Opinion of the European Economic and Social Committee on Trans-Euro-Mediterranean energy networks
Date: 2003-10-29
Institutions: European Economic and Social Committee
Subjects: ESC opinion, Union for the Mediterranean, energy grid, energy policy, security of supply, trans-European network

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Opinion of the European Economic and Social Committee on Trans-Euro-Mediterranean energy
networks

(2004/C 32/05)

On 27 March 2003, in a letter sent by Mrs Loyola de Palacio, the Commission asked the European
Economic and Social Committee, under Article 262 of the Treaty establishing the European Community,
to draw up an opinion on Trans-Euro-Mediterranean energy networks.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the work on the subject, adopted its opinion on 10 October 2003. The rapporteur was
Mr Hernández Bataller.

At its 403rd plenary session held on 29 and 30 October 2003 (meeting of 29 October), the European
Economic and Social Committee adopted the following opinion by 120 votes to two with two
abstentions.

1. Background

1.1.
The Euro-Mediterranean Conference held in Barcelona
in November 1995 was a milestone in the relationship
between the European Union and the associated non-member
Mediterranean countries, establishing the creation of an econ-
omic and social area based on shared prosperity. In order to
attain this objective,
in line with the strategy agreed in
Barcelona, a system of political meetings was drawn up
alongside initiatives aimed at bringing together civil society
and the economic players (1). Last but not least, a Community
Programme entitled ‘MEDA’ was created with significant
resources at its disposal.

From the very start,

1.2.
it was clear how potentially
important more intensive cooperation in the energy sector
was for both the Mediterranean countries and the European
Union. First and foremost, an adequate supply of all types of
energy at competitive prices is a prerequisite for promoting
economic development. Secondly, several southern Mediter-
ranean countries have major energy reserves, essentially hydro-
carbons, and in order to develop, use and transport this energy
to the end markets, major resources are needed, coupled in
many cases with stability on the home consumer market.
Lastly,
the global dimension of sustainable development
means that the supply and use of energy resources must be
accompanied by optimum protection of the environment.

1.3.
This led to various initiatives. First of all, at the Malta
Conference of 1997, energy was established as one of the
six priority sectors. Secondly, again in 1997,
the Euro-
Mediterranean Energy Forum was set up composed of senior

the companies of

representatives of the 27 EU and Mediterranean countries.
Thirdly,
the energy sector created the
Mediterranean Energy Observatory (OME), which operates as
a research and study centre dealing with the current situation
and future prospects of the energy sector across this region.
Lastly, in 2002, the Facility for Euro-Mediterranean Investment
and Partnership (FEMIP), which is multi-sectoral and managed
by the European Investment Bank (EIB), was created. The
Italian presidency of the EU has expressed an interest in
increasing its funding and in this facility ultimately forming
the nucleus of a Euro-Mediterranean Investment Bank.

At

1.4.
the same time several political meetings were
held, most recently the highly significant Euro-Mediterranean
Ministerial Conference on Energy which took place in Athens
in May of this year. The OME, together with other bodies
such as the European Forum for Renewable Energy Sources
(EUFORES) and the Euro-Mediterranean Forum of Economic
Institutes (FEMISE), organised both technical and business
important research into the
conferences and carried out
current situation and challenges on the energy market.

1.5.
The three most recent developments are the Green
Paper ‘Towards a European strategy for the security of energy
supply’, drawn up in October 2000, the communication issued
by the Commission on 13 May 2003 on the development of
energy policy for the enlarged EU, its neighbours and partner
countries and, lastly, the inclusion in July of 2003 of South-
North connection projects for the Mediterranean in the revised
list of priority Trans-European Energy Network (TEN) projects.

(1) The EESC was mandated at the Barcelona Conference to coordi-
nate those initiatives undertaken by national ESCs in this region
in relation to the global Euromediterranean strategy

It is the view of the European Economic and Social
1.6.
Committee that the above elements constitute an adequate
political and technical basis for promoting a partnership in the
energy sector, a key element in which is the development of
energy interconnection networks.

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2. Priorities for 2003-2006

will provide clear details of the objectives to be met. It is
estimated that around EUR 49 million will be needed.

