Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council determining the general rules for the granting of Community financial aid in the field of trans-European transport networks and energy and amending Council Regulation (EC) No 2236/95 (COM(2004) 475 final — 2004/0154 (COD))
Date: 2005-03-10
Institutions: European Economic and Social Committee
Subjects: EU aid, aid system, comitology, energy grid, financial aid, sustainable development, trans-European network, transport infrastructure, transport network

22.9.2005

EN

Official Journal of the European Union

C 234/69

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council determining the general rules for the granting of Com-
munity financial aid in the field of trans-European transport networks and energy and amending
Council Regulation (EC) No 2236/95

(COM(2004) 475 final — 2004/0154 (COD))

(2005/C 234/14)

On 9 March 2005 the Council of the European Union decided to consult the European Economic and
Social Committee, under Article 156 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 21 February 2005. The rapporteur
was Mr Ranocchiari.

At its 415th plenary session of 10 March 2005, the European Economic and Social Committee adopted the
following opinion by 112 votes to 8, with 6 abstentions.

1. Introduction

1.1
In 2000, the European Union accounted for a 15 %
share of global energy consumption, making it the world's
leading importer, with the second highest consumption in the
world after the USA. Its demand for primary energy rose by
10 % between 1990 and 2000. Political and economic systems
in many of the ten new Member States were revised and
restructured during the same period, resulting in a 17 % fall in
their demand for primary energy. Demand for primary energy
in the EU-25 consequently grew by an average of 6 % over the
decade.

In fact,

the sector now provides employment

with passenger and freight transport doubling in the last 30
years.
for
10 million workers. Overall traffic is expected to double by
2020, with freight
rising by 70 % in Europe-15 and by
approximately 100 % in the ten new Member States. This
follows a 185 % and 145 % increase for freight and passengers
respectively, over the last 30 years. Such huge growth has had
a negative impact in several respects, particularly road conges-
tion, which currently places a 0.5 % annual burden on GDP.
This burden is expected to double by 2010 to approximately
EUR 80 billion. Road congestion or obstruction affects
7,500 km of roads on a daily basis. This is equivalent to 15 %
of the EU-15 trans-European network and approximately 20 %
of the railway network (2).

1.2
The scenario for primary energy demand for the 2000-
2030 period assumes average EU-25 growth of 19.3 %, with a
higher rate of 26 % for the ten new countries and 18.4 % for
the older fifteen.

The improvement in systems in the ten new countries is
1.3
borne out by energy intensity (1) trends, which is expected to
rise by 1.7 % per annum between 2000 and 2030 for the
25 countries, i.e. the same as for the last decade (1990-2000).
However, this figure corresponds to an increase of 2.6 % per
annum for the ten new countries (3.5 % in the previous
decade) and a 1.7 % drop in the fifteen older countries.

The development of

1.6
a Trans-European Transport
Network (TEN-T) and Trans-European Energy network (TEN-E)
that have sufficient infrastructure to cope with the European
Union's growing needs has been included in EU strategies for
over ten years. It is rightly considered to be of paramount
importance firstly, for the completion of the internal market
and secondly, for achieving the targets of the Lisbon Strategy.
The Barcelona European Council of 2002 reiterated the impor-
tance of completing existing electricity networks and estab-
lished the specific objective of achieving a cross-border inter-
connection level of at least 10 % of installed national genera-
tion capacity. In December 2003, the European Council again
placed TEN-T and TEN-E networks at the centre of its action
for growth plan.

1.4
Lastly, it should be pointed out that this scenario also
predicts continuing dependence on fossil fuels for the next 25
years, remaining at nearly 90 % in 2020.

2. Current situation

1.5 When considering transport, the main subject of the
draft regulation under consideration, it should be remembered
that this represents approximately 32 % of energy consump-
tion, and also that it makes up over 10 % of European GDP,

2.1
Despite clearly identified present problems and further
new needs, the relevant parties, principally the Member States,
have so far failed to take appropriate action. Suffice it to say
that of the 14 major transport projects that Member States
undertook to complete by 2010 at the 1994 European Council

(1) Primary energy demand per unit of GDP at market exchange rate.

(2) European Union Energy and Transport Outlook 2000/2004.

