
indicated  that  an  extensive  proposal  was  required  to
enable  a  fair  evaluation.  However,  the  creation  of
standard  electronic  forms  for  proposals  as  is  already  the
case  in  other  programmes,  could  improve  the  efficiency
of  the  process.

in  JOULE,  which 

3.15. The  selection  process 
is
described  in  detail  in  Annex  2,  follows  the  standards  of
the  4th  FWP,  depending  heavily  on  the  judgment  of
external  experts.  During  the  first  call  for  proposals  for
JOULE  in  1995  the  original  consensus  report  proposed
classifications  for  143  out  of  563  proposals  in  the  RES
the
area  which  were 
Programme  management  before  submission 
the
JOULE  Committee.  Although  the  changes  were  justified
as harmonising classifications for individual criteria from

reclassified  downwards  by 
to 

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individual  experts  and  the  final  consensus  marks,  the
need  for  this  harmonisation  implies  that  the  instructions
to  evaluators  and  to  the  Commission  staff  who  chaired
the panel discussions, were not sufficiently clear. In order
to  avoid  the  recurrence  of  the  problems  of  the  first  call,
the  Commission  clarified  the  written  instructions  for
evaluators  and  Commission  staff.

period  to  be  too  long,  in  many  cases  discussions  within
project consortia or the late replies of individual partners
in  consortia  to  Commission  queries  were  themselves  a
cause  of  delay.  Significant  shortening  of  the  negotiation
period  might  be  achievable  by  revision  of  procedures,  in
particular  a  clarification  and  simplification  of  the
standard  contract.

3.16. Although  THERMIE  is  part  of  the  4th  FWP  it
does  not  apply  the  same  standard  procedures.  Its
selection  procedure  was  less  formalised,  less  documented
and  hence  less  clear  than  for  JOULE.  Instead  of  the  six
external  experts  who  evaluate  a  JOULE  proposal,
THERMIE  proposals  are  examined  by  two  external
experts,  one  or  two  scientific  officers  at  the  Commission
and, in theory, by all members of the relevant THERMIE
Technical  Committee.  The  members  of  the  THERMIE
Committees  are  representatives  of  the  Member  States.
Their participation is not limited to a supervisory role, as
involves  actual
the 
in 
participation 
in  the  technical  evaluation  of  specific
projects.  As  a  selection  process  which  aims  to  evaluate
proposals  only  on  their  scientific  merits  without  being
influenced  by  political  pressure,  the  JOULE  system
appears preferable.

JOULE  Committee,  but 

In 

the  JOULE  as  well  as 

3.17.
the  THERMIE
Committees,  some  Member  States  were  represented  by
staff members of public or semi-public research institutes
that  also  participated  as  contractors  in  the  programme.
Although  the  scientific  hands-on  experience  of  these
experts is certainly valuable in the discussions, a position
on  the  committees  may  give  their  institutes  an  unfair
‘information’  advantage  over  their  competitors.

3.18. Another  incompatibility  may  arise  in  a  contract
where  the  external  expert  who  evaluated  the  proposal
was also assigned by the Commission to do the scientific
monitoring  of  the  project  as  a  THERMIE  Technical
Manager  (TTM).  If  an  expert  first  evaluates  a  proposal
positively  it  could  be  difficult  for  the  same  expert  to  be
critical  about  the  execution  of  the  same  project.

the 

receipt  of  proposals  until 

3.19. From 
the
Commission  Decision  to  fund  projects  takes  on  average
four months. The negotiation phase between the decision
and  the  actual  signature  of  the  contracts  adds  another
four  to  five  months,  during  which  specific  terms  and
conditions 
the  contract  are
financial)  of 
negotiated.  Although  all  parties  consider  the  negotiation

(mainly 

3.20. One of the JOULE Solar Thermal projects audited
was  the  first  phase  of  a  much  larger  project.  The  next
phases  of  this  project  will  be  entered  for  evaluation  in
subsequent  calls  for  proposals,  where  they  risk  not  being
selected.  As  the  project  can  only  produce  relevant  results
if  all  phases  are  executed,  the  Commission  takes  a
considerable  risk  of  wasting  money.  In  the  information
presented  to  the  JOULE  Committee,  the  priority  list
contains  no  reference  to  the  fact  that  the  ECU  two
million  project  concerns  only  the  first  two  years  of  a  six
year  project.  While  the  proposal  summary  mentions  this
fact, it neither explains which technical part is covered by
the  first  phase,  nor  what  the  total  financial  value  of  the
whole  project  will  be.  This  means  that  the  information
provided  to  the  JOULE  Committee  was  inadequate  to
assess  the  proposal  in  the  proper  context.  The  JOULE
Committee  should  be  informed  in  more  detail  about
proposals  for  parts  of  projects.  A  Solar  Thermal  project
in  THERMIE  was  divided  into  phases  in  a  similar  way,
but  the  THERMIE  Committee  had  been 
informed
adequately.

3.21. The  average  cost  of  experts  for  evaluating  one
JOULE  proposal  was  approximately  ECU  655,  which
represents for each contract almost ECU 2 600, 3,2 % of
the  average  project  contribution.  The  average  cost  of
experts  per  proposal  for  THERMIE  was  higher  than  for
JOULE  although  a  THERMIE  proposal  is  reviewed  by
only  two  external  experts,  instead  of  a  maximum  of  six
experts  in  JOULE.  The  Commission  did  not  monitor  or
evaluate  the  costs  of  the  procedure.  Detailed  information
on  its  related  internal  costs  for  staff  and  infrastructure
was  not  available.  This  lack  of  cost  information  and
awareness was not limited to the selection procedure, but
was  found  in  the  entire  programme  management,  no
attempt  being  made  to  determine  best  practice.

3.22. The  audit  of  13  THERMIE  projects  showed  that
the  application  or  interpretation  of  several  selection
criteria  raised  fundamental  questions.  Six  out  of  13
projects,  in  the  areas  of  both  solar-photovoltaic  and
biomass, showed only limited innovative elements. While
the  THERMIE  information  brochure  1994  to  1995
defines eligible costs as the costs related to the innovative
part  of  the  project,  the  Commission  had  also  funded  the
non-innovative  parts.  This  led  to  the  conclusion  that
these  projects  were  more 
like  RES  promotion  or
investment  projects  than  true  demonstration  projects  as

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defined in the Council Decision and the THERMIE work
programme.  In  two  of  the  13  projects  the  only  project
partner  not  coming  from  the  same  Member  State  as  the
other  partners  in  the  consortium  was  found  to  be  an
affiliated company with a negligible role in the project. In
another six projects the only ‘foreign’ project partner was
merely  a  normal  supplier  of  standard  parts  who  did  not
participate in the innovative part of the project, as far as
any 
real,  new
international cooperation shows that these projects lack a
European  added  value.  This  implies  that  the  projects
should  have  been  supported  on  a  national  level.

innovation  existed.  The 

lack  of 

3.23. The  eligibility  criteria,  specified  in  the  THERMIE
Information  Brochure  1996,  explain  under  ‘transnational
collaboration’  that  ‘the  collaboration  must  be  more  than
symbolic  and  the  proposal  must  show  a  significant  and
balanced  participation  between  project  partners’.  On  the
financial  level  this  rule  is  not  applied.  Whilst  in  JOULE
projects  all  industrial  project  partners  contribute  50 %
towards  their  own  costs,  in  THERMIE  this  was  not  the
case.  In  all  projects  the  funding  structure  was  such  that
the  future  owner/user  of  the  installation  paid  the  full
difference  between  the  total  project  costs,  including  the
costs  of  all  project  partners,  and  the  Commission
contribution.  Therefore  the  costs  of  the  partners  who
built  the  installations  were  fully  reimbursed  and  they  did
not  contribute  financially  to  the  project.  In  two  projects
it was found that a partner had even charged commercial
prices  for  the  execution  of  his  tasks  instead  of  cost
price.

therefore 

indicated  above  six  of 

3.24. As 
the  13  audited
THERMIE  projects  do  not  have  an  innovative  character
the
not 
and 
JOULE-THERMIE  programme.  They  would  have  fitted
in  the  energy  technology  promotion  programme,  which
the Commission proposed to the Council under the name
THERMIE-II (5),  but  which  was  not  approved.  Even  the

eligible 

under 

are 

(5)  OJ  C  158  of  9.6.1994,  p.  7.  THERMIE  II:

Art.  2.1.  For  the  purposes  of  this  Regulation,  ‘projects  for
the  promotion  of  energy  technology’,  hereinafter  referred  to
as  ‘projects’,  means  projects  which  are  not  eligible  for  the
specific  programmes  of  the  fourth  framework  programme
and  which  are  designed  to  advance,  implement  and/or
promote  innovative  technologies  in  the  field  of  energy,
implementation of which entails a large element of economic
risk,  such  that  those  projects  would  in  all  likelihood  not  be
executed  without  Community  financial  support.
Art.  2.2.  Community  financial  support  may  be  granted  for
projects  designed  to  promote  with  a  view  to  their  broader
utilization,  either  under  different  economic  or  geographical
conditions  or  with 
innovatory
techniques,  processes  or  products  with  have  already  been
applied  once  but,  owing  to  residual  risk,  have  not  yet
penetrated  the  market.

technical  modifications, 

than  would  be  expected 

proposal  evaluation  forms  show  that  in  the  selection
procedure  the  innovation  aspects  are  considered  less
essential 
from  an  RTD
programme.  Although  the  forms,  which  are  filled  out  by
external  experts,  require  the  expert  to  summarise  ‘aim
description  and  innovation  aspects  of  the  project’,  the
form’s  section  on  ‘project  appraisal’  does  not  require  the
expert  to  appraise  the  innovation  aspects.  The  criteria
which  have  to  be  appraised  are:  previous  activities,
replication  potential,
technical  and 
economic  viability,  environment  and  safety  aspects  and
dissemination capability. The Council’s objective with the
merger  of  JOULE-THERMIE  —  to  integrate  the  RTD
and demonstration phases — has not been realised. While
JOULE  has  increased  the  involvement  of  industrial
project partners, THERMIE did not take truly innovative
results  of  JOULE  projects  to  the  demonstration  phase.
THERMIE  continues  to  support  installations  which  are
hardly innovative, but which need public support because
they  are  not  economically  viable.  Only  one  project  was
the  follow-up  of  a  prior  JOULE  II  (3rd  FWP)  project.

financial 

risk, 

criteria 

selection 

application  of 

3.25. The 
for
photovoltaic  (PV)  projects  revealed  a  specific  problem.
is
One  of  the  main  THERMIE  eligibility  criteria 
economic viability, as one of the objectives of THERMIE
is  to  show  the  economic  advantages  of  new  technology.
The standard project proposal evaluation forms therefore
include  the  pay-back  period  of  a  project.  In  all  PV
proposals 
financial
the  pay-back  period  or  other 
indicators  were  disclosed  by  the  applicants,  but  the  PV
evaluation  summaries  did  not  include  this  information.
Some  PV  proposals  had  pay-back  periods  as  high  as  77
or  even  121  years,  which  far  exceed  the  expected
lifetimes of the installations. The fact that grid-connected
PV-installations  are  not  financially  viable  should  not  be
neglected.  It  raises  the  question  whether  the  focus  in  the
area  of  photovoltaics  should  not  be  more  towards  basic
research  than  towards  the  demonstration  of  uneconomic
installations  which  need  massive  public  support.

Project  management  and  control

for 

3.26. The  distribution  of  projects  over  the  scientific
officers,  who  are 
scientific
responsible 
management  and  monitoring  of  projects,  is  very  uneven.
The  number  of  projects,  including  on-going  contracts
from the previous programmes, allocated to one scientific
officer  varied  in  JOULE  from  five  to  90  and 
in
THERMIE  from  six  to  41  while  the  average  number  of
in  both  areas
projects  managed  per  officer  was 

the 

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approximately  30  projects.  As  a  consequence  the  actual
follow-up by officers who are in charge of more than the
average  number  of  projects  is  very  limited,  especially  in
JOULE.

3.27. Visits  to  contractors  by  the  scientific  officers  are
very  rare  and  the  departments  have  no  target  number  or
percentage  of  contractors  to  be  visited  during  a  year.
None  of  the  19  contractors  audited  by  the  Court  had
been  visited  for  the  selected  project.  Only  22  of  125
JOULE RES projects, signed by 30 September 1997, had
been  visited,  as  well  as  14  of  182  THERMIE  RES
projects,  as  at  31  December  1997.  Contractors  meet  the
scientific  officer  in  Brussels,  mainly  during  mid-term
reviews, at which all projects of one area meet. The time
for  discussion  per  project  was  found  to  be  unreasonably
short  by  the  contractors.

3.28. Even  though  the  scientific  officers  did  not  visit
many projects, project monitoring in THERMIE is closer
than  in  JOULE  because  for  257  projects  the  scientific
officers  are  assisted  by  16  THERMIE  Technical
Managers  (TTM).  This  does  not  only  mean  that  the
number  of  projects  managed  by  the  scientific  officers  is
smaller, the TTMs also visit their projects more often and
therefore  provide  closer  supervision.  In  general  their  role
is  appreciated  by  the  contractors  as  well  as  by  the
scientific  officers,  even  though  every  TTM  has  to  be
directed and supervised by the scientific officer who is in
charge  of  the  technology  area.

3.29. The  JOULE programme management only started
to  introduce  external  support  for  their  scientific  officers
in  1997.  The  first  so-called  ‘cluster  managers’  were
selected  after  a  call  for  tender  and  each  will  have  the
responsibility  for  the  monitoring  of  a  number  of  projects
in one technical area. As the role of the cluster managers
is  very  similar  to  the  role  of  the  TTMs  the  question  is
raised  why  the  two  types  of  external  assistants  have  not
been  harmonised  or  merged.  If  both  JOULE  and
THERMIE would  use  one  group  of  external  experts  this
might  help  to  reduce  the  gap  between  research  and
demonstration.

3.30.
In  JOULE  and  THERMIE  at  least  three  scientific
officers  with  temporary  contracts  were  responsible  for
projects in which their previous employers were involved.
Although  there  were  no 
indications  that  this  had
influenced the management and control of these projects,
conflicts  of  interest  could  be  created.