2.1.
The priorities adopted by the energy ministers in May
of this year on the basis of the recommendations of the Euro-
Mediterranean Energy Forum can be divided into three main
areas:

3. Current challenges

— concrete energy policy action at regional

level and
infrastructure projects of common

development of
interest;

— creation of financing mechanisms for these projects of
common interest and promotion of industrial cooper-
ation in this respect;

— development of logistic support for the Euro-Mediterrane-

an Energy Forum.

These areas will be the main topics on the agenda of the next
Euromed Conference on energy infrastructures to be held in
December of 2003 during the Italian presidency of the EU.

Within these three areas, six major focal points have been
identified comprising a total of 24 priority actions and a large
number of concrete energy infrastructure projects (9 for
natural gas and 12 for electricity). Within the first area two
types of action are to be undertaken side by side. In terms of
infrastructure, a fully integrated and interconnected Euro-
Mediterranean electricity and natural gas market is to be
created. With respect to Euro-Mediterranean energy policy, a
harmonised legal framework is to be set up covering both
pricing and technical aspects related to trade, the reduction or
potential elimination of tax concessions that prevent the
promotion of rational energy use, increased use of renewable
energy sources and enhanced security of supply in the
transport of hydrocarbons by sea.

2.2. Within the second area, namely project financing, the
focus has been firmly set on use of the FEMIP, finding new
financing measures at regional level with the participation of
the EIB and other multilateral lending organisations such as
the World Bank and the Regional Development Banks (RDB)
and lastly, the possibility of drawing up legislation that will
offer a better guarantee to potential investors. The desired
industrial cooperation is to be achieved through the transfer
of technology and the elimination of the legal impediments to
joint ventures involving businesses from
the creation of
different countries in the region.

2.3.
The third area covers the need for financing to enable
the three working groups set up within the Forum to continue
their tasks, and which hope to involve some 100 specialists in
their meetings, as well as the 11 studies deemed necessary, of
which 7 are regional and 4 national in nature. Several of these
studies have already been started and when they are finished

3.1.
The detailed definition of the priorities to be adopted
must take account of the challenges faced by Euro-Mediterrane-
an cooperation in the field of energy, summarised below.

3.2.
The first challenge will be to determine the real
implications of the security of energy supply to the EU and the
Mediterranean as a whole, and just how this cooperation and
the development of
interconnecting energy networks can
improve it.

3.3.
The second will be to outline the role to be given to
public sector and private operator initiatives in developing this
cooperation, and how this is viewed in the various countries
and regions, in terms both of financing problems and the
creation of the legislative and regulatory frameworks.

Thirdly,

it will be necessary to set down concrete
3.4.
financing needs, determine available public-initiative resources,
in particular from MEDA, FEMIP, the EIB, the World Bank and
the RDB, look for a new way to reduce non-business risks and,
in parallel, enhance the interest and capacity of the private
sector to take on projects.

The fourth challenge will be to develop South-South
3.5.
initiatives to complement the North-South initiatives, the latter
being of particular interest to the European Union and the
energy exporting countries. This will create a true feeling of
partnership in the Euromed area and its various sub-regions.

3.6.
In fifth place comes the creation of genuinely sustaina-
ble energy policies which encourage rational energy use and
promote renewable energy sources whilst alleviating the
environmental impact of energy use. Similarly, within these
policies particular attention should be paid to the issue of
rational use of water, as considerable quantities of energy are
going to be required across the Mediterranean for the purposes
of desalination to meet the sharp increase in demand for both
agricultural and residential use.

3.7.
The sixth challenge will be to harmonise the legislative
and regulatory frameworks and provide adequate information
to legislators and other officials responsible for implemen-
tation.

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The seventh challenge will be to draw up a joint
3.8.
position to be adopted by the EU Member States and the other
Mediterranean countries in international bodies such as the
Conference on Climate Change (UNFCC), the Johannesburg
Renewable Energy Coalition (Coalition of the Willing) set up
at the Johannesburg summit and the International Maritime
Organisation (IMO).

Lastly, the greatest and most important challenge will
3.9.
without doubt be to place into appropriate order all the
priorities outlined in the previous point, along with the
challenges mentioned earlier, so as to turn the objectives
and projects already sufficiently identified into reality in a
progressive and clearly structured manner.