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in Essen, only three were completed by 2003. Furthermore, less
than a quarter of the investment required for trans-European
had been found. At the current rate of investment, it might
take another 20 years to complete the programme.

3.2
A clear need emerged to optimise the quantitative
impact of Community financing, by increasing the current rate
of funding, and the qualitative impact, by adopting new finan-
instruments. The overall goal was to encourage private
cial
investment as part of an intensified drive for public private
partnership (PPP).

2.2
The energy problem is no less serious even though the
needs for EU financial support are far more limited, as shall be
seen below. In fact, the networks' physical capacity does not
correspond to the legislative provisions. The liberalisation
process that should culminate in a genuine internal electricity
market by 2007 might be of limited impact unless steps are
taken to complete currently inadequate and overburdened
networks.
to eliminate physical obstacles to
competition in areas of high market concentration in order to
avoid negative repercussions
including
domestic ones. Nor should it be forgotten that the development
of renewable energy forms could entail ad hoc investment in
existing energy systems and their networks.

for all consumers,

is essential

It

2.3
The reasons for TEN-T's disappointing results were iden-
tified and summarised in a Communication from the European
Commission (3) in 2003 as follows:

— lack of political will on the part of the decision-makers in

the Member States;

— inadequacy of the financial resources dedicated to the trans-

European network; and

— fragmentation of the entities responsible for the projects.

(former Commissioner for competition)

2.4
Awareness of the severity of the situation was confirmed
in a report by the High Level Working Group, chaired by Karel
in June
Van Miert
2003. However the report also put forward some interesting
suggestions for overcoming the crisis. The report was not
restricted to the financial aspects of the problem but also took
into consideration the organisational and coordination require-
ments that EU enlargement would entail.

2.5 Mr Van Miert's report provided the basis for a European
Commission proposal in October 2003 for amending TEN-T
guidelines and bringing the list of priority projects up to thirty,
including the 14 Essen projects. The proposal was
then
discussed and adopted by the European Parliament and the
Council on 29 April 2004. At this stage, the new guidelines
and priorities were approved, as were the project characteristics
in terms of anticipated costs.

3. The Commission's proposal

The proposal for a Regulation under consideration was
3.1
needed to provide the Commission with a legal instrument that
would enable it to apply the general rules for the granting of
financial aid, revised in the light of the foregoing, to ensure
secure and reliable funding for the period 2007-2013.

(3) Communication of 23 April 2003: Developing the trans-European
transport network: Innovative funding solutions Interoperability of
electronic toll collection systems.

requirements

The fundamental

3.3
for achieving Com-
munity action are connected with the fact that the projects are
of common interest, secure cross-border interconnections, and
contribute to market integration in an enlarged Europe. In the
field of transport, particular attention must be paid to environ-
mental impact and the need for high-speed railway lines to free
capacity for freight to bring about a modal shift. For these
reasons, approximately 80 % of funding will be allocated to
non-road modes of transport. Priority aspects of the energy
sector include network continuity and optimising the capacity
and integration of the internal market, the incorporation of the
new Member States into this market, as well as connections
with renewable energy sources.

3.4
In order to fulfil these objectives, criteria for allocation
and co-financing are to be clear and objective. The criteria to
be applied are: conditionality means that aid will be targeted
according to selection and concentration criteria that priori-
tise the interconnections that will result in the highest Com-
munity added value and the proportionality of the co-finan-
cing rate, which will be increased to 30 % for cross-border
In exchange, Member
links (or 50 % in exceptional cases).
States will have to provide appropriate guarantees on the basis
of a financial plan and a firm commitment to implement the
project within the specified deadline.

3.5
The co-financing rate could amount to a maximum of
50 % for TEN-T and TEN-E studies. On the other hand, the
maximum rate for TEN-T construction is 30 % for certain
sections of the priority projects (in exceptional cases, 50 % for
sections) and 15 % for projects of common
cross-border
interest. The maximum co-financing rate will remain 10 % for
energy, as stipulated in the present Regulation, but could be
raised to 20 % in cases of exceptional financial difficulty or
difficult interconnections with neighbouring countries. The fact
that the co-financing rate for energy is much lower than for
transport, as well as the substantial differences between the two
budgets, may be justified by the fact that energy benefits from
other Community instruments (Structural Funds, EIB loans) and
higher levels of competition amongst operators in a clearly
market-driven sector. In fact, only Member States may submit
requests concerning transport networks, whereas private opera-
tors in the energy sector are also entitled to submit requests.