3.31. At  one  THERMIE  contractor  the  office  of  the
TTM  (a  semi-public  technical  monitoring  agency)  not
only  worked  for  the  Commission  but  also  provided  a
technical  supervision  service,  on  the  same  project,  to  the
beneficiary.  In  the  case  mentioned  in  paragraph  3.18  the
project  proposal  had  been  evaluated  by  the  same  TTM
who  was  later  assigned  to  monitor  the  project.  Both
situations  could  result  in  conflicts  of  interest,  and  should
have  been  avoided.

3.32. Financial  checks  are  limited  to  the  reasonableness
of  contractors’  cost  claims  and  review  of  project  budget
outturn.  The  high  number  of  problems  encountered  in
the  cost  statements  of  the  audited  contractors  clearly
indicates  that  a  serious  review  of  the  costs  is  not
performed. None of the contractors selected by the Court
had  been  audited  by  the  Commission.  According  to  the
Commission,  during  the  earlier  JOULE  II  programme,
only  5 %  of  the  contractors  had  been  audited.  This
means  that  the  chance  of  being  audited  (1:20)  is  very
small for JOULE contractors. In the previous THERMIE
programme  a  higher  number  of  contractors  was  audited
than  in  JOULE.  The  results  of  the  Court’s  audits  imply
that  the  number  of  audits  should  be  extended  in  the
present  programme,  especially  in  the  JOULE  area.

3.33. The information system AMPERE-AQUA which is
used  in  JOULE  for  the  monitoring  of  the  programme
and  project  execution  is  an  inadequate  tool  for  day  to
is  not
day  management.  Because 
‘user-friendly’, important data like the receipt of technical
reports,  required  to  control  the  project’s  progress  and
adherence to actual contract terms, had not been entered.
Other  data  for  monitoring  the  Commission’s  own
performance,  such  as  the  delay  between  the  receipt  of  a
cost  claim  and  the  actual  payment,  were  not  available.

system 

the 

3.34. The  local  information  system  which  supports  the
management  of  the  THERMIE  side  of  the  programme
and  projects  in  DG  XVII  (PROMAN)  is  even  weaker
than  the  JOULE  system.  Information  regarding  the
execution  of  individual  projects  was  often  not  available
in the system, but required the examination of the project
files.  Whereas  the  JOULE  system  was  at  least  able  to
provide  information  regarding  the  actual  distribution  of
the  EC  contribution  to  the  individual  partners  in  a
contract, 
in  THERMIE  the  contribution  was  only
recorded as a total amount for the whole project. One of
the  consequences  of  this  is  that  within  THERMIE  the
Commission  is  incapable  of  presenting  reliable  figures
regarding  the  actual  contribution  a  particular  contractor
received  in  all  projects  he  is  involved  in.  The  system  is
also incapable of showing the contribution to all partners
in  a  certain  region  or  Member  State.

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all 

3.35.
In  the  framework  of  a  pilot  study  for  DG  XII  to
implement  a  Quality  Management  Manual  for  RTD
projects, the unit responsible for JOULE is recording and
reconsidering 
and  management
administrative 
procedures.  This  major  effort  includes  a  project  for  the
improvement  and  development  of 
supporting
information  systems.  The  quality  management  approach
is  certainly  an  important  step  towards  improving  the
efficiency  and  effectiveness  of  programme  management.
However,  the  fact  that  within  JOULE-THERMIE  only
half  of  the  programme  is  involved  in  this  development  is
unsatisfactory.  To  manage  and  monitor  the  whole
JOULE-THERMIE  programme  in  a  truly  harmonised
way,  the  two  parts  of  the  programme  must  move  in  the
same direction.

the 

3.36. Although  both  JOULE  and  THERMIE  apply  the
same  model  contract,  an  important  difference  remains.
JOULE contracts provide for annual cost claims whereas
THERMIE  contracts  require  six  monthly  claims.  Only
seven  out  of  13  audited  THERMIE  projects  actually
fulfilled  this  obligation  so  the  utility  of  two  claims  per
year  is  questionable.  It  also  shows  that  adherence  to
contractual  deadlines 
closely  monitored.
Harmonisation  between  the  THERMIE  contract  and  the
JOULE  standard  seems  desirable.

is  not 

for 

significant 

consequences 

3.37.
In two out of 13 audited THERMIE projects, one
of  the  contract  partners  filed  for  bankruptcy.  Although
there  were  no 
the
Community  budget  this  illustrated  the  risk  in  projects
where  large  advances  are  often  paid  to  relatively  small
companies.  These 
the
cases  also 
Commission  lacks  a  standardised  quick  procedure  to
react  to  notifications  regarding  bankruptcies.  A  standard
procedure, involving the legal service, should be designed
to  ensure  that  the  Commission  immediately  takes  the
necessary  steps  to  reduce  the  risks  for  the  Community
and 
the  same
consortium.

the  other  project  partners 

revealed 

that 

for 

in 

Programme monitoring

3.39.
In  accordance  with  Article  4.2  of  the  Council
Decision  a  more  extensive  monitoring  exercise  was
executed  in  the  ‘five-year  assessment  of  the  non-nuclear
energy  programmes’  which  was  published  in  December
1996. This report contained an evaluation of the previous
JOULE and  THERMIE  programmes,  as  well  as  the  first
year  of  the  current  JOULE-THERMIE  programme.  The
five-year  assessment  panel  and  the  annual  monitoring
panel  had  different  members,  but  the  conclusions  and
the  management  were
recommendations  concerning 
similar.

3.40. The  observations  and  recommendations  of  the
monitoring  reports  regarding  the  implementation  of  the
programme  confirm  the  observations  of  the  Court.  The
recommendations 
the
be 
implementation  of  the  Fifth  Framework  Programme.

valuable 

during 

can 

3.41. Although  assessment  of  the  cost-effectiveness  of
the  programme  implementation  is  clearly  mentioned  as
one  of  the  objectives  of  the  monitoring  exercises,  the
annual  and  the  five-year  reports  only  make  very  general
comments.  Under  the  heading  ‘Cost  effectiveness  of
running  the  programmes’  the  five-year  assessment  states
that  as  the  number  of  Commission  staff  which  has  to
manage  all  projects  is  relatively  small  and  as  the  original
the  programme
budget 
management 
considered
cost-effective.  Neither  report  contains  a  single  cost
figure.

is 
respected, 
administration 

allocation 
and 

is 

Programme  management  costs

3.42. Control of programme management costs depends
on  knowledge  of  cost  elements.  The  Commission’s
departments  responsible  for  the  implementation  of  the
programme, have no overview of the administrative costs
of  their  actions.  The  total  management  costs  of  the
programme  or  more  specific  indicators  like  the  costs  per
proposal,  the  total  management  costs  per  project  or  the
mission expenses per project, which would be essential to
assess  whether  the  costs  of  the  present  programme
management structure are in reasonable proportion to the
total  Community  contribution,  are  not  calculated  by  the
Commission. This reduces their possibilities of optimising
use  of  resources.

3.38.
JOULE-THERMIE  is  monitored  annually  by  a
panel  of  external  experts,  as  required  by  the  Council
Decision.  Whereas  the  first  (1995)  monitoring  report
focused  on  the  launching  of  the  first  call  for  proposals
and  the  selection  procedure,  the  1996  report  also
evaluated  the  Commission’s  project  management  and
monitoring activities.

repartition  of 

3.43. The  annual  provisional 
the
administrative costs in the programme’s budget (part B of
the  various  cost  categories
the  budget),  between 
and  meetings,
(non-statutory  personnel,  missions 
informatics,  publications,  statutory  personnel)  is  not
complemented by an appropriate allocation of the related
costs  in  the  same  categories  covered  by  part  A  of  the
budget. Although the Commission monitors adherence to

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this 

the  limits  for  the  personnel  costs  (2,85 %  of  the  budget)
and  the  administrative  costs  (2,15 %  of  the  budget),
defined  in  Annex  II  of  the  Council  Decision  regarding
JOULE-THERMIE, 
is  only  a  budget-control
for  part  B,  without  any  element  of
procedure 
cost-efficiency analysis. The Court also found that in DG
XII  at  31  December  1997,  26  out  of  48  posts  financed
through 
JOULE
THERMIE  were  occupied  by  staff  working  on  tasks
outside  the  JOULE-THERMIE  programme.  It  can  be
concluded  that  the  annual  overall  administration  and
management  costs  of  the  programme  remain  unknown.

appropriations 

the  budget 

for 

Project  execution

Project  coordination  by  European  Economic  Interest
Groupings  (EEIGs)

for  participating 

3.44. The Commission promotes the possibility of using
a  European  Economic  Interest  Grouping  (EEIG)  as  a
mechanism 
in  RTD  programmes.
According  to  the  Commission  the  use  of  an  EEIG  as  a
coordinator,  entering  project  proposals  on  behalf  of
consortia consisting of members of the EEIG, can help in
dealing  quickly  with  the  procedural  stages  prior  to  the
beginning  of  the  project,  and  in  the  management  of  the
project.

3.45. Out  of  the  17  audited  JOULE  projects,  six  were
coordinated  by  three  different  EEIGs.  Although  the
consortium partners were satisfied that the administrative
tasks  were  delegated  to  a  separate  entity,  which  in  two
cases was located close to the Commission, in none of the
cases  had  the  use  of  an  EEIG  resulted  in  easier  or  faster
contract negotiations. On the contrary, there were several
additional  problems.

the  only 

3.46. Contracts  coordinated  by  an  EEIG  are  signed  by
the  EEIG  on  behalf  of  all  members.  The  actual  members
are  only  mentioned  in  the  technical  annex.  However,  the
technical  annex  gives  no  information  regarding  the
distribution  of  the  Community  contribution  between  the
members.  This  means 
sources  of
that 
information  regarding  the  ‘budgets’  of  the  individual
members,  are  the  contract  negotiation  forms.  As  these
forms  are  not  part  of  the  actual  contract,  the  members
could  change 
themselves
without  the  Commission’s  approval.  This  situation  may
reduce  the  authority  of  the  Commission  and  it  certainly
contracts.  The
the 
reduces 
Commission 
‘Estimated
extend 
breakdown  of  allowable  costs’  in  all  contracts  with
EEIGs  to  include  the  distribution  of  funds  between  the
participating  EEIG  members.

transparency  of 
should 

the  distribution  amongst 

table 

the 

the 

contract  some  EEIG  members  would  work  under  the
additional cost model (6),  while  others  apply  the  full  cost
model (7).  This  does  not  allow  a  university  (which  uses
the additional cost model) and a private company (which
is  obliged  to  adopt  the  full  cost  model)  to  participate  as
members of the same EEIG. If the contract with the EEIG
discloses  the  actual  distribution  of  the  contribution  over
the  participating  members, 
this  rule  would  seem
superfluous.

Difficulties  in  producing  correct  cost  statements

3.48. The  system  of  real  cost  contracts  requires
analytical  accounts  to  be  kept  in  order  to  complete  cost
statements and avoid the misuse of Community funds. In
the  JOULE  and  THERMIE  contracts  audited  the
justification  of  claimed  costs  was  often  unsatisfactory.
The  findings  confirmed  prior  reports  of  the  Court  on
RTD  programmes,  which  use  the  same  model  contract.

3.49. Eight  out  of  19  contractors  had  claimed  budgeted
instead  of  actual  costs  for  labour  and  overhead  rates.  In
general it is acceptable to apply budgeted rates during the
course of the year, as long as these are adjusted to actual
rates,  once  the  financial  year  is  closed  and  the  actual
rates are calculated. However, in most cases reviewed, the
contractors did not intend to adjust their previous claims
and  in  two  cases  they  were  either  incapable  or  unwilling
to  calculate  overhead  rates  based  upon  actual  costs.

3.50. A  fundamental  problem  was  found  to  be  the
calculation and justification of the overhead rates charged
under  a  full  cost  contract.  For  universities  who  have  no
cost-accounting system this problem is settled by the fact
that their additional cost contracts have a fixed overhead
rate  set  at  20 %  of  direct  costs.  All  others  have  to
calculate  an  actual  rate.  The  model  contract  only  gives
limited  and  vague  guidance  as  to  which  method  to  use
and  which  costs  are  allowable  or  not  allowable  in  the
overhead  rate.  The  audited  contractors  used  overhead
rates between 12 % and 210 % of personnel costs. Some
contractors  included  costs  in  their  overhead  basis  which

the  Commission 

reimburses  100 %  of 

(6)  The  additional  cost  model  is  a  cost  reimbursement  system
the
whereby 
‘additional’  costs  which  are  caused  directly  by  the  project
and  which  are  not  covered  by  recurrent  university  funds.  In
addition  the  Commission  pays  an  amount  equal  to  20 %  of
the  direct  costs  to  cover  overhead  costs.  This  model  is
restricted  to  universities  who  have  no  cost-accounting
system.

3.47. The  Commission’s  internal  negotiation  guidelines
for  EEIGs  show  that  it  does  not  accept  that  within  one

(7)  The  full  cost  model  is  the  usual  cost  reimbursement  system
whereby  the  Commission  reimburses  50 %  of  the  ‘full’  costs
of  the  project,  including  actual  overhead  costs.

C  356/48

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were  under  the  terms  of  the  contract  clearly  ineligible,
such  as  marketing  costs,  but  many  others  were  found  to
be  very  creative  in  including  costs  which  were  not
specifically  mentioned  as  non-eligible 
in  the  model
contract,  but  which  inflated  the  rates  to  an  excessive
these  costs  were  non-project
level.  Examples  of 
man-hours  and  depreciation  costs 
for  production
equipment  which  is  also  used  for  RTD  projects.

3.51. Two contractors had no system for recording time
worked  on  projects  at  all.  Another  five  had  systems
which  fulfilled  the  conditions  set  by  the  contract,  but
were  not  fully  reliable.  One  contractor  had  claimed  an
important  number  of  man-hours  which  was  performed
outside  of  the  eligible  contract  period,  during  the
preparation  of  the  project  proposal.

3.52. Four  contractors  had  unsatisfactory  accounting
systems,  in  which  the  allocation  of  cost  elements  to
projects  was  not  transparent  and  six  contractors  had
claimed  costs  for  which  no  justification  existed  or  which
were  not  directly  related  to  the  project.