4. The concept and importance of security of energy

supply

In its opinion on the Green Paper of May 2001, the
4.1.
Committee indicated, amongst other things, that one essential
element of the debate was to understand that although EU
dependency on external energy supplies is set to soar in the
future, it is crucial that the notion of dependency be dissociated
from the notion of risk.

4.2.
The Commission then included this assessment in its
document issued in December of 2001, which summarised
the various contributions made with respect to the Green
Paper. Other contributors to the debate had thrown up the
very same issue. A series of new concepts surrounding the
amended notion of security of energy supply can be taken
from this document and summarised as follows:

— Increased external dependency must not automatically

imply greater risk as to security of supply.

— Enhanced security of supply to the EU depends to a large
extent on appropriate use of energy resources globally.
This is in line with the Kyoto commitments and rests on
the absolute priority that must be given to concrete
projects undertaken internationally to promote rational
energy use and placing such rational use at the very
centre of all economic and social development.

— In order to achieve the cooperation that is required across
the globe in the energy sector, three aims must be met.
First of all, there must be transfer of technology both for
the use of domestic fossil and renewable resources and in
order to promote rational energy use. Secondly, invest-
ment must be encouraged in order to make possible the
use of new resources whilst guaranteeing a return on and
recovery of the capital
invested. And lastly, suitable
conditions must be created for the transit of energy
products so as to benefit the producer, consumer and
transit countries in a fair manner.

— The energy sector must become a priority in the European
Union’s external relations, promoting both producer-

consumer dialogue at the global level and including this
issue as a central topic in its bilateral relations with the
Mediterranean countries and Russia, to give but two
examples.

— Equally, the idea that eco-taxes could be acceptable in
specific cases must be considered. Energy taxation intend-
ed to enhance security of supply, in particular where it
also improved the protection of the environment, could
be widely accepted.

4.3. Whilst a constant and regular supply of energy is vital
to the EU, it must be remembered that the creation of an area
of shared prosperity will guarantee the future stability of the
EU and the whole Mediterranean region. It is for this reason
that it is necessary to promote South-South energy cooperation
within the Mediterranean region and its sub-regions in order
to guarantee regional stability and ensure the harmonious
development of Mediterranean society.

5. The role of the public authorities and of private

initiative

5.1.
The magnitude of the investment required means that
the private sector is going to have to shoulder the lion’s share
of the burden, supplemented, especially in the southern and
eastern Mediterranean countries, by the active participation of
public-sector energy companies in these countries.

5.2.
Nonetheless, the important role to be played by the
public authorities within the EU and the other countries of the
Mediterranean cannot be ignored. This role will centre on the
following tasks:

— to lay the basis for adequate political and social dialogue
so as to minimise what is known in financial terms as
‘country risk’ and any additional related costs and to
secure for the citizens of the South and East Mediterrane-
an countries far-reaching services that will give them
security and safety for the future;

— to participate in financing feasibility studies for infrastruc-
ture or concrete projects of common interest, i.e. projects
which benefit the EU and at least one non-EU Mediter-
ranean country;

— to co-finance priority infrastructure projects not fully
covered by private initiative and according to specific
conditions;

— to draw up legislative and regulatory frameworks that
will facilitate joint operational or infrastructure projects,
including the transit of energy products through non-EU
countries.

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6.

Financing of the Euro-Mediterranean energy sector
and its infrastructures

Several studies have attempted to provide clear indi-
6.1.
cations of the investments that will be needed to finance
South-North and South-South interconnection infrastructure.
For the first, the aim is to double the supply of gas to the
European Union through three points, strengthen existing
electricity connections and build pipelines for the transport of
crude oil. In terms of South-South cooperation, the overarch-
ing aim is to create what are referred to as Mediterranean gas
and electricity ‘ring networks’. The undeniable and immediate
advantage of the latter for all parties is the support they
provide for the management of the relevant systems, which in
turn leads to reductions in any supply downtimes. The one
sticking point in this respect is the inclusion of Libya in the
ring network in order to ensure it is complete. Plans are afoot
to create an integrated sub-regional electricity market in the
Maghreb. These were ratified from a political point of view at
the recent meeting of energy ministers held in Athens in May
of this year.

