Opinion of the European Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council on the promotion of cogeneration based on a useful heat demand in the internal energy market" (COM(2002) 415 final — 2002/0185 (COD))
Date: 2003-03-26
Institutions: European Economic and Social Committee
Subjects: administrative procedure, approximation of laws, electrical energy, energy policy, energy production, evaluation method, heating, security of supply

C 95/12

EN

Official Journal of the European Union

23.4.2003

4.2.5.
The treatment of R&D support in the EU rules on
state aids needs, indeed, a review. It may not necessarily be a
question of more generous rules, but definitely to make them
more flexible. To mention just one important problem,
cooperative projects between the public and private sector are
burdened by requirements of notification to the Commission,
which adds bureaucracy and also leads to much uncertainty.
These kinds of barriers to partnerships need to be removed. A
well judged ‘de minimis’ rule should be introduced.

4.3. R&D and innovation in corporate strategies and management

4.3.1.
In order to be able to strengthen their R&D efforts,
enterprises need a stable political framework. Governments

Brussels, 26 February 2003.

need to give a clear and coherent message, not only on
measures for more R&D as such, but on their emphasis and
orientation towards a knowledge-based, innovation-oriented
economy whenever any policies are addressed and executed.

4.3.2.
Companies need, and they do take, different, individ-
ual approaches to their R&D. Amongst advice to be given, the
EESC stresses one in particular: networking with the public
research institutions as well as other companies. Some of the
barriers to networking seen by companies are real and relevant,
but many are more a matter of tradition and mistrust.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council on the promotion of cogeneration based on a useful heat
demand in the internal energy market’

(COM(2002) 415 final — 2002/0185 (COD))

(2003/C 95/04)

On 5 September 2002 the Council decided to consult the European Economic and Social Committee,
under Article 175 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 6 February 2003. The rapporteur
was Mr Buffetaut.

At its 397th plenary session on 26 and 27 February 2003 (meeting of 26 February), the Economic and
Social Committee adopted the following opinion by 107 votes to one with two abstentions.

1.

Introduction

— the EU has limited scope to influence energy supply

conditions.

The proposed Directive is set against the following

1.1.
backdrop:

— the European Union is extremely dependent on external

energy supplies;

It is therefore paradoxical that the potential for using cogener-
ation as a measure to save energy is underused.

— greenhouse gas emissions are on the rise, contrary to the

commitments under the Kyoto Protocol; and

This is why the promotion of high-efficiency cogeneration
based on a useful heat demand is now a Community priority,
intended to supplement renewable energy policy.

23.4.2003

EN

Official Journal of the European Union

C 95/13

Cogeneration is expected to have three beneficial effects, i.e.:

— higher installation costs per kilowatt; and

— save primary energy;

— reduce greenhouse gas emissions; and

— contribute to the security of energy supply.

— shorter operating hours compared to larger baseload
plants owing to the fact that these installations are linked
to the use of heat (e.g. shutdown at the weekend for some
industrial installations and closure during summer time
for heating facilities).

1.2. Objectives of the Commission proposal

2. General comments

In 1997 the Commission set the indicative target of doubling
the share of electricity production from cogeneration in total
EU electricity production, i.e. from 9 % in 1994 to 18 % by
2010. However, no significant increase has been seen.

The objective of this proposal is to establish a framework to
support and facilitate the installation and proper functioning
of electrical cogeneration plants where a useful heat demand
exists, without encouraging heat to be wasted.

There are two specific aims:

— in the short term, to consolidate existing and, where
feasible, promote new high-efficiency cogeneration instal-
lations; and

— in the medium to long term, to ensure that high-efficiency
cogeneration becomes a key element when decisions on
investment in new production capacity are made.

Advocates for this type of simultaneous production of heat
and power argue that it:

— reduces fuel consumption and CO2 emissions;

— prevents losses on the electrical grid caused by proximity

to the consumption point;

2.1. Definitions

First, high efficiency cogeneration is defined by the energy
savings obtained by the combined production rather than
separate production of heat and electricity.

Existing plants with energy savings of more than 5 % and new
plants with energy savings of more than 10 % — considered
in relation to the reference values laid down by the proposed
Directive — qualify for the term ‘high efficiency cogeneration’
(annex III).

The proposal also contains a definition of electricity from
cogeneration and identifies two efficiency percentages — 75 %
and 85 % — depending on the technologies used. Electricity
not produced in a cogeneration process must not be considered
as cogenerated electricity, with all
the consequences this
implies in terms of aid and tariffs.

The EESC welcomes the objective of developing cogeneration,
but emphasises that the technical definitions contained in the
annexes affect the impact and effectiveness of the document.
thresholds
It considers
depending on the technologies used is appropriate and that
the percentages stipulated, though high, are realistic.

the definition of different

that

— increases

competition among electricity producers

2.2. Obligations on the Member States

because new actors enter the market;

— creates new enterprises, in particular SMEs; and

— strengthens the link between the territory and the popu-
lation, in particular in the least favoured regions of the
European Union.

1.3.

Problems hindering the development of cogeneration

The main problems are the following:

Some obligations relate to the provision of statistics or
information (e.g. analysis and development of cogeneration
potential, three-yearly report, etc.), while others relate to the
technical application of the criteria and definitions laid down
in the Directive.

The EESC acknowledges that information and reports are
necessary, but would like them to be fewer in number and
more focused on areas that may encourage the development
of cogeneration. Otherwise there is a risk of information
overload.