3.53.
In  two  cases  the  amounts  claimed  for  travel
included  costs  for  trips  to  the  United  States  of  America
the
for  which  no  written  prior  approval 
Commission  had  been  obtained.

from 

abandoned  and  were  even  suppressed  from  the  project
lists,  while  a  fourth  project  was  severely  delayed.  Out  of
the  six  projects  selected  in  1996,  one  was  abandoned,  a
second  was  frozen  and  two  were  heavily  delayed.  The
reasons  for  abandonment  as  well  as  the  delays  were  in
most  cases  the  absence  of  building  permits  or  difficulties
with  the  private  funding  of  the  installations.  Although
biomass  as  a  RES  is  promoted  as  an  environmentally
friendly  source,  some  of  the  problems  with  building
permits  were  related  to  problems  with  the  emissions  of
the  installations.

3.57. The  PV  area  of  THERMIE  had  similar  cases,
although  the  percentage  was  smaller.  Delays  appeared  to
be  caused  by  private  funding  problems,  the  denial  of  a
building  permit  to  install  PV-modules  on  a  ‘protected’
façade,  or  delays  in  the  construction  of  the  structure  on
which  the  PV-modules  were  to  be  mounted.

these  problems 

cannot  usually  be
3.58. Whilst 
influenced  by  the  responsible  Commission  service,  they
clearly result in unnecessary blocking of funds. Therefore,
a closer monitoring of project delays and faster decisions
to  close  ‘frozen’  projects,  in  order  to  allow  the  funds  to
be  decommitted,  is  required.

3.54. The Court’s audit revealed errors and inaccuracies
for  10  out  of  19  contractors  of  approximately  ECU  0,6
million  in  cost  claims  for  a  total  of  ECU  4  million.

Legal  and  organisational  framework

4.  THE  ALTENER  PROGRAMME

3.55. The  high  number  of  errors, 
inaccuracies  or
overcharging  in  cost  claims,  as  well  as  the  fundamental
problems  regarding  the  interpretation  of  the  model
contract  where  eligible  overhead  costs  are  concerned,
leads  to  the  conclusion  that  an  increase  in  the  financial
control  effort,  including  on-the-spot  audits,  as  well  as  a
clarification  and  simplification  of  the  model  contract  are
required. The Commission should either introduce a fixed
overhead  rate  for  all  contractors  or  define  exactly  which
overhead  calculation  method  it  accepts.

Risk  of  abandoned  projects

3.56.
In the biomass area of THERMIE in particular the
number of abandoned projects was found to be excessive.
Three  out  of  six  projects  selected  in  1995  had  been

4.1. Whilst JOULE-THERMIE, as an RTD programme,
is  part  of  the  4th  FWP,  the  Altener  programme  stands
alone. It is the consequence of the shift in the 1980s from
a purely economy oriented energy policy towards a policy
which leaves room for environmental issues. The purpose
of  this  ECU  44  million  programme  is  to  promote
renewable  energy  sources  in  the  Community.

4.2. The  first  Altener  programme  (1993  to  1997)  was
governed  by  the  Council  Decision  of  13  September  1993
(93/500/EEC) (8).  A  follow-up  programme  under  the
name Altener II (1998 to 1999) is in the process of being
adopted  by  the  Council (9),  with  a  budget  of  ECU  22
million  for  the  first  two  years.

(8)  OJ  L  235,  18.9.1993,  p.  41.
(9)  Common  Position  (EC)  No  9/98  adopted  by  the  Council  on
19 January 1998 with a view to adopting a Council Decision
concerning  a  multiannual  programme  for  the  promotion  of
renewable  energy  sources  in  the  Community  (Altener  II)  (OJ
C  62,  26.2.1998,  p.  31).

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4.3. Within  DG  XVII, Altener is managed by a separate
section  in  unit  C2,  which  is  part  of  the  ‘Industries  &
Markets  II:  Non-Fossil  Energy’  Directorate.

Programme  description  and  objectives

4.4. The Altener programme is designed to support four
categories  of  actions  to  promote  RES;

(a)  studies,  market  strategies  and  technical  evaluations
for  defining  technical  standards  or  specifications;

(b) measures  to  support  Member  States’  initiatives  to
extend or create infrastructures which include training
and  information  activities  as  well  as  a  variety  of
sectoral  actions  (pilot  projects);

(c)  measures  to  help  create  an  information  network  to
promote  better  coordination  between  national,
Community  and 
international  activities  and  at
evaluating  the  impact  of  the  various  actions;

(d) studies,  evaluations  and  other  measures  to  assess  the
technical  feasibility  and  advantages  for  both  the
economy  and  the  environment  of  the 
industrial
exploitation  of  biomass  for  energy  purposes.

4.5. The  Community  contributions  towards  the  actions
were  generally  100 %  for  studies,  60 %  for  information
dissemination and between 30 % and 50 % of the project
costs  for  pilot  actions.  The  average  contribution  for  a
pilot  project  is  approximately  ECU  95 000.

into 

four 

themes; 

4.6. The  audit  focused  on  category  (b)  of  the  support
measures,  the  pilot  actions.  The  definition  of  this
category  in  the  Council  Decision  mentioned  training  and
information  activities  and  sectoral  actions.  These  latter
are  grouped 
tools,  planning,
information/training and financial. An examination of the
list  of  project  titles  revealed  that  it  often  concerned  the
development of implementation plans for RES or strategy
or  feasibility  studies  for  the  use  of  certain  RES  types  in
specific  areas,  regions  or  industries.  Many  of  these  titles
could  also  have  come  under  the  JOULE  component  of
JOULE-THERMIE 
‘integration  of
the 
Renewable  Energies’,  or  as  a  type  B  action  in  the
THERMIE component. More transparency and efficiency
could be achieved by concentrating the support given to a
certain  type  of  action  in  one  programme.

field  of 

in 

4.7. The  distribution  of  the  Altener  funds  between  the
is  no  correlation
Member  States  shows  that  there 

of 

the 

the 

level 

contribution 

from
between 
the 
JOULE-THERMIE  and 
the  Altener
contribution.  That  is  to  say  that  some  Member  States
which  are  hardly  involved  in  any  JOULE-THERMIE
receive
funded  RTD  or  demonstration  projects 
substantial  support  for  the  promotion  of  RES  from
Altener.

level  of 

Programme  management  and  control

Project  selection

4.8. The  selection  procedures  in  Altener  for  the  pilot
projects,  which  represent  66 %  of  all  contributions,  are
completely  different  from  the  JOULE  and  THERMIE
procedures.  Instead  of  publishing  calls  for  proposals  in
the  Official  Journal  of  the  European  Communities,  the
Altener  proposals  have  to  be  brought  forward  by
Member State representatives in the Altener Management
Committee.  The  categories  or  types  of  proposals  which
can be entered each year are defined in annual guidelines,
which  are  established  by  the  Commission  in  cooperation
with  the  committee.  These  guidelines  do  not  contain  any
directives  on  the  way  Member  States  have  to  collect
proposals  or  whether  they  should  pre-select  proposals  or
not.  The  Commission  services  had  no  information  on
how  different  Member  States  dealt  with  this  matter.

4.9. Every  proposal  is  subsequently  evaluated  by  two
Commission  officials  who  draft  a  concise  consensus
report.  On  the  basis  of  the  consensus  reports  the
programme  management  establishes  a  priority  and
reserve  list,  in  which  it  proposes  projects  for  funding  to
the  Altener  Committee.

4.10. The  selection  procedure  lacks  transparency  and
cannot  guarantee  that  potential  proposers  from  different
Member States will enjoy fair and equal chances of access
to  Community  funding.  The  introduction  of  published
calls  for  proposals,  the  harmonisation  of  pre-selection
procedures  in  all  Member  States  and  a  close  supervision
by  the  Commission  is  essential.

Formal  decision  procedure

list  and 

the  Commission  decides  on 

4.11. Under  Articles  5  and  7  of  the  Council  Decision,
the  Altener  Committee  gives  its  opinion  on  the  proposed
project 
the
Community  contribution.  However,  once  the  Altener
Committee  has 
its  opinion,  DG  XVII’s
Director-General  decides  the  financing  of  the  selected
projects,  without  a  formal  financing  decision  by  the
Commission. As at 31 December 1996, ECU 26,1 million
had  been  committed  for  pilot  projects,  without  a
sufficient  legal  basis.

given 

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20.11.98

4.12.
In  paragraph  13-53  of  its  annual  report  on  the
year  1992 (10)  and  in  paragraph  13-57  et  seq  of  its
annual  report  on  the  year  1993 (11)  the  Court  drew
attention  to  this  irregularity,  underlining  that  the  Court
of Justice had clearly distinguished in paragraph 17 of its
judgment  concerning  case  16/88  Commission  v.  Council
between  the  decision-taking  power  of  an  Institution  and
the  powers  of  an  authorising  officer.

Project  management

4.13. The  273  pilot  actions  (situation  at  19  November
1997)  are  managed  by  three  scientific  officers,  including
the programme manager. Project progress and results are
monitored  on  the  basis  of  interim  and  final  reports.  No
contractors  have  been  visited  during  the  programme.

files  and 

the
in 
4.14. Significant  weaknesses  were  revealed 
organisation  of 
the  project
the  project 
information  system.  The  use  of  different  identification
codes  for  each  project  by  the  technical,  financial  and
information-system departments makes it very difficult to
obtain  an  overview  of  the  background  and  current
position  of  a  project.  Most  pilot  projects  are  run  by
the  Altener
consortia  with 
information system registers only the coordinator of each
project.  Therefore,  the  Commission  has  no  overview  of
all  subsidies  awarded  to  a  contractor.

several  partners  but 

4.15. Although  the  pilot  actions  were  found  to  be  quite
similar  to  JOULE projects,  the  standard  contract  differs.
The  Community  contribution  is  paid  in  three  stages:  an
advance,  a  payment  on  acceptance  of  the  interim  report
and  the  final  payment  on  acceptance  of  the  final  report,
accompanied  by  a  statement  of  expenditure.  The
cost-reimbursement  contract  contains  no  definition  of
eligible  costs  or  acceptable  cost-allocation  methods.  Cost
statements  are  not  accompanied  by  any  supporting
documentation  and  no  contractors  claims  were  audited
by  the  Commission.

It  would  be  more  appropriate 

the
4.16.
JOULE-THERMIE  model  contract,  including  Annex  2
which  specifies  the  eligible  costs,  for  Altener.  Because
contracts  are  relatively  small,  the  Commission  could  also
consider  simplification  by  the  introduction  of  flat  rates
for  overheads.

to  use 

5.  INFORMATION  DISSEMINATION

5.1. The  Commission  has  made  considerable  efforts  to
disseminate  information  about  the  JOULE-THERMIE

(10) OJ  C  309,  16.11.1993.
(11) OJ  C  327,  24.11.1994.

for 

(specifically 

and  Altener  programmes.  Potential  beneficiaries  can
receive  information  from  many  different  sources;  focal
points 
SMEs),  Euro-Infocentres,
Innovation  Relay  Centres,  national  JOULE  contact
points,  OPETs  (Offices  for  the  Promotion  of  Energy
Technologies),  European  Energy  Network  contact  points
(Altener),  and  CORDIS  (Internet).  However,  apart  from
CORDIS,  most  of  these  sources  were  neither  familiar  to
nor  used  by  the  contractors  audited  by  the  Court.

5.2. Most of the audited contractors were well informed
about  the  programme,  but  they  used  direct  contacts  at
the  Commission  or  had  special  departments  who
collected  information  from  various  sources.  Hence  the
large number of different information points, which exist
in  parallel,  do  not  notably  contribute  to  an  efficient  and
effective information policy (12). As many of the different
‘information  points’  are  located  in  the  same  semi-public
energy  agencies,  the  situation  is  even  more  confusing.
Each programme maintains its own information network
in  the  Member  States,  without  a  harmonised  and
coordinated  information  policy.

6.  COORDINATION OF JOULE-THERMIE AND ALTENER
WITH  OTHER  EUROPEAN  UNION  AND  MEMBER
IN  THE  AREA  OF
STATE  SUPPORT  MEASURES 
RENEWABLE  SOURCES  OF  ENERGY

in 
for 

the  Council  Decision 
JOULE-THERMIE 

and
6.1. References 
work-programme 
to  other
programmes  like  Altener  or  AIR (13)  already  indicated
that  similar  objectives  and  subjects  exist  in  several
programmes.  Amongst  the  audited  projects  one  JOULE
project  was  found  to  be  an  extension  of  a  previous
BRITE-EURAM (14)  project,  whilst  another  followed  a
prior  AIR  project.  In  addition,  within  JOULE,  the
subject  of  biomass  arises  both  in  RES  and  in  the  fossil
fuel  area.  Whilst 
inter  sectoral
consultation  procedure  should  eliminate  the  risk  that  the
same activity is funded by two programmes, the imprecise
definition  of  the  boundaries  between  programmes  may

the  Commission’s 

(12) Similar observations were made in the Court’s annual report

concerning  the  financial  year  1996,  paragraph  10.14.

(13) Council Decision 94/802/EC of 23 November 1994 adopting
a specific programme of research, technological development
and  demonstration  in  the  field  of  agriculture  and  fisheries
(including 
forestry,
aquaculture  and  rural  development)  (OJ  L  334,  22.12.1994,
p.  73).

agro-industry, 

technologies, 

food 

(14) Council  Decision  94/571/EC  of  27  July  1994  adopting  a
specific  programme  of  research,  technological  development
and  demonstration  in  the  field  of  industrial  and  materials
technologies  (OJ  L  222,  26.8.1994,  p.  19).

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still  be  a  risk  element.  In  addition,  it  creates  confusion
amongst  potential  contractors  and 
it  multiplies  the
management  resource  needs.

in 

their 

support 

regional 

6.2. Although  the  Structural  Funds  (mainly  ERDF  and
EAGGF) (15) 
to  energy
infrastructure  projects  significantly  contribute  to  RES
installations  (e.g.  biomass  and  waste-powered  electricity
stations  in  Objective  1  and  5b  regions),  the  Commission
was  unable  to  provide  an  overview  of  supported  RES
projects  in  the  various  regions  of  the  European  Union.
Global  figures (16)  were  available  only  for  five  regions  of
Italy,  Spain,  Portugal,  Greece  and  Ireland  who  benefit
from a specific energy programme. (For the 1992 to 1997
period  the  total  support  for  RES  under  specific  energy
programmes  in  the  Structural  Funds  was:  ECU  341,17
million  out  of  a  total  of  ECU  3 000  million  for  energy
(11,4 %). In the previous programming period from 1989
initiative (17)
to  1993, 
the  Valoren  Community 
contributed  ECU  293,75  million  to  the  enhancement  of
endogenous energy potential, out of a total of ECU 2 331
million  granted  in  the  field  of  energy  (12,6 %)).