6.2.
Studies carried out by different organisations, such as
FEMISE and the OME, estimate the required investment in
infrastructure and development of
the production sector
at around EUR 200 billion over the next 10 years, with
EUR 110 billion earmarked for
electricity sector
(EUR 70 billion for generation and the remainder for transport
and distribution). These figures are based on estimates for the
year 2000 and today’s figures could turn out to be somewhat
higher. It is also important to note that 50 % of the investments
needed refer to just two countries, Turkey and Algeria. It was
not possible to ascertain what part of the investments was
intended for Energy Networks of Common Mediterranean
Interest (ENCMI).

the

6.3.
Against such a background, constructive action is
needed. On the one hand, according to FEMISE, in the 1990s
Foreign Direct Investment (FDI) in these countries amounted
to some EUR 15 billion per annum for all sectors of the
economy, divided equally between public-sector investments,
made by multilateral institutions and development cooperation
programmes, and private-sector investments. With the new
FEMIP, the EIB expects to be able to increase its investment
capacity for the Mediterranean from EUR 1,4 billion to
EUR 2 billion per annum. It will therefore be crucial for private
initiative to supplement this major investment drive. New
ideas, such as the recent Averroes risk capital initiative, with a
budget of EUR 26 million, are a timid first step in the right
direction.

In the Committee’s view, one issue that has thus far
6.4.
been insufficiently analysed is the possibility of granting
access to competitors to major interconnection infrastructure
financed in part by Community money. For the moment, this
infrastructure is governed by the principles of owner priority
and first-come first-served to determine how any surplus
capacity is used. This issue should be analysed from a legal
point of view. It could become a distortive factor in terms of
the participation of private initiative in the construction of
major North-South interconnections.

Some recent data point to a significant increase in
6.5.
private investment in the energy sector in the Mediterranean
countries. Major projects financed by the private sector are up
and running in Turkey, Algeria and Egypt.
In the latter
countries the focus is on exporting their energy products.
However, although the scale of these projects is impressive,
they are one-off cases which are in no way interlinked and,
whilst bringing considerable mutual benefits both for the
investors and the country concerned, do not form part of the
collective partnership strategy.

It is for this reason that new actions must be drawn up

6.6.
based on the following guidelines:

— to promote reciprocal investment protection agreements
based on the bilateral agreements between the EU and
the relevant Mediterranean countries;

— to establish precise criteria for the use of infrastructure

financed partially using public subsidies;

— to improve the domestic legislation of the Mediterranean
countries involved so as to increase foreign investment in
the energy sector wherever socially and economically
possible, both to boost exports and to meet domestic
supply requirements
the local population and
industry;

for

— to develop new financial services tailored to the Euro-
Mediterranean situation as approved at the Athens Minis-
terial Conference, with the support of the EIB, the World
Bank, the Regional Development Banks and the private
banking sector;

— to increase the amounts of both national and Community
financing earmarked for the development of energy
projects of common interest with a high strategic and
social value and which also have evident benefits for the
environment;

— to promote industrial cooperation in the energy sector
through agreements between major companies and
between the latter and governments, including the manu-
facture and maintenance of equipment and the creation
of a local production base.

7. The North-South and South-South dimensions

7.1.
It is clear that any North-South connection infrastruc-
ture will benefit not only the energy exporters and transit
countries which take a levy for the use of the infrastructure
and gain from the creation of both employment and wealth
during the construction phase, but also and quite particularly
the European Union.

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Nonetheless, many such connections (natural gas, oil
7.2.
and electricity) are based on exclusive export to the European
Union, meaning not only that the exporter countries renounce
any possible dealings with other importers, even in the south
of the Mediterranean itself, but also that priority is given to EU
exports over domestic consumption, a figure that is rocketing
as a result of the population explosion and economic growth.

7.3.
It would therefore seem necessary to promote South-
South interconnections in parallel to North-South connections
with the three-fold objective of increasing overall security of
supply in the region, enhancing the synergy of the economies
involved and creating a feeling of partnership between the
Mediterranean countries and the European Union.

At the same time, some of this infrastructure could be
7.4.
doubly useful where the North-South connection runs through
non-EU transit countries. Not only that, but it would improve
both the physical and technical security of EU energy supplies
in that several alternative routes would be available for use
during one-off or even longer-term crisis situations. This
solution would also be an alternative to the suggestion by the
European Commission that the levels of strategic stocks within
the Union itself should be increased. This latter proposal has
met with considerable reservations.