— high fuel prices owing to the fact that cogeneration
producers are smaller fuel users than the large electricity
producers;

— problems linked to accessing the electricity market;

The following three areas should be highlighted:

— the creation of a guarantee of origin of electricity from
cogeneration on similar lines to the guarantee of origin
of electricity from renewable energy sources;

C 95/14

EN

Official Journal of the European Union

23.4.2003

— the obligation to ensure that transmission and distri-
bution system operators guarantee access to cogenerated
electricity at a reasonable cost and in a non-discriminatory
manner; and

— the obligation to reduce the regulatory barriers to cogen-

eration and adopt rules facilitating it.

Finally, it should be noted that the proposal endorses national
support schemes, within the limits set by Community compe-
tition rules and standards in this area. The EESC welcomes
this, provided that it does not lead to unjustified distortions of
competition.

As explained by the Commission, the aim of Annex II is to
provide the most accurate calculation of electricity and heat
production in order to measure the volume of electricity that
can be considered cogenerated. Above a threshold of 75 % or
85 %, all electricity is cogenerated, while below that threshold,
only a part will be considered cogenerated.

Annex III, however, concerns the definition of high-efficiency
cogeneration. Cogeneration is considered to be high-efficiency
if there are primary energy savings. If there are no primary
energy savings, however,
it cannot be considered high-
efficiency.

3. Specific comments

The EESC stresses that, given that there is a high heat demand
in the European Union, it is imperative that the proposed
mechanism genuinely encourages cogeneration by ensuring
that it is economically attractive for heat producers.

3.3. Article 4: Guarantee of origin of electricity from cogeneration

The EESC calls for additional information on the practical
implementation of this guarantee of origin.

3.4. Article 5: Efficiency criteria

3.1. Article 1: Purpose

This article lists obligations on the Member States.

The EESC welcomes the purpose of promoting cogeneration
and regrets that results are still very modest compared to the
objective proposed in 1997.

It stresses the need to take account of specific national
circumstances and respect the subsidiarity principle in an area
where national climatic and economic conditions are crucial.

3.2. Article 3: Definitions

This article is central to assessing the impact and effectiveness
of the proposed mechanism. The link between Annex II and
Annex III, in particular, is crucial for evaluating the practical
consequences of the text.

If considered alone, the definition found in Annex II suggests
that electricity can be considered cogenerated simply on the
basis of heat production, even if there are no primary energy
savings or, consequently, emissions reductions.

It would therefore be useful to clearly specify the relationship
between Annexes II and III, and to define a threshold for
output or primary energy savings, below which electricity
cannot be considered cogenerated.

It must be stressed that, while the differentiated definition of
electricity from cogeneration according to the type of equip-
ment (overall annual efficiency equal to or above 75 % or
85 %) may seem complicated, it responds to different technical
realities regarding the combined production of heat and
electricity. The EESC believes that the idea of ‘simplifying’ the
text by introducing a single intermediate percentage (80 %) is
not therefore appropriate.

3.5. Article 6: National potentials for high-efficiency cogeneration

Although the proposal does not lay down precise targets, the
Commission asks the Member States to analyse their potential
for high-efficiency cogeneration. The EESC hopes that the
reports requested of the Member States will encourage the
development of cogeneration by identifying the nature of
obstacles to it. It would seem unnecessary to request so many
reports and so much information.

3.6. Article 7: Support schemes

The EESC opposes the differentiated treatment that penalises
cogeneration installations above 50 MW (e).

It stresses that support schemes must not cause unjustified
distortions of competition.

3.7. Article 8: Electricity grid system issues

The EESC considers it of paramount importance that producers
of cogenerated electricity are guaranteed access to the network
on equal terms.

The Commission proposes giving preferential treatment to
renewable energy sources. However, the EESC wishes to stress
that the combustion of household waste and other refuse
may produce more dangerous emissions than natural gas
combustion.

23.4.2003

EN

Official Journal of the European Union

C 95/15

The EESC is aware of the fact that smaller cogeneration plants
for use in heavily populated areas are — for technical reasons
and owing to their location — less adapted to meeting the
necessary health protection standards than larger incineration
plants that are specially designed for the purpose.

on cogeneration would be more valuable than excessive
information that will not be used.

Articles 12, 13 and 14 need no comment.

3.8. Article 9: Administrative procedures

4. Conclusion

The EESC welcomes the principle of encouraging cogeneration
through legislation, through both positive measures encourag-
ing cogeneration and measures encouraging simplification,
reduction of barriers and transparent procedures.

However,
it believes that this must not lead to excessive
obligations in terms of information for the Member States, in
particular if these obligations remain badly defined and vague,
and therefore serve no real purpose.

3.9. Article 10: Member States’ reporting

The EESC considers that simplification is needed.

3.10. Article 11: Commission reporting

The comments made about Article 10 apply equally to
Article 11. Concise and specific information on progress

Brussels, 26 February 2003.

The EESC welcomes the objective of developing combined
heat and electricity production. It must be ensured that the
proposed mechanism, while taking account of the current
situation in which various types of cogeneration equipment
co-exist, does not penalise the most modern and efficient
technologies requiring the least investment.

It would therefore seem legitimate to have different output
criteria according to the technologies used. The objective of
this proposed Directive is to encourage the development of
high-efficiency cogeneration regardless of the technology used
or the size of the installations concerned. The Committee
reiterates its opposition to any differential
treatment that
penalises cogeneration installations above 50 MW (e).

The EESC would like the reports and analyses requested of
both the Member States and the Commission to focus
on identifying obstacles to developing combined heat and
electricity production, ways of overcoming them and follow-
up assessment.

The President

of the European Economic and Social Committee

Roger BRIESCH