6.3. As  an  entire  category  of  measures  within  the
Altener  programme 
is  dedicated  to  supporting  the
creation  of  an  information  network  to  promote  the
coordination  of  national,  Community  and  international
activities,  it  is  unacceptable  that  by  the  end  of  Altener  I
no  overview  exists  of  all  RES  projects  supported  by  the
various  Commission 
the
Structural  Funds.

programmes, 

including 

6.4. Although  the  DGs  responsible  for  the  Structural
Funds  are  consulted  by  DG  XVII  prior  to  a  decision  to
support  THERMIE  projects,  the  lack  of  detailed  project
information  at  these  DGs  means  that  no  full  assurance
can be obtained that a THERMIE demonstration  project
is  not  funded  a  second  time  from  the  Structural
Funds (18).  For  this  purpose  a  database  with  all  RES
projects  supported  by  the  Structural  Funds  would  be
indispensable.

6.5.
In  its  proposal  for  a  Council  Decision  regarding  a
multi-annual  framework  programme  for  the  actions  in
the  energy  sector  (1998  to  2002) (19)  the  Commission

(15) European  Regional  Development  Fund  and  European

Agricultural  Guarantee  and  Guidance  Fund.

(16) Source:  Answer  to  written  parliamentary  question  No

E-1996/97.

(17) Council  Regulation  (EEC)  No  3301/86  of  27  October  1986
instituting  a  Community  programme  for  the  development  of
certain less-favoured regions of the Community by exploiting
endogenous  energy  potential  (Valoren  programme)  (OJ  L
305,  31.10.1986,  p.  6).

(18) See  also  the  Court’s  comment 

in 

its  Annual  Report

other 

energy 

between 

proposes  to 
integrate  the  follow-up  programme  of
Altener  (Altener  II)  in  an  energy  framework  programme.
This  is  to  contain  current  energy  policy  programmes  like
Synergy, SAVE and Altener II. It also envisages improving
related
all 
coordination 
programmes  or  policies,  including  JOULE-THERMIE,
other  RTD  programmes, 
international  cooperation
(PHARE, TACIS, MEDA) and the Structural Funds. This
Commission 
indicates  that  more  extensive
coordination and harmonisation is envisaged. However, a
more  fundamental  restructuring  of  the  programmes,
creating  clear 
responsibilities  and  boundaries  and
avoiding  overlap  could  reduce  the  need  for  coordination
and  increase  the  efficiency  and  effectiveness  of  the
programmes.

initiative 

6.6. The  coordination  of  the  programmes  with  Member
States  own  support  measures  is  supposed  to  be  assured
by  the  representation  of  the  Member  States  in  the
management  committees  and  by  the  work  of  the  ad  hoc
Committee  on  coordination  of  Member  States’  and
Community non-nuclear energy RTD programmes, which
reports 
the  Scientific  and  Technical  Research
Committee (CREST). The coordination task is supported,
within  the  Altener  programme,  by  major  studies  such  as
The  European  Renewable  Energy  Study  (TERES),  which
gives  an  overview  of  the  status  of  RES  and  the  policies
affecting  the  development  of  RES 
in  30  European
countries.

to 

6.7. Although  differences  between  the  Member  States
and  the  Commission  as  to  the  degree,  methods  or
priorities  of  support  for  RES  are  substantial,  they  must
not  influence  the  Commission’s  measures.  However,
where  a  Member  State’s  objectives  are  opposed  to  the
Commission’s objectives, this must be taken into account.
In  the  case  of  support  to  grid-connected  photovoltaic
installations  by  THERMIE, 
these
installations  very  much  depends  on  the  political  will,
within  the  Member  States,  to  allow  the  installations  on
the  electricity  grid  and  to  offer  favourable  electricity
buy-back  rates.  In  one  of  the  Member  States  visited  the
national 
grid-connected
PV-installations.  Under  such  circumstances  it  appears
inappropriate 
such
installations,  as  the  chances  that  the  demonstration  will
be  replicated  on  a  large  scale  are  too  low.

for  THERMIE 

success  of 

support 

against 

policy 

was 

the 

to 

continues 

6.8. A notable difference between the Commission’s and
the  Member  States’  support  measures  is  that  while
THERMIE 
for
to 
demonstration  projects,  national  support  is  increasingly
taking  the  form  of  fiscal  incentives,  soft  loans  and
guaranteed  electricity  buy-back  rates.  Although  these
incentives  are  often  not 
innovative
installations,  they  create  favourable  conditions  that
stimulate  innovation.  Considering  the  success  of  specific

provide 

limited 

grants 

to 

concerning  the  financial  year  1996,  paragraph  10.12.

(19) COM(97)  550  final,  18.11.1997,  p.  16.

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20.11.98

schemes,  such  as  the  guaranteed  buy-back  rate  for
wind-generated  electricity  in  several  Member  States,  the
possibility  of  a  harmonisation  of  successful  incentive
schemes  throughout  the  European  Union  could  be
envisaged.  The  Commission’s  report  to  the  Council  and
the  European  Parliament (20)  on  the  requirements  for
harmonisation  of  incentives  to  RES  within  the  internal
electricity  market  is  a  first  step  in  this  direction.

7.  CONCLUSION  AND  RECOMMENDATIONS

7.1. A  general  conclusion  as  to  the  success  or  failure  of
Altener  and  the  RES  component  of  JOULE-THERMIE
cannot  be  reached  because  the  overall  objectives  were
insufficiently  precise  to  be  used  as  benchmarks  against
which  the  actual  outcome  of  the  programmes  can  be
assessed.  The  absence  of  clear  and  quantified  objectives
increases the risk that a programme will be continued for
an  extended  period  regardless  of  its  real  economic  value
or  potentiality  (see  paragraph  3.09).

to 

process, 

intended 

integrate 

innovation 

7.2. The  merger  between  JOULE  and  THERMIE,
which  was 
the  RTD  and
demonstration  phases  into  a  coherent  strategy  covering
the  whole 
scientific
breakthrough  all  the  way  to  dissemination,  has  not  been
fully achieved. The gap between RTD and demonstration
still  exists,  mainly  because  THERMIE  supports  the
construction  of  large  production  units  rather  than  of
genuine  innovative  installations.  The  lack  of  harmonised
project 
selection,  management  and  administrative
procedures  in  both  areas  underlines  the  problem  (see
paragraphs  3.02,  3.16,  3.24.  3.29,  3.35  and  3.36).

from 

7.3. Many  of  the  THERMIE  demonstration  projects
were  found  to  lack  a  major  innovative  aspect;  they  had
only  a  limited  European  dimension  and  their  funding
structure  could  not  guarantee  equal  participation  by  all
contractors.  As  a  consequence  they  would  have  been
better  placed 
in  the  energy  technology  promotion
programme (THERMIE II), proposed by the Commission
in 1994, but not adopted by the Council (see paragraphs
3.22,  3.23  and  3.24).

scientific  and 

7.4. Proper 
financial  management,
monitoring  and  control  of  all  projects  under  JOULE,
THERMIE  and  Altener 
is  not  guaranteed.  The
widespread  use  of  external  assistance  by  DG  XVII  has
made  it  possible  for  supervision  to  be  closer  than  for
JOULE. The introduction of external cluster managers to
supervise  JOULE  projects  in  1997  may  improve  the
situation.  Both  DGs  should  try  to  harmonise  the  role  of

(20) COM(1998)  167  final,  16.3.1998.

external  assistants.  It  remains  vital  that  the  Commission
ensures  the  adequate  monitoring  of  the  experts  (see
paragraphs  3.26  to  3.35,  4.13  to  4.16).

7.5. The annual and five-year external evaluations (21) of
the  JOULE-THERMIE  programme  confirm  many  of  the
observations of the Court and should be followed closely
by  the  Commission,  as  far  as  management  is  concerned,
implementation  of  the  Fifth  Framework
during  the 
programme. The technical and scientific evaluation in the
reports  should  however  be  strengthened  (see  paragraphs
3.38  to  3.41).

7.6. The  Commission  should  avoid  conflicts  of  interest
in  the  fields  of  project  selection,  management  and
supervision  (see  paragraphs  3.17,  3.18,  3.30,  3.31).

7.7. The  large  number  of  problems  with  cost  claims
shows  that  the  Commission  must  increase  the  number  of
audits  carried  out  at  contractors  by  its  own  departments
and  by  external  auditors.  The  Commission  should  also
consider 
introducing  a  policy  whereby  contractors
provide  a  certificate  from  an  external  audit  firm  to
confirm  the  accuracy  of  the  cost  claims,  exceeding  a
certain amount. The audit fees could then be accepted as
eligible  project  expenses  (see  paragraphs  3.48  to  3.55).

7.8. Especially  in  the  case  of  smaller  contracts,  such  as
under Altener, the Commission could consider a different
funding procedure. Possibilities include using a simplified
contract,  for  example  by  introducing  flat  rates  for
overheads (22)  (see  paragraphs  3.55,  4.16).

all 

involved 

services  of 

the
7.9. Coordination  between 
Commission 
in  the  funding  of  RTD  and
demonstration measures in the area of RES is insufficient
and  needs  to  be  strengthened.  Boundaries  between
programmes should be clarified to avoid overlap, to focus
and  streamline  the  European  Union’s  work  in  this  field,
and  to  avoid  confusion  among  potential  participants.
This includes in particular the Structural Funds’ area, and
the  information  dissemination  policy  (see  paragraphs
5.01  to  5.02,  6.01  to  6.08).

for 

report 

energy 

(21) Source:  External  monitoring 

the 
specific
(JOULE-THERMIE)
programme 
non-nuclear 
covering  the  period  January  to  December  1995,  December
1995; External monitoring report for the specific non-nuclear
energy  programme  (JOULE-THERMIE)  covering  the  period
January  to  December  1996,  July  1997;  Five-year  assessment
of  the  non-nuclear  energy  programmes,  report  by  the
assessment  panel,  December  1996.
(22) See  also  the  Court’s  comments  in  its:

Annual  Report  concerning 
paragraph  10.53;
Annual  Report  concerning 
paragraph 9.8;
Annual  Report  concerning 
paragraph  11.17;
Annual  Report  concerning 
paragraph  11.6.

the 

financial  year  1996,

the 

financial  year  1995,

the 

financial  year  1993,

the 

financial  year  1990,

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This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  its  meeting  of  23
September  1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

C  356/54

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Table  1

Budgetary  Execution  Total  JOULE-THERMIE  1994  to  1998

Budget (1)

Implementation (1)

Year

Commitments
ECU

Payments
ECU

Commitments

Payments

ECU

%

ECU

%

1995

1996

1997

1998

320 098 000

62 870 000

319 781 647

99,90

32 032 258

171 000 000

130 000 000

170 888 266

99,93

105 923 000

288 000 000

192 080 000

287 523 000

99,83

162 909 000

50,95

81,48

84,81

260 330 000

148 771 000

Total

1 039 428 000

533 721 000

778 192 913

300 864 258

(1)  Budget  and  implementation  exclude  the  contribution  from  the  European  Economic  Area  Member  States.

Source:  Commission  (unaudited).

Breakdown  of  JOULE-THERMIE  to  the  principal  supported  areas

Table  2

Indicative
Budget
JOULE (1)

Indicative
Budget
THERMIE
(1)

Indicative
Total (1)

Indicative
%

Area

Indicative
enlarged
Budget
JOULE-
THERMIE
(3)

Committed
(4)  JOULE
until
31.12.1997

Committed
(4)
THERMIE
until
31.12.1997

Committed
(4)  Total
until
31.12.1997

Area
distribution

ECU
million

ECU
million

ECU
million

%

ECU
million

ECU
million

ECU
million

ECU
million

%

Rational  use  of  energy

Renewable energies

Fossil  fuels

RTD  energy  strategy

Staff  expenditure (5)

Administrative
expenditure

Dissemination

SME  support (6)

Specific  RTD  programme

Other (6)

96

225

40

26

27,6

20,8

4

22

35

115,5

130,6

177,6

34

(7)

(7)

20

28

(7)

211,5

355,6

217,6

60

27,6

20,8

24,0

50

35

21

35

22

(2)

(2)

(2)

(2)

(2)

(2)

219,3

368,7

225,6

62,2

28,6

21,6

24,9

51,8

36,3

104,9

153,3

46,8

14,5

14,5

3,4

1,9

(6)

2,2

109,7

122,6

133,7

15,7

12,1

20,9

8,1

(6)

214,7

275,9

180,4

30,2

14,5

15,6

20,9

9,9

(6)

27,58

35,46

23,19

3,88

1,86

2,00

2,68

1,28

14,0

16,1

2,07

Total

496,4

505,6

1 002

100

1 039

341,4

436,8

778,2

100,00

(1)  Based  upon  the  Council  Decision  94/806/EC  of  23  November  1994  and  Commission  information.
(2)  Annex II of Council Decision 94/806/EC of 23 November 1995 sets an indicative limit of 2,85 % for personnel, 2,15 % for administrative expenditure,
6 % for strategic issues, 5 % for specific SME, ECU 24 million for dissemination of results and ECU 35 million for the specific RTD programme, to be
carried out on the one hand by means of direct action (JRC), and on the other by means of activities within the framework of a competitive approach
and  intended  for  S/T  support  to  Community  policies  (1995  to  1998).

(3)  Increased  budget  after  the  enlargement  of  the  European  Union  and  the  European  Parliament’s  supplement  (distribution  estimated).
(4)  Budget  and  implementation  exclude  the  contribution  from  the  European  Economic  Area  Member  States.
(5)  Staff  expenditure  includes  under  JOULE  the  THERMIE  staff;  it  only  includes  statutory  staff  as  non-statutory  staff  is  recorded  under  administration.
(6)  These items are in SINCOM integrated in the first four categories which makes it very difficult to get a clear and reliable overview. ‘Other’ is a mixture

of  administration  costs,  evaluations,  publications,  promotion  activities,  etc.
(7)  These  items  include  the  THERMIE  side  of  the  programme  under  JOULE.

Source:  SINCOM  and  Commission  (unaudited).