8. Development of sustainable energy policies

8.1.

As outlined above:

— If the current trend continues and a major effort is not
made to improve rational energy use, domestic energy
consumption in the countries of the southern Mediter-
ranean is set to grow exponentially. A similar effort to
improve rational energy use will have to be made in the
EU.

— Investment needs in the energy sector are very high and
will be met only if both public and private initiative are
involved together. The private sector will only participate
if suitable guarantee and profitability conditions can be
created for its investments.

— There is a clear need to introduce legislation and regu-
lations in the energy sector that will make for sustainable
economic growth, generate income from energy exports
and promote the rational use of energy.

ship and strict government control to an open-market
model with regulated competition.

— The situation in each of the countries of the southern
Mediterranean is quite distinct and transferring the cur-
rent model used by the European Union must be a long-
term aim based on a variety of approaches that will not
necessarily involve the creation of an internal Euro-
Mediterranean energy market in the short term or even
in theory.

— Hand in hand with the progress made on liberalisation of
the energy sector, it will be important to safeguard all
missions of common interest implemented by the energy
sector. The European Economic and Social Committee
has not yet seen this aspect reflected in any official
documents dealing with Euro-Mediterranean cooperation.
To ignore this aspect will lead to major social disputes
and the possible stagnation of the entire process.

Nonetheless, the cautious, gradual approach and social
8.3.
dimension considered to be essential by the Committee must
not overshadow other aspects that will enable consensus to be
reached as to the direction any Euro-Mediterranean energy
policy should take. These aspects are:

— the need to create solidarity in the energy sector by
strengthening both bilateral and regional cooperation.
The national dimension of sectors such as energy is
limited;

— the need for energy policies that promote rational use of
energy above all else, which support renewable energy
sources as much as possible and which include the
combined aspect of water and energy which is relevant
to all of the countries of the Mediterranean to a greater
or lesser extent;

— the need for fiscal policies that comply with these
objectives and eliminate unnecessary subsidies, including
those of a social nature, which cannot be sustained in
the longer term and which discourage those types of
consumption that offer low added social and collective
value;

8.2.
The organisation model used by the energy sector in
the European Union is a sound example, provided the
following truths are accepted:

— The energy model used by the European Union has
evolved over several decades from majority state owner-

— the need to integrate the protection of the environment
into all energy projects and in particular to apply the
same criteria used within the European Union to those
projects which the Union considers to be of a priority
nature, including the Trans-European Energy Networks.

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9. Harmonisation of legislative and regulatory frame-

works

9.1.
As already indicated under the previous point, the
harmonisation of legislative and regulatory frameworks must
not be seen as an end in itself but rather as a means of
obtaining true Euro-Mediterranean partnership in the energy
sector.

9.2.
Accordingly, harmonisation of the legislative and regu-
latory frameworks must begin with those aspects that will
promote the sustainable energy policies already drawn up
beforehand. In other words, we should not endeavour to create
an energy market based on the EU model in the southern part
of the Mediterranean region with immediate effect. First of all,
legal frameworks must be set up that are adapted to the
circumstances of the countries concerned and are compatible
with the current strong growth of the energy sector fed by the
population increase and higher expectations. Such frameworks
will also enable the countries involved to export any surplus
energy to the European Union.

9.3.
Regulatory frameworks such as that used in Europe
from 1950 to 1990, established in line with the phases of
strong growth experienced by the energy sector and based on
a system of territorial concessions granted under the aegis and
supervision of the government authorities, need to be opened
up to private initiative and investment. The experiences of
other regions of the world, such as Latin America between
1970 and 1990, show that a public-sector monopoly of the
energy sector does not guarantee supply in the face of growing
demand; rather it serves only to attract international capital
which is swallowed up by the receiving state and does not
benefit other sectors which are unable to guarantee similar
returns.

9.4.
The framework eventually established will nonetheless
need to sustain in their entirety those projects of general
interest currently being carried out by the energy sector in the
countries concerned, taking as its reference the past experi-
ences of the EU. Were the energy market to be opened up,
even partially, without maintaining public service obligations
— especially the obligation to provide a universal service —
the result would be social discontent and potential failure of
the model within a few years.

An effort must also be made to (a) create a framework
9.5.
for the protection of foreign investment so as to eliminate
political risks, bring down the cost of the new installations —
and, with that, the energy supply — and provide added value
for the general public, who would pay less for the energy they
need, and (b) support the development of new economic
activities.
it would be both possible and
desirable to define a framework within which to harmonise all
legislation concerning investments so as to eliminate any
competition not justified on purely technical and economic
grounds.

In this respect,

be advantageous. A common model could be chosen based on
the harmonisation of
tax bases and procedures, without
removing the freedom of each country to determine the
individual rules to be followed in each category. This approach
would eliminate fiscal competition, which is not desirable in
the long term.

Finally, it will be necessary to guarantee the trans-
9.7.
parency and stability of the legal and regulatory frameworks.
With this in mind, it would be advisable to prioritise specific
projects, organised via the MEDA programme, to suitably
prepare those responsible for drawing up and applying the
legislation. The wealth of experience of the countries of the
European Union will enable a training and shared experience
scheme to be chosen for each country that is best adapted to
its specific needs. The training and twinning projects run
by the European Institutions and national socio-economic
partners and governments will be of particular importance in
this respect

10. Development of a joint position in international

bodies

10.1.
In the light of recent world events, it is becoming
increasingly clear that both the European Union and the
countries of the southern Mediterranean must work together
actively to promote a multipolar world in which consensus
and respect for international law are upheld.

10.2.
Given that the energy problem has a global dimen-
sion, that every consumer country needs a producer country,
that for every country that reduces its energy consumption
there is another ready to increase it, and that for every
exporting and importing country another transports energy
across its land or waters, it is indispensable for a clear position
to be adopted in all international bodies.

10.3.
The development of sustainable energy policies, based
on rational energy use and encouraging renewables, will
help to prevent climate change. The creation of new, safer
infrastructure minimises the impact of much more hazardous
methods of
transport on the environment. By further
developing the use of renewables and promoting the efficient
use of water we are not only generating decentralised wealth
but also preventing phenomena that lead to migration.

10.4.

It would thus seem possible:

9.6.
Similarly, the harmonisation of fiscal policies used to
promote or penalise specific sources and uses of energy could

— to involve the countries of the Mediterranean in the Clean
Development Mechanisms outlined in the Kyoto Protocol
as far as possible;

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— to establish a joint position within the IMO to push for
the use of the Mediterranean Sea only by vessels that
comply with the required safety conditions and are
subject to uniform controls at all ports of that sea;

an excessive dissipation of effort which prevents the success of
this Euro-Mediterranean energy initiative.

— to promote the use of renewable energy sources via
adequate transfer of technology and the development of
industrial activities at
Initiatives such as
the Marrakech Declaration should ensure that all the
countries of the Mediterranean participate in the Johann-
esburg Renewable Energy Coalition.

level.

local

11. Realistic priorities for the energy partnership

11.1.
As analysed under point 2.1, the existence of six
objectives and 24 priority actions for the energy sector would
seem ambitious. The Committee would strongly recommend
further prioritising these. The following criteria could be used
for this:

11.2.
partnership:

Criteria for the definition of priorities in the energy

— Autonomy of the proposed measure: Can the proposed
measure be adopted on its own or does it require the
adoption of another measure or action first?

— Contribution to the partnership: Does this measure have
a primarily North-South dimension or is this dimension
combined with a major impact on the South-South
dimension?

— Responsibility for implementation: Does this measure or
action have to be carried out or implemented solely by
the public authorities or does it require private initiative
participation? In the latter case, are there any firm
declarations of interest from the private sector?

— Cost effectiveness: What

impact will

the proposed
measure or action have on ordinary citizens in the short
and medium term? Will the outlay by the public sector
be adequately repaid in economic and social terms and
will the results be visible to citizens?

— Sustainability: Are the proposed measures or actions self-
sustaining or will they require regular financial top-ups
or further regulatory action? In environmental terms, do
these measures comply with the sustainability principles
reaffirmed in Johannesburg?