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Breakdown  of  JOULE  support  in  the  renewable  energy  area  to  the  various  categories

Table  3

Area

Committed  until
31.3.1997
ECU  million (1)

Resulting
Distribution
% (2)

Paid  on  contracts
signed  per
31.3.1997  until
31.12.1997
ECU  million (1)

Number  of
Projects
Supported
31.3.1997

Average
contribution  per
project
ECU  million

Integration
of  renewable  energies

Solar Photovoltaics

RE  in  buildings

Wind  energy

Biomass

Geothermal energy

Solar  Thermal/Energy
Storage

5,41

26,66

14,04

22,78

22,07

2,62

7,10

5

26

14

23

22

3

7

3,56

14,70

7,16

14,29

12,82

1,96

4,59

10

23

21

40

21

1

9

Total

100,68

100

59,07

125

0,54

1,16

0,67

0,57

1,05

2,62

0,79

0,81

(1)  The  Commission’s  DG  XII  was  unable  to  provide  figures  as  at  31.12.1997.
(2)  The  distribution  over  the  RES  categories  is  for  information  only,  it  does  not  refer  to  limits  indicated  in  the  Council

Decision.

Source:  Commission  (unaudited).

Breakdown  of  THERMIE  support  in  the  renewable  energy  area  to  the  various  categories

Table  4

Area

Committed (1)
until  31.12.1997
ECU  million

Resulting
Distribution
% (2)

Paid  until
31.12.1997
ECU  million

Number  of
Projects
Supported

Average
contribution  per
project
ECU  million

Solar Photovoltaics

RE  in  buildings

Wind  energy

Energy  from  Biomass
and  Waste

Small scale
hydro-electric  plants

Geothermal energy

Solar Thermal

23,9

6,4

27,1

34,2

10,6

16,8

3,5

20

5

22

28

9

14

3

6,5

0,6

8,1

6,6

3,2

5,4

1,4

52

9

38

22

34

24

3

Total

122,6

100

31,8

182

0,46

0,71

0,71

1,56

0,31

0,70

1,18

0,67

(1)  Commitments  exclude  the  contribution  from  the  European  Economic  Area  Member  States.
(2)  The  distribution  over  the  RES  categories  is  for  information  only,  it  does  not  refer  to  limits  indicated  in  the  Council

Decision.

Source:  Commission  (unaudited).

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ANNEX  1

POSITION  OF  RENEWABLE  ENERGY  SOURCES  IN  THE  COMMUNITY  POLICIES

‘Renewable Energy Sources’ (RES) is the term used to describe those forms of energy in which resources are
naturally and endlessly available: energy from the sun, the wind, the oceans and the earth, and from plants
and  the  fall  of  water.  Energy  produced  from  waste  is  also  regarded  as  being  renewable.  The  share  of
renewable energy sources in Gross Inland Consumption varies widely in the Community. However, the total
share  in  1994  was  calculated  as  5,4 %.  In  the  area  of  electricity  production  from  sources  of  renewable
energy,  the  share  of  hydro-energy  was  91,1 %,  biomass  6,8 %  and  wind  1,1 %.  The  share  of  the  other
sources  was  an  insignificant  1 % (1).

Promotion  of  RES  has  been  a  central  objective  of  Community  energy  policy  for  a  considerable  period  of
time.  The  Council  Resolution  of  16  September  1986 (2),  places  the  promotion  of  RES  among  the  central
objectives  for  examining  the  convergence  and  the  cohesion  of  the  Member  States’  energy  policies.  This
central  objective  was  confirmed  by  the  Council’s  recommendation  of  9  June  1988 (3)  and  the  Council
Decision  of  13  September  1993 (4).  An  ambitious  quantified  objective  for  RES  was  set  by  the  European
Commission  in  its  1997  White  paper  for  a  Community  Strategy  and  Action  Plan  ‘Energy  for  the  future:
renewable sources of energy’ (5), where it set as an indicative objective a contribution from RES of 12 % to
the  European  Union’s  gross  inland  energy  consumption  by  2010.

The importance of RES in the Commission’s energy policy is also reflected in the research area. In Council
Decision 94/806/CE of 23 November 1994 (6), concerning the specific research programme for non-nuclear
energy  within  the  Fourth  Research  and  Technological  Development  (RTD)  Framework  Programme
(JOULE-THERMIE  1994  to  1998),  45 %  of  the  funds  (ECU  435  million)  are  allocated  to  renewable
energy.  The  other  areas  supported  by  JOULE-THERMIE  are  the  rational  use  of  energy  and  fossil  fuels.

Whilst  the  primary  objective  of  the  Commission’s  energy  policy  had  been  the  reduction  of  the  dependency
of energy imports through the reduction of fossil energy consumption, the Convention of Rio de Janeiro of
1992 on the reduction of CO2  emissions has caused more emphasis to be placed on environment protection.
In  1996  the  Green  paper  ‘Energy  for  the  future:  renewable  sources  of  energy’  the  Commission  mentions
employment  creation,  regional  development  and  export  stimulation  as  additional  objectives (7).

In the European Community framework the subject of renewable energy can be found in the energy policy
area  (DG  XVII)  as  well  as  in  research  (DG  XII).  These  programmes  include  research,  development,
demonstration  and  support  actions.  Other  areas  of  the  Commission  with  direct  or  indirect  involvement  in
renewable  energy  matters  are  the  Structural  Funds,  International  Cooperation,  Environment,  Agriculture,
and  European  Coal  and  Steel  Community  actions.

(1)  Energy for the future: renewable sources of energy, Green paper for a Community strategy, COM(96) 576, 20.11.1996,

p.  12  and  49.

(2)  OJ  C  241,  25.9.1986,  p.  1.
(3)  OJ  L  160,  28.6.1988,  p.  46.
(4)  OJ  L  235,  18.9.1993,  p.  41.
(5)  COM(97)  599  final,  26.11.1997.
(6)  OJ  L  334,  22.12.1994,  p.  87  to  p.  108.
(7)  COM(96)  576  final,  20.11.1996,  p.  3,  4.

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ANNEX  2

SELECTION  PROCEDURES  IN  THE  JOULE  PART  OF  THE  JOULE-THERMIE  PROGRAMME

The  selection  process  in  JOULE  is  a  major  centralised  action  involving  important  Commission  resources
and  between  90  (1997)  and  170  (1995)  external  experts  per  call.  After  formal  eligibility  checks  by  the
Commission,  each  formally  acceptable  proposal  is  submitted  for  technical  and  financial  evaluation  to  at
least  three  experts,  without  the  proposer  being  identified.  Following  the  individual  evaluations  the  experts
form  a  panel,  according  to  the  research  theme,  chaired  by  the  Commission  as  moderator,  which  drafts  a
‘pre-consensus’ report. Proposals which are considered to be of sufficient technological merit are passed on
to  an  extended  panel  of  experts,  chaired  by  the  Commission  as  moderator,  for  strategic  evaluation  of
economic, social and environmental benefits. The chairperson of each extended panel completes a consensus
report  with  a  final  ranking (8).  Results  are  harmonised  across  all  programme  areas  and  coordination
possibilities  are  examined  by  a  coordinator  group  composed  of  the  Director  and  Heads  of  Units  of  the
programme  concerned.

The  Commission  then  verifies  the  financial  capability  of  partners,  and  performs  an  inter-programme
consultation  to  check,  in  particular  for  any  overlap  of  proposals  with  existing  projects  in  other
programmes.

The final results of the process are summarised in a complete overview of all evaluations and a shortlist of
proposals which the Commission puts forward for support. The JOULE Committee, which is composed of
representatives  of  all  Member  States,  discusses  these  documents  and  forms  an  opinion,  after  which  the
Commission  decides.

(8)  The  applied  rates  are  A1,  A,  B  or  C,  A1  being  the  highest  ranking  and  C  meaning  a  rejection.

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COMMISSION’S  REPLIES

INTRODUCTION

JOULE

the 

specific  non-nuclear 

(a)  It  should  be  stressed  that  the  JOULE  and  Thermie
sections  of 
energies
programme  within  the  fourth  framework  programme
emerged  from  widely  differing  historical  backgrounds
displaying  a  variety  of  management  practice
characteristics.  It  should  also  be  stressed  that  the
Council  Decision  of  23  November  1994  sets  up  two
programme  committees  with  two  budget  breakdowns
(point  2.1).

(b) As  regards  coordination  with  the  other  policies  one
should  remember  the  major  tools  provided  by  the
interdepartmental 
the  new
consultations 
monitoring  and  information  dissemination  activities
provided for in the White Paper on renewable energy
sources.  That  coordination  is  intended  to  be  boosted
under  the  fifth  framework  programme  (point  2.12).

and 

(c)  The Commission is required to monitor the cost of all
of the programmes closely. The Commission carefully
examines  whether  the  programmes  are  managed
within  the  limits  of  the  administrative  spending
percentages  laid  down  by  the  Council.  The  fact  of
reducing  management  costs  to  one  amount  per
project,  as  performed  by  the  Court,  does  not  reflect
the  will  of  the  legislative  authority.  The  Commission
is in no way obliged to keep accounts per project, and
moreover  this  is  not  a  significant  instrument  in
measuring the quality of the programme management
(point  2.6).

In  its  management  the  Commission  also  stresses  the
auditing  activities.  In  line  with  the  commitments
entered into the Commission has greatly increased the
number  of  its  audits,  including  those  while  projects
are  in  progress.

(d) Experts in their fields are responsible for the scientific
monitoring  of  the  contracts.  Once  appointed  by
means  of  general  selection  procedures  that  have  been
widely  advertised  the  Commission’s  administrators
are  required  to  abide  by  all  of  the  terms  of
employment relating to discretion and confidentiality.
The  Commission  will  ensure  that  all  conflicts  of
interest  are  avoided  and  shall  take  any  prior  action
that  is  needed  (point  2.5).

A  certain  number  of  regular  staff  in  DG  XII  paid
under  Item  B6-7 1 5 1  (non-nuclear  energy  sources  or
those
JOULE/Thermie)  have  been  seconded 

to 

of 

the 

proper 

functioning 

departments  in  order  to  implement  a  policy  aimed  at
ensuring 
the
Directorate-General’s  horizontal  services.  In  addition,
following internal redeployments and mobility regular
staff working on the programmes are paid by JOULE
and,  to  offset  this,  staff  assigned  to  the  JOULE
programme  are  paid  via  other  programmes.  That
situation  will  be  rectified  with  a  view  to  launching  a
fifth  framework  programme  in  1999  (point  2.6).

that, 

(e)  The  Commission  must  point  out,  with  regard  to  the
information  networks, 
to
coordinate  the  various  sources  of  information,  the
Directorates-General 
and
(DGs) 
Technological  Development  (RTD)  intend  to  forge  a
partnership  with  the  Member  States  that  is  based  on
the  creation  of  national  contact  points  (point  2.11).

in  order  better 

for  Research 

(f)  Finally,  the  Commission  feels  that  the  Court’s  main
comments  applying  to  both  JOULE  and  Thermie  or
else  just  to  JOULE  apply  to  different  aspects  of  the
programme  without  calling  into  question  the  quality
of  the  Commission’s  management.

THERMIE

to 

Throughout  the  various  framework  programmes  the
Commission  has  developed  a  common  set  of  procedures
to be used in selecting projects and negotiating contracts.
In  addition 
these  common  procedures,  specific
evaluation  manuals  describe,  in  detail,  the  selection  and
decision  processes,  as  well  as  the  role  of  the  various
actors  participating  therein.  The  clarity,  quality  and
accuracy  of  these  processes  have  been  widely  recognised
by  the  proposers  and  by  the  external  panels  of
independent  experts  who  have  annually  monitored  the
various  specific  programmes  (points  2.1.  and  2.2).

Among  the  various  evaluation  criteria,  the  innovative
nature  of  the  proposal  is  a  prerequisite  for  support.
Notwithstanding,  the  Commission  views  the  innovative
important  as
application  of  mature  technologies  as 
the
technological  development 
support  which  has  been  given  to  a  number  of  projects
which  demonstrate  the  innovative  integration  of  existing
energy 
public
environments  (point  2.3).

itself.  This  explains 

components 

business 

into 

and 

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its 

(i.e. 

future 

In  addressing  these  issues,  the  Commission  takes  into
account  the  potential  impact  of  the  project’s  results  on
the  market 
implementation  and
exploitation)  and  whether  this  can  be  provided  by  the
the
proposed  partnership 
proposals,  the  Commission  also  considers  the  European
dimension  and  the  relevance  of  the  technical  problems
being  addressed,  as  well  as  the  capacity  and  technical
credibility  of  the  partners  to  find  solutions  to  these
problems  which  can  be  adopted  on  a  Europe-wide  basis
(point  2.3).

team.  When  assessing 

The Commission recognises that there is scope for further
integration  between  the  research  and  demonstration
phases.  However,  the  Commission  views  the  problem  of
integration  as  something  that  requires  a  novel  solution
which  goes  far  beyond  possible  re-definitions  of  the
concept  of  innovative  installations.  In  its  plans  for  the
fifth  framework  programme,  the  Commission  propagates
this novel approach by concentrating activities in the field
of  non-nuclear  energy  on  two  key  areas,  in  which
upstream  and  downstream  developments  are  aimed  at
solving  a  common  set  of  problems  (point  2.1).

RENEWABLE  ENERGY  SOURCES  NOT  COVERED  BY
RESEARCH

The  Court  of  Auditors’  report  analyses  a  period  where
the legal basis, i. e. the Council’s Decision concerning the
(1993  to  1997)  Altener  programme,  first  of  all  provided
support  for  promotion  activities  at  Member-State  level
without, however, placing stress on genuine coordination
at  Community  level.  At  the  time  this  was  not  considered
to  be  genuinely  urgent.

The lessons learned from the Altener programme and the
European  Parliament’s  activities  in  this  area  led  to  the
adoption  of  the  Green  Paper  on  Renewable  Energy
Sources  in  1996  and  the  adoption,  in  late  1997,  of  the
White  Paper  in  which  the  Commission  puts  forward  a
Community  strategy  and  an  action  plan  for  2010  while
insisting  on  the  need  for  closer  coordination  and  on
monitoring  of  the  activities,  and  of  the  action  taken  at
both  Community  and  Member  State  level.