11.3.
The Committee does not of course regard itself as
qualified to establish the priorities itself, but thinks that on the
basis of these criteria the 24 priorities proposed by the energy
ministers should be placed in various categories, thus avoiding

12. Conclusions

12.1.
Euro-Mediterranean cooperation in the energy sector
is a key plank in both boosting overall energy supply security
for the Mediterranean region and making the most of the
energy resources of the southern Mediterranean countries, so
that instead of merely a source of export revenue they become
a mainstay of their productive economy.

12.2.
Such cooperation provides a unique opportunity for
creating joint infrastructure and projects between the countries
of the southern Mediterranean themselves, thus fostering the
concept of shared prosperity based on the joint exploitation of
resources and use of territory for the transit of these products
or for the creation of interconnected energy networks which
make it possible to develop integrated sub-regional energy
markets.

12.3.
Hence it is clear that major progress has been made
on Euro-Mediterranean cooperation in the energy sector:
obstacles have been identified, a set of priority actions has
been adopted and governments have been made aware of the
issues involved.

12.4.
Nevertheless, it must be pointed out that the obstacles
to be overcome are still considerable and centre around the
following four aspects:

— Effective harmonisation of the regulatory framework and
its administrative application, tailored to the priorities
and different national situations, so that we have a
genuine collective partnership and not ad hoc, bilateral
actions.

— Substantial expenditure mainly provided by private capi-
tal and companies who first have to be guaranteed a
stable legal framework effectively supervised by the public
authorities.

— The traditionally weak regional cooperation between the
countries of the southern and eastern Mediterranean.

— Involvement of the people, especially around the southern
and eastern shores of the Mediterranean, explaining the
projects and the overall results expected, so that the
benefits for the population in general and for energy
consumers can be seen and possible reservations over-
come.

12.5.
Effective harmonisation of the regulatory framework
should focus on aspects such as reciprocal protection of
investments, harmonisation of energy taxes geared towards
environmental sustainability, agreements for the transit of
energy products and ratification of the concept of services of
general interest in the energy sector.

5.2.2004

EN

Official Journal of the European Union

C 32/35

Nevertheless, the Committee regards it as unnecessary
12.6.
to concentrate in the short term on building up an internal
energy market in the southern Mediterranean countries based
on the present EU model and linked to the Union’s own
internal market. Although such an internal energy market may
be a long-term objective, the EESC thinks that in the short
term individual strategies need to be adopted tailored to the
situation in each country or specific region. Such strategies
should avoid all forms of fiscal and administrative discrimi-
nation, promote the objectives of a sustainable energy policy
and not impede the principles of Euro-Mediterranean cooper-
ation in the energy sector, especially with regard to free transit,
openness to private initiative and non-discrimination on
grounds of nationality.

12.7.
Once the transparency and stability of the regulatory
framework have been established, it will be much easier to ask
the private sector to undertake projects previously identified
as of ‘common Euro-Mediterranean interest’ and which will
give a significant boost to south-south cooperation. This will
first require the public authorities and institutions to fund the
detailed studies needed for an economic and social assessment
of the projects of common interest and a decision to be made
on which of them, on account of insufficient profitability or
high risk, may require public-sector support in the form of
subsidies or loans. Finally, wherever possible other multilateral
bodies such as the World Bank and the RDB should be

Brussels, 29 October 2003.

involved. In this respect, the European Commission is currently
revising further the planned trans-European energy network
projects and hopes to include various south-south network
initiatives.

12.8.
A major effort is needed right now to impress on the
people of the southern and eastern Mediterranean countries
the necessity of framing energy policies which encourage the
efficient use of energy and water and boost
the use of
renewable energy sources; they should be assured that energy
will continue to be regarded as an essential service and subject
to a public service obligation. Only when this objective is
attained will it be possible to inform people that national
energy surpluses can be used outside their country and hence
that Euro-Mediterranean cooperation in the energy sector and
in the development of infrastructure and production and
distribution facilities is the appropriate means of properly
exploiting these possibilities.

The EESC, through its links with civil society in these
12.9.
countries, can initially be instrumental
in channelling this
process which would later have to extend at local level to all
economic and social players across society. To this end the
EESC recommends the creation of a specific programme,
within the framework of EUROMED, to disseminate these
ideas and projects among national and local public adminis-
trations and the media, thus strengthening any training and
twinning projects.

The President

of the European Economic and Social Committee

Roger BRIESCH