In  addition  the  Council  Decision  on  Altener  II,  which
was  adopted  on  18  May  1998,  introduced  far-reaching
changes:  monitoring  and  coordinating  tools,  new  project
selection 
of
information,  etc.  (point  2.10).

dissemination 

procedures, 

targeted 

The  Commission  feels  that  the  financing  decisions  under
the  Altener  programme  were  taken  correctly.

overlaps 

the  Altener 

The  Commission  will  redouble  its  efforts  concerning
possible 
and
between 
JOULE-Thermie  programmes  as  regards 
information
dissemination in order to ensure rigorous targeting of the
information  in  terms  both  of  its  contents  and  of  the
audience  to  which  it  is  addressed.  However,  it  feels  that
the  use  of  common  information  networks  for  differing
programmes 
is  quite  compatible  with  the  stringent
targeting  mentioned  above.  The  use  of  one  and  the  same
network  is  thus  not  synonymous  with  overlap  (point
2.11).

THE  FIFTH  FRAMEWORK  PROGRAMME

The  Commission  has  opted  for  tackling  a  large  number
of  the  points  raised  by  the  Court  of  Auditors  during  the
fifth framework programme: coordination of JOULE and
Thermie,  project  assessment  and  negotiation  deadlines,
simplification  of  the  model  contract,  payroll  costs  and
project  overheads,  and  an  expert  selection  procedure  for
monitoring,  and  information  networks.

in 

its  proposal  concerning 

(a)  Purely  as  a  result  of  its  structure,  the  Commission
advocates, 
fifth
framework  programme,  the  incorporation  of  the  two
factors R& D/demonstration, especially in view of the
content  of 
two  key  projects  concerning
non-nuclear  energy  that  involve  a  problem-solving
approach.  Harmonisation  of  rules  and  procedures
across  the  various  departments  will  ensure  that  the
programme  is  homogeneous.

the 

the 

(b) In  order  to  launch  the  fifth  framework  programme,
the  Commission  will  examine  all  possible  ways  of
shortening  the  project  assessment  and  negotiation
deadlines.  The  work  currently 
in  progress  on
contracts within the Commission is intended to clarify
the contractual terms while avoiding conflict with the
legal texts which form their main bases; by way of an
example  the  proposals  concerning  the  new  rules  for
involvement  and  dissemination  provide  scope  for
using  flat  rates  for  the  overheads.

for  selecting 

(c)  The  Commission  is  examining  the  scope  for  devising
a  common  procedure 
the  experts
responsible  for  the  technical  monitoring  of  the
projects  for  the  R&D  sections  of  the  programme.
However,  that  procedure  in  itself  will  not  guarantee
any  narrowing  of  the  gap  between  research  and
demonstration  mentioned  by  the  Court  of  Auditors.

The rewriting of the financial Regulation that is currently
taking  place  should  be  able  to  clarify  the  responsibilities
in  this  area  (point  2.9).

(d) In  order  better  to  coordinate  the  various  sources  of
information,  the  RTD  DGs  are  contemplating  the
building-up,  together  with  the  Member  States,  of  a

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partnership  based  on  the  creation  of  national  contact
points.  That  body  would  be  designated  by  the
Member  States  and  would  be  made  responsible  for
disseminating  information  above  and  beyond  the
direct  services  provided  under  the  programmes,  such
as  help  desks.  It  would  thus  also  be  responsible  for
coordination  within 
State,  more
particularly  with  the  regional  and  local  authorities
responsible  for  assisting  applicants,  especially  small
in  drafting
and  medium-sized  businesses  (SMBs) 
research  proposals.

a  Member 

a new range of technologies which will enable biomass to
be  used  ...’.

The  Commission  wishes  to  point  out  that  the  3 %
increase  referred  to  by  the  Court  applies  only  to
commitments  in  the  field  of  renewable  energy  up  to  31
December  1997  and  not  to  the  entire  duration  of  the
programme.

3.  THE  JOULE/Thermie  PROGRAMME

Budgetary  execution

3.10. Use  of  the  appropriations  for  payments  in  1995
varies  in  accordance  with  the  programme  sections.  The
use  of  appropriations  for  payment  may  be  affected  by
various  factors, 
including  the  heterogeneity  of  the
partnerships  as  far  as  demonstration  is  concerned,  which
may  lead  to  a  longer  contract  negotiation  phase.  The
problem  of  obtaining  building  permits  must  also  be
highlighted.

3.12. The budget targets set out in detail in Annex II to
the  Council  Decision  are  intended  to  cover  the  entire
implementation  of  the  programme  and  must  not  be
reached  with  each  call  for  proposals.

The support for SMBs began with the phase involving the
exploratory  awards  committed  in  1995  and  1996,  with
reduced  amounts  for  each  award.  The  Commission
forecasts that the 5 % guide percentage for SMBs will be
reached  on  completion  of  the  programme.

3.13. Given  the  complexity  of  the  issues  involved  and
the  inclusion  of  coal  and  biomass,  the  Commission  was
not  able  to  state  its  views  on  the  definitive  nature  of  the
project  mentioned  by  the  Court  until  it  was  being
implemented.

The  reclassification  of  that  Court-audited  contract  from
fossil  fuels  towards  renewable  energy  sources  was
prompted  by  the  main  aim  of  this  contract,  which  is  to
solve  the  problems  of  fouling,  corrosion  and  pollutant
emissions caused by the burning of biomass together with
coal, thus enabling biomass to be used as a raw material
for  energy.

For  the  record  the  aim  of  the  biomass  sub-area  is  to
‘increase the use of biomass in the supply of energy in the
European  Union  (EU)  ...  the  R&D  will  aim  to  devise

Programme  management  and  control

Project  selection

3.14. The  Commission  shares  the  opinion  of  the  Court
of  Auditors  as 
forms  available
regards  making 
electronically:  nowadays  that  practice  is  spread  among
several  programmes  including  JOULE/Thermie.

3.16. The  Commission  has  established  a  set  of  common
features  that  are  used  in  the  selection  process  for
determining  which  proposals  are  suitable  for  European
Union  support.  These  features  —  such  as  the  use  of
external  experts  to  assess  proposals,  discussion  of  the
individual  assessment  at  consensus
results  of  each 
meetings, and the publication of the criteria which will be
used in assessing proposals — reflect the need for quality
and  accuracy  in  the  selection  procedure.  Given  the
diversity  of  the  RTD  programmes,  it  is  reasonable  to
accept  a  certain  degree  of  differentiation  in  the  selection
procedures,  as  long  as  these  do  not  deviate  from  the  set
of  common  features  and  they  are  formally  and  clearly
described  in  the  specific  programme  assessment  manuals.
The  Thermie  programme  meets  all  of  these  conditions.

3.17. The  Member  States  nominate  the  members  of  the
programme committee. Under Article 6, footnote 4 of the
committee’s rules, ‘When an opinion of the Committee is
requested  ...,  the  members  of  the  European  Union
Member States delegations should not have an interest in
or  connection  with  the  legal  entities  involved’.  That  rule
is  still  invoked  by  the  committee’s  chair,  which  is
occupied  by  the  Commission.

are 

selected  on 

the  basis  of
3.18. Assessors 
demonstrated  technical  expertise  and  they  work  under
the  appropriate  confidentiality  arrangements.  Once  the
independence  of  an  assessor  has  been  established  and  his
technical  expertise  recognised,  the  Commission  sees  no
problem  in  assigning  to  him  the  technical  supervision  of
any  project  that  falls  within  his  area  of  expertise  and,  in
particular,  to  any  project  that  he  might  have  helped  to
assess.

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3.19.
In order to launch the fifth framework programme
the  Commission  is  examining  every  possible  means  of
shortening the assessment and project negotiation period.
The  Commission  favours  a  simplification  of  the  model
contract.

3.20. The  division  of  the  project  into  three  stages  has  a
sound  scientific  basis,  leaves  no  room  for  uncertainty  as
to  its  genesis,  and  enables  the  Community’s  financial
interests  to  be  defended  in  the  best  possible  manner.

The Commission has in its possession precise information
on  the  various  cost  components  of  its  assessments.  The
Court compares the assessment cost per proposal with an
assessment  cost  per  contract  signed.  That  calculation  is
not  justified  in  that  the  expert  assessors  are  not  involved
at the contract-signing stage. Their purpose is to examine
all  of  the  proposals  and  to  rank  these  on  the  basis  of
previously-established  selection  criteria.  Only  the  best
proposals  are  likely  to  lead  to  the  signing  of  contracts.

is  a  top-quality  wide-ranging  research  project
This 
costing an estimated total of roughly ECU 12 million and
involving 
three
European  industrial  bodies,  and  three  industrial  users.

three  European 

research 

centres, 

The consortium has opted to introduce a project in three
phases  in  order  to  reflect  the  nature  of  the  work  in  the
light  of  the  different  types  of  project  supported  by  the
Commission.  The  first  two  phases  are  more  R&D  in
nature,  while  the 
is  close  to  demonstration
activities.

latter 

Subdivision  of  the  project  will  enable  the  Commission  to
move on to a subsequent phase on the basis of the results
and  progress  achieved  during  the  preceding  phase.  The
Commission  may  thus  lower  the  risk  attached  to  its
financial commitment.

Since Community financing is based on proposal quality,
the  Commission  does  not  guarantee  that  any  consortium
will  receive  its  financial  support  forever.

In addition the JOULE committee has obtained all of the
information  on  the  projects,  including  the  fact  that  this
project  formed  an  initial  phase  of  the  research  to  be
carried  out.

spending.  The  Commission 

3.21. For  each  specific  RTD  programme  the  legislative
authority  adopts  a  maximum  guide  percentage  for
administrative 
closely
monitors  the  programmes  in  order  to  ensure  that  these
are  managed  within  those  percentage  limits.  Studies  by
outside  experts  have  shown  that  the  cost  of  managing
Community RTD projects compares favourably with that
of  managing  organisations  carrying  out  comparable
projects  in  the  Member  States.

The  Commission  is  required  closely  to  monitor  the
overall  cost  of  the  programmes.  Reducing  management
costs to one amount per project, as the Court has in fact
legislative
done,  does  not  reflect  the  will  of  the 
authorities. The Commission is in no way obliged to keep
accounts  per  project.  In  any  case  these  are  not  a
significant 
the  quality  of  a
programme’s management.

for  measuring 

tool 

In 

the 

suggests 

set  out 

the  Court 

requirements 

its  comments, 

innovation.  The  Commission  wishes 
in 
that 

that
3.22.
demonstration  projects  cannot  be  considered  to  include
to
sufficient 
emphasise 
the
information  pack  include  a  number  of  innovative  aspects
of  technology  that  are  not  specifically  related  to  the
equipment  itself.  The  Commission  certainly  welcomes
innovation  in  materials,  equipment  and  components
provided 
the  other
requirements  given  in  the  information  pack,  such  as  the
potential  for  cost  reduction,  long  term  reliability,  and
environmental  friendliness.  However,  equally  important
to  the  future  development  of  the  sectors  under  audit  is
the innovative integration of mature technologies into the
overall energy system.

they  are  consistent  with 

that 

In  conclusion,  the  Commission  considers  that  a  project
can  be  considered  innovative  if  the  total  energy  system
(energy  sources,  components  and  their  integration)  meets
the innovative requirements referred to in the information
pack accompanying the call for proposals, whether or not
the  standard  components  are  used.

As  far  as  partnership  is  concerned,  the  Commission  does
not  regard  cooperation  and  European  added  value  as
being  directly  proportional  to  the  participation  of  the
various  Member  States.  The  Commission  takes  into
account the potential impact of the project on the market
(i.e.  future  implementation  and  exploitation  of  results)
and  whether  this  can  be  assured  by  the  proposed
partnership  team.  Furthermore,  when  assessing  the
strength  of  a  partnership,  the  Commission  considers  the
technical problems being addressed by the project and the
capacity  and  technical  credibility  of  the  partners  to  find
solutions  to  these  problems  which  can  be  adopted  on  a
European-wide  basis.

3.23. The  fact  of  having  a  sole  contractor  who  is  a
financial contributor as well as the Commission (e. g. the
final user) does not conflict with the Council Decision on
the  adoption  of  the  programme  concerned,  nor  the
Council  Decision  of  21  November  1994  on  the  rules
governing the involvement of companies, research centres
and  universities 
research,
technological  development  and  demonstration  projects.

in  European-Community 

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It  is  also  stressed  that  in  many  cases  the  contractors  are
broken  down  into:

—  users  who  directly  benefit  from  an  installation  once

the  demonstration  is  over,

—  producers  who  will  have  acquired  the  know-how
deriving  from  the  project  and  will  be  responsible  for
disseminating  this.

The  importance  of  the  presence  of  contractors,  even
where these do not directly contribute to project funding,
resides  in  their  commitment  to  meet  the  contractual
obligations  in  terms  of  turning  the  results  of  this  project
to  account  and  disseminating  them.

This  aspect  is  an  essential  feature  of  any  research  and
demonstration  programme.

Nevertheless  the  Commission  duly  notes  the  Court  of
Auditors’ findings when auditing contractors, particularly
with regard to invoicing, and will take any action that is
necessary.

3.24. The  Commission  does  not  share  the  Court’s  view
on  the  innovative  character  of  six  out  of  the  13  Thermie
projects  audited.  In  fact,  throughout  the  selected  phase,
the  Commission 
independent  and
is  assisted  by 
technically-qualified  external  experts  who  routinely
advise  on  the  innovative  nature  of  each  proposal  and  on
its  compliance  with  the  general  aims  of  the  programme.
Only  those  proposals  which  fulfil  the  above  eligibility
criteria  are  considered  for  selection.  All  of  the  projects
audited were considered to be innovative and suitable for
support  by  the  outside  experts,  the  Commission’s
technical  staff,  and  all  members  of  the  programme
committee.

The  Commission  also  refutes  the  statement  that  Thermie
did  not  make  good  use  of  the  technologies  developed
under  JOULE,  since  various  supported  projects  are
demonstrating the results of the innovative integration of
these 
public
environments.

technologies 

business 

into 

and 

included 

3.25. The  Commission  does  not  use  pay-back  time  as  a
selection  criterion  in  the  PV  sector  and,  for  this  reason,
in  the
values  for  this  parameter  are  not 
assessment  summary  sheets.  In  fact  there  is  a  general
consensus  among  decision  makers  and  experts  in  the
sector  that  pay-back  time  does  not  provide  a  sufficiently
accurate basis for assessing PV projects. This is due to the
pre-competitive  nature  of  the  PV  technologies  which,  at
present,  are  less  cost  effective  than  conventional  energy
sources.  However, 
the  huge  potential  of  market
deployment  in  the  future  is  recognised  and  the  main
assessment parameters (e. g. installation costs and services
provided)  reflect  this.

components  whilst 

research  projects  as  being  centred  on  the  innovative
development  of 
the  Thermie
demonstration activities are focused on reducing the total
cost  of  the  integrated  PV  system.  A  simple  concentration
of  efforts  just  on  basic  research  developments  would  put
aside more than 50 % of the cost reduction potential that
results  from  the 
integration  of  existing
components.

innovative 

Project  management  and  control

3.26.
JOULE temporarily had to cope with a substantial
increase  in  the  workload  of  the  unit  that  is  responsible
for  managing  renewable-energy  contracts.  Therefore  (a)
additional  staff  were  engaged  without  delay  within  the
existing  procedure  and  (b)  the  selection  of  11  ‘cluster
coordinators’  per  contact  procedure  was  initiated  as
quickly  as  possible.  This  is  why,  with  the  new  staff  and
support of the cluster coordinators, no scientific manager
was  responsible  for  more  than  26  projects  in  mid-1998.

3.27.
In  order  to  optimise  the  human  and  financial
resources  the  JOULE  quality  management  manual  states
that,  as  a  rule,  the  scientific  managers  attend  three
meetings:  start-up,  mid-term  and  end  of  project.  The
contractors’  meetings  are  mainly  held  in  Brussels,  unless
an  equipment  inspection  is  necessary.

On-site  visits  are  not  the  only  means  of  monitoring  a
project: they are useful at critical points in the project but
may  not  always  be  necessary  or  may  not  be  enough.

35  JOULE  projects  were  inspected  either  at  the  start-up
stage  (12)  or  as  the  projects  were  in  progress  (23).
Meetings should automatically be held in situ  for  project
start-up,  as  they  facilitate  subsequent  monitoring  of  the
most  complex  projects  in  particular.  Likewise  for  project
conjunction  with
monitoring  meetings  held 
conferences, which reflect better management of missions
by  Commission  staff.

in 

With regard to the Court’s question over the focus in the
area  of  photovoltaics,  the  Commission  views  the  JOULE

14 Thermie projects had been visited by June 1998. This
represents an acceptable rate since the first project began
in  late  1995  and  lasted  four  or  five  years.

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In  addition,  37 %  (68  projects)  of  the  contracts  signed
since  1990  have  so  far  been  visited.

3.29. The  Commission 
is  examining  the  scope  for
devising  a  common  selection  procedure  for  the  experts
who  are  responsible  for  the  technical  monitoring  of  the
projects.  However,  that  procedure  would  not  in  itself
guarantee the narrowing of the gap between research and
demonstration  mentioned  by  the  Court  of  Auditors.

3.30. The  Commission  is  aware  of  the  risks  referred  to
by  the  Court  and  has  taken  all  necessary  action  to
counter  these.  Operators  who  are  experts  in  their  fields
have  been  made  responsible  for  the  scientific  monitoring
of  contracts.  In  many  cases  the  specialist  experience  of
those  administrators  coincides  with  the  professional
profiles  sought  by  the  Commission,  and  their  expert
knowledge 
the
scientific-monitoring  quality  of  the  projects.  Moreover,
from 
their  appointment  via  general,
widely-publicised  selection  procedures,  the  Commission’s
administrative  staff  are  required  to  obey  all  of  the  staff
rules  concerning  discretion  and  confidentiality.

forms  an  essential  component  of 

time  of 

the 

3.31.
In  its  comments,  the  Court  makes  reference  to  a
project  in  which  a  large  group  performed  the  acceptance
test  on  the  equipment  used  in  the  project.  The  outside
expert  involved  is  employed  by  an  associated  company.
However,  the  Commission  does  not  see  any  conflict  of
interest  between  the  actual  technical  follow-up  of  the
project  under  the  responsibility  of  the  expert  and  the
quality  checking  of  equipment  which  was  performed  by
an  associated  company.

3.32. The  systematic  examination  of  the  cost  reports  by
the  Commission’s  departments  means  a  lot  more  than  a
simple  examination  of  the  costs  declared  and  of  their
breakdown  in  terms  of  the  initial  budget.  Indeed,  the
examination is intended to analyse the correspondence of
the  costs  to  the  work  carried  out.

In  line  with  the  commitments  entered  into  with  the
budgetary  authority  DG  XII  increased  the  number  of
staff  in  its  audit  department.  The  new  audit  strategy
based  on  an  analysis  of  risk  indicators  is  being  finalised
at  the  moment  and  will  enable  the  impact  of  the
inspections  to  be  improved.  Against  this  background  a
call for proposals was made on 27 May 1998 in order to
select  outside  auditors.

The very large number of contracts managed by the same
financial  manager  for  Thermie,  and  the  constraints  as

regards  processing  deadlines,  do  not  enable  checks  to  be
carried  out  on  items  greatly  exceeding  the  current
inspection  threshold  without  threatening  to  jam  the
programme completely.

However,  the  number  of  in  situ  audits  should  increase
significantly  once  a  contract-audit  unit  has  been  fully
constituted.

AMPERE/AQUA  management
3.33. DG 
XII’s 
information  system 
is  tailored  to  a  project’s  daily
management  needs.  An  assessment  aimed  at  developing
management  tools,  such  as  ‘instrument  panels’  enabling
that  management  to  be  perfected,  is  currently  under
way.

As  part  of  that  special  report  the  Commission  has
provided  the  Court  of  Auditors  with  very  generous
amounts of information and has carried out ad hoc work
for  the  Court  requiring  major  staff  input.

3.34. The  weaknesses  of  the  Proman  system  are  well
known.

The Commission is already designing a new tool (Project
Management System) in order better to meet the needs of
comprehensive  contract  and  contractor  monitoring.

3.36. Harmonising the frequency of the financial reports
under  the  fifth  framework  programme  is  envisaged.

3.37. One  of  the  main  aims  of  research  policy  is  to
encourage  participation  by  SMBs.  Payment  in  advance  is
a key factor in achieving that aim. It is clear that in order
to  ensure  that  the  Commission’s  financial  interests  are
protected  any  advances  granted  will  receive  particular
attention  by  the  Commission’s  departments.  However,
this  will  not  enable  the  detection  of  any  future
bankruptcies  to  be  guaranteed.

A  computerised  alert  system  was  introduced  at  the
Commission  in  January  1998.  Where  contractors  are
brought  before 
the  case  of
bankruptcies),  the  system 
immediately  records  such
instances  in  a  register  that  is  available  to  all  of  the  DGs
in  such  a  way  that  these  are  informed  of  the  matter.

the  Courts 

(as 

in 

Programme  management  costs

3.42. to 3.43. The RTD programmes have an integrated
budget  structure,  i. e.  the  Council  adopts  a  maximum
percentage  for  staff  and  administrative  spending  for  each
specific  programme.  Every  year,  as  an  annex  to  the
budget, the budgetary authority adopts a correspondence
table  which,  for  each  programme,  gives  a  breakdown  of
the budget between action spending and five categories of

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administrative  spending,  including  payroll.  When  that
correspondence  table  is  drawn  up  it  does  not  exceed  the
ceilings  set  by  the  Council.  The  implementation  of  the
programme  budgets  is  precisely  planned  in  accordance
with  the  principles  of  good  financial  management  and  is
accompanied by regular monitoring by the Commission’s
departments.

unless the contract were amended accordingly this would
not  increase  the  Commission’s  authority.

When  the  interim  and  final  reports  are  examined  the
Commission  will  check  that  the  work  carried  out  does
indeed  meet  the  aims  of  the  contract.

The  Commission’s  operating-budget  appropriations
(Section  A  of  the  budget)  are  not  distributed  per  RTD
programme but per DG. Thus DG XII and DG XVII also
receive an allocation from that budget that mainly covers
infrastructure  spending.  That  allocation  is  monitored  in
detail  by  DG  X, 
in  cooperation  with  all  of  the
Commission’s  departments.

to 

the 

proper 

energy 
seconded 

A  certain  number  of  regular  staff  in  DG  XII  paid  under
sources  or
Item  B6-7 1 5 1 
(non-nuclear 
JOULE/Thermie)  have  been 
those
departments  in  order  to  implement  a  policy  aimed  at
the
ensuring 
Directorate-General’s  horizontal  services.  In  addition,
following  internal  redeployments  and  mobility  regular
staff  working  on  the  programmes  are  paid  by  JOULE
and,  to  offset  this,  staff  assigned  to  the  JOULE
programme  are  paid  via  other  programmes.  That
situation will be rectified with a view to launching a fifth
framework  programme  in  1999.

functioning 

of 

Project  execution

Project  coordination  via  European  economic  interest
groupings  (EEIG)

its  negotiating  forms,  and  those  of  all 

3.45. During  the  contract  negotiations  the  EEIG  must
submit 
its
to  direct
members.  The  negotiations  are 
the
participation  by 
contact-signing  procedure  is  speeded  up  since  only  the
EEIG  is  a  signatory.

those  members.  However, 

identical 

3.46. The  Commission  would  again  point  out  that  the
parties to a contract are legally authorised to depart from
the  estimated  table  of  costs  and  to  conduct  transfers
among 
prior  Commission
authorisation,  the  only  restriction  being  that  of  meeting
the aims of the project (Article 18.(2)). An amendment to
the technical Annex would be necessary if the aims of the
project  were  to  be  altered.

themselves  without 

in 

the  contract  of 

Inclusion 
the
distribution  of  a  member  of  an  EEIG’s  contribution  no
doubt  holds  appeal  in  information  terms.  However,

information  on 

Difficulties  in  producing  correct  cost  statements

3.48.  to  3.55. The  Commission  has  available  to  it  four
levels  of  inspection,  namely:

—  prior  inspection  during  the  negotiating  stage,

—  analysis  of  the  cost  breakdowns  in  relation  to  the

technical  report  concerned,

—  a  request,  where  appropriate,  for  additional  evidence

concerning  the  cost  breakdowns,

—  in-situ  inspections,  if  necessary.

On  27  May  1998  the  Commission  made  a  call  for
proposals  for  the  selection  of  external  auditors.  The
selection  of  the  audits  to  be  carried  out  in  this  instance
will  be,  in  particular,  based  on  a  risk  analysis.

justifying  the  expenses  charged  by
With  regard  to 
contractors the model contract provides for an obligation
that  all  contractors  keep  appropriate  accounts  and
documentation.  Additional  evidence  may  be  required  by
the Commission, both to support and certify the costs set
out  in  the  statements,  and  during  in  situ  inspections.

Article  19(1)(1)  of  the  model  contract  provides  that  a
participant  shall  enter  average  payroll  costs,  provided
that  these  are  drawn  up  in  accordance  with  its  habitual
practice  and  do  not  diverge  significantly  from  actual
costs.

It  must  be  pointed  out  as  regards  payroll  costs  that  the
labour time sheets do not constitute absolute proof. They
are only one means of assessment among others and may
not  lead  to  automatic  acceptance  of  the  costs  claimed
purely  as  a  result  of  their  existence.

When the overheads were monitored a prior examination
was  carried  out  of  the  rates  suggested  by  the  contractors
during the negotiation. Those rates are generally based on
calculated  forecasts  using  the  contractors’  accounting
figures,  more  particularly  in  accordance  with  their  own
conventions,  policies  and  accounting  principles  while
following  national  accounting  practice.  They  are
nevertheless informed that the criteria adopted must be in
line  with  the  terms  of  the  contracts.  They  must,  in
particular,  have  appropriate  documentation 
in  their
possession  which  enables  them  to  vouch  for  and  certify
all  of  the  costs  that  they  declare.  That  documentation

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must  be  available  at  all  times.  The  exactness  of  that  rate
may  only  be  fully  confirmed  via  an  audit  at  the
contractor’s.

—  projects  in  all  of  the  priority  areas  included  in  the

annual guidelines,

the 

fifth 

The points raised by the Court in connection with payroll
charges  and  overheads  are  discussed  within  the  various
working  parties  preparing 
framework
programme. These working parties have acquired a great
deal  of  experience  on  research  contracts  and  aim,  more
especially,  to  optimise  the  management  and  inspection
procedures  for  the  next  framework  programme.  The
work  on  contracts  currently  in  progress  within  the
intended  to  clarify  the  contractual
Commission 
provisions while complying with the legal texts which lay
down  their  basic  principles.  For  example,  the  proposals
concerning the new participation and dissemination rules
offer  scope  for  using  flat  rates  for  the  overheads.

is 

Risk  of  abandoned  projects

in 

sector 

the  photovoltaic 

3.56.  to  3.57. The  rate  of  abandoned  and  cancelled
Thermie  projects 
is
approximately  10 %  whilst,  in  the  case  of  biomass,  this
rate is 24 %. The main reasons for cancelling the biomass
projects  mentioned  by  the  Court  were  the  change  in
national  buy-back  rate  tariff  and  the  inherent  high
technical risk. Taking into account that Thermie supports
projects  entailing  technology  risks,  in  application  areas
which  lack  harmonised  legislation,  this  rate  can  be
considered acceptable.

4.  THE  ALTENER  PROGRAMME

Programme  management  and  control

—  projects  covering  their  entire  territory  in  a  balanced

manner,

—  projects  whose  proposing  bodies  represent  a  balance
between  the  public  and  private  sectors,  agencies,
institutes,  universities,  etc.

to 

regard 

the  annual  guidelines  and 

With 
the
dissemination  of  information  concerning  the  programme,
attention should be drawn to the fact that, independently
of  what  has  been  done  directly  by  the  Ministries
concerned,  the  Commission  has  supported  systematic
activities  in  the  15  Member  States  and  at  Community
level  as  part  of  the  information-dissemination  activities
provided  for  by  the  Council  Decision  in  order  to
disseminate  targeted  information  on  the  programme  and
on  its  activities  (in  particular  the  annual  guidelines).

The  wording  of  the  Decision  does  not  provide  for  any
need  to  carry  out  public  call-for-proposals  procedures,
particularly  since  pursuant  to  Article  5(2)  they  will  have
to  have  been  national,  and  the  guidelines  require  the
projects to be multinational except in highly precise cases
such  as  regional  plans.

In  any  case,  the  Article  5(2)  referred  to  above  is  no
longer  contained  in  the  Altener  II  programme  approved
by  the  Council  Decision  of  18  May  1998  (L  159,
3.6.1998)  which  follows  on  from  the  first  Altener
programme.  Calls  for  proposals  have  already  been
published 
in  the  Official  Journal  of  the  European
Communities  and  will  henceforth  continue  to  be  so.

Project  selection

Formal  decision  procedure

4.8.  and  4.10. Pursuant  to  Article  5(2)  of  the  Council
Decision  of  13  September  1993,  the  draft  initiatives
referred  to  in  Article  3(b)  and  the  list  of  bodies  who
would  be  called  upon  to  implement  these  are  put  to  the
Commission  by  the  Member  States  each  year.  The
the  Community’s
Commission 
financial  participation  and  on  the  conditions  attached  to
this  in  accordance  with  the  procedure  provided  for  in
Article  7(1).

then  decides  upon 

The  Council’s  Decision  does  not  describe  the  procedure
which  the  Member  States  must  follow.

Nevertheless,  the  Commission  has  always  taken  steps  to
ensure  that  the  Member  States  put  forward: 

4.11.  and  4.12. The  procedure 
Commission 
implementing rules.

covered  by 

is 

the 

followed  by 

the
internal  budget

Article 5(5) of those rules requires the authorising agency
(the  Commission)  or  its  duly  empowered  agent  (the
Director-General of DG XVII for a Altener heading) may
commit  the  institution  with  regard  to  third  parties  in
contractual  terms.  In  turn  the  acting  authorising  agency
has  subdelegated  its  powers  to  a  certain  number  of
officials who have been empowered in pursuance of those
same  internal  rules  to  implement  the  budget.

—  a  sufficient  number  of  proposals  in  order  to  make  a

stringent  selection,

It  is  also  pointed  out  that  all  commitments  by  DG  XVII
are  covered  by  an  internal  decision  signed  by  the
authorising  officer  himself.

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The  Commission  is  thus  not  able  to  agree  with  the
Court’s  statement  that  ECU  26,1  million  have  been
committed  without  an  adequate  legal  basis,  to  pilot
projects  funded  under  the  programme.

Conversely,  it  should  be  noted  that  in  the  internal  rules
already referred to for Article B5-7 1 0 ‘Financial support
for  energy  infrastructures’  of  which  DG  VII  is  also  the
manager,  the  Commission  has  been  clearly  named  as  the
authorising officer for that spending. That being the case
a  Commission  Decision  is  required.

The  use  of 
financial
contributions  of  less  than  ECU  100 000  could  also  be
considered.

fixed-price 

contracts 

for 

Applying  the  model  research  contract  and  its  Annex
unchanged  would  seem  to  be  inappropriate.  Indeed,  in
view  of 
the  Altener
programme  cannot  be  treated  on  the  same  basis  as  a
research programme.

its  non-technological  nature 

It must nevertheless be stressed that the current rewriting
of  the  financial  Regulation  should  be  able  to  clarify  this
point.

5.  PROJECT  MANAGEMENT

Project  management

4.13. Those  of  the  in  situ  financial  checks  made  since
1997  intended  for  Research  projects  have  been  extended
to  the  programmes  covered  by  energy  policy.

These  measures  will  not  be  visibly  turned  to  practical
account until 1998, bearing in mind the human resources
available.

4.14. A  new  numbering  system  has  been  introduced  in
an attempt to make up for the deficiencies of the existing
data-processing  system.  Since  the  test  proved  to  be
system  was
this  double  numbering 
inconclusive 
abandoned  in  late  October  1997.

Since  the  financial  managers  are  aware  of  the  difficulties
they  are  experiencing  because  of  a  lack  of  efficient
user-friendly packaged computer software, the design of a
new  tool  has  been  initiated  in  order  better  to  meet
current management needs and also to monitor all of the
contracts  and  contractors.

4.15.  and  4.16.
It  should  be  borne  in  mind  as  regards
eligible  costs  that  the  structure  of  current  contracts,
which  is  fairly  simple,  had  been  devised  in  order  to  take
account  of  the  particular  nature  of  the  projects  having
specific  characteristics 
that  had  been  awarded  a
contribution  under  the  Altener  programme,  i. e.  projects
that were great in number but relatively low in cost and,
as  a  general  rule,  only  contained  payroll  and  overhead
charges.

In  future  the  management  of  the  Altener  programme
should  move  towards  the  adoption  of  projects  that  are
more  restricted  in  number  but  greater  in  terms  of  costs.
The model contract used for that programme will thus be
amended.  It  will  be  more  structured  and  substantial,
particularly  as  regards  spending  breakdowns.

5.1. More  than  90 %  of  the  Thermie  presentations
throughout  Europe  involve  or  are  organised  by  OPETs
(Offices  for  the  Promotion  of  Energy  Technologies)  and
agencies  that  are  members  of  the  European  energy
network.  A  wide  spread  of  information  tools  and  in
particular  web  pages  have  been  successfully  used  by  the
contractors  (e. g.  application  forms  can  be  automatically
downloaded  from  the  DG  XVII’s  World  Wide  Web
page).

5.2. The  Commission  would  point  out  with  regard  to
information  networks  that  in  order  better  to  coordinate
the  various 
the  RTD  DGs
contemplate  the  creation  of  a  partnership  with  the
Member  States  that  is  based  on  the  provision  of  a
network  of  national  contact  points.

information 

sources 

That  body  would  be  appointed  by  the  Member  States
and  would  be  made  responsible  for  disseminating
information as a bonus to the direct programme services,
such  as  the  help  desks.  It  would  also  be  responsible  for
ensuring  coordination  within  a  Member  State,  and  more
particularly  with  the  regional  and  local  authorities  that
were  responsible  for  assisting  applicants,  and  especially
SMBs,  in  drawing  up  research  proposals.

6.  COORDINATION 

OF 

AND
ALTENER 
AND  OF  OTHER
COMMUNITY  AND  NATIONAL  SUPPORT  MEASURES
IN  THE  FIELD  OF  RENEWABLE  ENERGY  SOURCES

JOULE-THERMIE 

PROGRAMMES 

informed 

6.1. The  Commission  has  clearly 
those
submitting  proposals  concerning  biomass  that  their
proposals  could  be  eligible  under  two  programmes
(JOULE-Thermie  and  FAIR),  but  that  they  should  be
submitted  to  one  or  other  of  those  programmes  in  the
light of their ultimate aim. Indeed, it is stated in the work
programme  that 
‘biomass  R&D  projects  could  be
eligible  under  both  the  JOULE-Thermie  and  FAIR
(agro-industry)  programmes.  The  FAIR  programme
addresses  the  production,  management  and  processing  of

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raw  materials.  JOULE-Thermie  will  concentrate  on
solid-biomass conversion  and use  processes. They will be
submitted 
to  FAIR,
to  either  JOULE-Thermie  or 
depending  upon  the  project’s  main  approach’.

In addition the Commission’s future contractors will have
to  declare  the  various  sources  of  funding,  and  especially
public  sources,  for  the  project  receiving  a  financial
contribution.

In  those  sectors  where  there  could  be  programme
overlaps  the  JOULE-Thermie  programme  will  take  steps
to  provide  coordination  via  the  following  means:

—  communication  among 
exchanges  of  information,

scientific  managers  and

6.5. The  Commission’s  proposal  introducing  an  energy
framework  programme  is  covered  by  Articles  130s  and
235  and  is  actually  aimed  at  better  coordination  of
various  activities  relating  to  energy.  However,  the
research  activities  are  coordinated  under  the  fifth  RTD
framework  programme  in  accordance  with  Article  130f
of  the  Treaty.

—  involvement  of  scientific  managers  from  another
role  of

in  order 

the 

fill 

to 

programme 
assessment-panel  moderator,

—  formal  inter-departmental  consultation.

Internal  coordination  in  the  bioenergy  sector  is  currently
covered  by  several  programmes  (BRITE,  EURAM,  FAIR,
JOULE-Thermie,  Altener)  and  managed  by  various
Directorates-General  (VI,  XII,  XVI).  The  officers  of  the
various  programmes  have  already  recommended  the
creation  of  an  informal  working  group  whose  purpose  is
to  hold  regular  meetings  (twice  a  year)  of  all  officers  in
order 
the
programmes  and  the  priorities  in  the  various  calls  for
proposals.

to  establish  clear  boundaries  amongst 

6.2. As  a  result  of  the  Council  resolution  on  the  White
Paper  on  a  Community  strategy  and  action  plan  for
renewable energy sources, the Commission will introduce
specific  monitoring  which  should  enable  figures  to  be
provided on the funding granted, particularly with regard
to the regions concerned. It is, however, pointed out that
this  resolution  is  not  binding  on  the  Member  States.

6.3. Only  a  comprehensive  survey  could  provide  an
overview  of  the  NRES  projects  that  are  funded  by  the
Structural  Funds.  However,  this  lay  outside  the  scope  of
Altener  I.  Conversely  Altener  II  —  which  is  the  White
Paper’s  main  monitoring  tool  for  a  Community  strategy
and action plan for renewable energy sources up to 2010
—  has  provided  for  specific  monitoring  and  follow-up
activities.  Since  the  programme  was  adopted  on  18  May
1998  that  permanent  activity  will  begin  in  late  1998.

6.4. Before  any  decision  is  taken  to  fund  projects  the
Commission  will  set  up  interdepartmental  consultation
machinery  which 
the
Structural  Funds,  which  will  inform  the  departments
receiving  the  projects  that  are  likely  to  be  funded.

the  DGs  managing 

includes 

The  RTD  activities,  as  applying  to  energy,  cannot  be
reduced solely to the scale of energy policy. The results of
this  research  will  help  to  clarify  and  support  other
the
Community  policies  and  activities 
environment  and  the  internal  market.

such  as 

The  Commission  feels  that  the  multiannual  framework
programme for action on energy mentioned by the Court
initial  response  as  regards
represents  a  satisfactory 
defining 
the  overlap  between
non-research  programmes.

responsibilities  and 

6.7. The  Commission  shares  the  view  of  the  Court  that
national  objectives  should  be 
into  account.
However,  in  the  specific  case  of  grid-connection,  there  is
a  Council  Recommendation  88/611/EEC  that  promotes
cooperation  between  public  utilities  and 
in-house
producers  of  electricity  that  the  Commission  also  has  to
take  into  account.

taken 

7.  CONCLUSIONS  AND  RECOMMENDATIONS

7.1. RTD  projects  are  assessed  in  the  light  of  a  certain
number  of  criteria,  and  in  particular  their  coincidence
with 
the  programmes’  prospects  and  aims.  The
programmes  are  also  monitored  and  subjected  to  a
systematic  assessment  every  five  years.  The  Commission
is  assisted  in  this  by  independent  experts  who  provide
competence  and  neutrality.  The  Commission 
takes
account  of  the  assessments  made  when  it  proposes  new
framework  programmes  and  specific  programmes.

7.2. The  Commission  recognises  that  there  is  scope  for
further  coordination  between  the  JOULE  and  Thermie
sections  of  the  programme.  However,  the  Commission
views  the  problem  of  integration  as  something  that
requires  a  novel  problem-solving  approach.  In  its  plans
for  the  fifth  framework  programme,  the  Commission
centres  the  non-nuclear  energy  research,  development

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and  demonstration  on  two  key  action  areas  in  which
upstream  and  downstream  developments  are  aimed  at
solving  a  combined  set  of  problems.  Harmonisation  of
the  management  procedures  was  a  constant  concern  of
the
the  Commission’s 
preparatory  work  on  the  fifth  framework  programme.

departments 

throughout 

7.3. The  Commission  does  not  share  the  views  of  the
Court  as  regards  the  lack  of  innovation  in  some  of  the
projects  audited.  It  draws  the  attention  of  the  Court  to
the  fact  that  the 
innovative  application  of  mature
technologies  is,  nowadays,  also  considered  to  be  an
important  technology  innovation  in  itself.  Moreover,  the
compliance  of  the  projects  selected  with  the  aims  and
objectives  of  the  programme  —  in  which  innovation  is  a
prime  criterion  —  have  been  checked  by  recognised
independent  experts  in  the  field,  technical  Commission
staff  and  representatives  of  the  Member  States.

7.7. The  Commission  is  in  the  process  of  upgrading  its
data-processing  and  administrative  systems,  and 
its
human  resources,  and  of  introducing  a  new  audit  system
based  on  risk  analysis.  The  Commission  made  a  call  for
proposals  for  the  selection  of  external  auditors  on  27
May  1998.

The  Court  of  Auditor’s  suggestion  with  regard  to
certification  of  the  costs  submitted  by  contractors  via
external  auditing  firms  was  interesting.  Among  other
methods this will be examined within the ad hoc working
party  preparing  the  fifth  framework  programme.

7.8. The  Altener  contracts  will  indeed  be  significantly
amended.

Two  compatible  outline  solutions  can  be  contemplated:

7.4. The  additional  staff  needed 
to  manage  and
supervise  contracts  under  JOULE  were  engaged  as
quickly as possible in line with the procedures. Moreover
the  selection  of  the  11  cluster  coordinators  on  a
contractual  basis  was  launched  as  soon  as  possible.

—  financial contributions to a more restricted number of

projects,  but  which  individually  cost  more.

—  In  this  case  the  model  contract  will  be  more
structured  and  substantial,  particularly  as  regards
spending  records,

The  Commission  is  examining  the  scope  for  organising  a
common  procedure  for  selecting  the  experts  to  be
responsible  for  technical  project  monitoring.

—  the  use  of 

flat-rate 
contributions  of  less  than  ECU  100 000.

contracts 

for 

financial

is 

already 

among 
the
7.9. There 
Commission  departments 
in  RTD  and
demonstration  funding,  more  particularly  by  means  of
interdepartmental  consultation.

coordination 
involved 

7.6. The Commission is aware of the risks mentioned by
the  Court  and  has  taken  all  action  needed  in  order  to
counter  these.  Once  they  have  been  appointed  by  means
of  general  competitions  that  have  been  widely  advertised
Commission  staff,  whatever  their  past  experience,  are
required to obey all of the staff rules as regards discretion
and  confidentiality.

This  coordination  is  intended  to  be  stepped  up  with  a
view  to  the  fifth  framework  programme.

information-dissemination
The  new  monitoring  and 
activities  provided  for  in  the  White  Paper  on  renewable
energy  sources  should  also  be  mentioned.