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3.6
Under the present Regulation, available resources for
2000-2006 amount to little more than EUR 4.6 billion, with
4.2 billion allocated to transport and increased by EUR 225
million as of 2004, as a result of enlargement. In practice, this
corresponds to approximately EUR 600 million per annum for
the period.

for 2007-2013 to EUR 20.35 billion,

The proposal under consideration would increase TEN-T
3.7
appropriations
i.e.
EUR 2.9 billion per annum as opposed to EUR 600 million
for the previous period. The specific TEN-E appropriations will
be EUR 340 million, bringing the total Community TEN
budget to EUR 20.69 billion.

Another new element, over and above the increased rate
3.8
of Community support, is the possibility of Community finan-
cing to cover post-construction risks that could result in a
lower than expected return on investment. This guarantee is
intended to encourage private investment in the projects but is
nevertheless restricted to the initial phase, and entails substan-
tial support from the Member States involved.

Other novelties concern project management. The
3.9
Commission proposes to give Member States the lead role in
technical support and the certification of costs. Furthermore,
the Commission reserves the right to delegate the management
of the present programme for the trans-European transport
network to an executive agency whilst retaining its own
responsibilities in the area of planning.

4. General comments

4.1
The EESC welcomes the proposal, which incorporates,
though not in their entirety, comments and recommendations
that
the EESC has consistently reiterated in its previous
opinions (4).

in fact

formalises

The proposal

4.2
the recommended
increase in Community financing, which offers Member States
and private investors greater security in a public private part-
nership.
In this regard, the EESC would point out that the
projected increase, although substantially higher than previous
increases, should be assessed in the light of the growing needs
mentioned above. It should be borne in mind that financial
needs for the thirty priority transport projects have been esti-
mated at EUR 225 billion, EUR 140 billion of which for the
2007-2014 period.

4.3
Furthermore, the EESC approves the definition of the
abovementioned principles governing the allocation of Com-
munity financial aid, and welcomes the idea that the procedures

(4) Exploratory opinion on the Revision of the list of trans-European
network (TEN) projects up to 2004 (OJ C 10 of 14.1.2004) and the
opinion on the General rules for granting Community financial aid/
TEN (OJ C 125 of 27.5.2002).

for applying these principles will be decided on the basis of
comitology, with a view to simplifying the process.

4.4
The EESC also welcomes the concept of providing
support, not only during the preliminary study and construc-
tion phase but also, in exceptional cases, for the first years of
the operational phase of the project. It is impossible to underes-
timate the sensitivity of the transport sector's situation, with all
its well-known implications (congestion, pollution, safety etc.),
which have repeatedly been the subject of EESC opinions.
Equally, it is impossible to underestimate the risks relating to
energy supplies and the need to ensure the interoperability of
energy networks.

5. Specific comments and conclusions

5.1
The EESC believes that a rigorous policy should be
adopted to ensure that Member States do not fall behind in
setting up the infrastructure specified by the European Union.
The fulfilment of commitments should take precedence over
the national political or economic contingencies which can
always arise. If need be, should requests for clarification remain
unanswered, provision should also be made for penalties, or
even for the funds disbursed by the Commission to be recalled
and re-allocated to infrastructural projects that are on schedule.

5.2
Nevertheless, the EESC fears that despite the proposed
increases the resources available will not always be sufficient to
stimulate investment and render the commitments undertaken
irreversible. For this reason, the EESC believes that a suggestion
put forward in one of its previous opinions (5) to create a Euro-
infrastructure remains worthy of
pean fund for
It would be funded by a reasonable levy on
consideration.
European fuel consumption in EU-25 without
incurring a
corresponding increase in excise tax. A second possibility
would be to restrict
this proposal to those Member States
involved in the TEN-T projects.

transport

5.3
Since the proposal for a Regulation under consideration
concerns the period 2007-2013, the current Regulation will
remain in force until that date, including the above-cited appro-
priations. This entails the risk of further delays and reconsidera-
tions while awaiting the new conditions. It would be preferable
to bring forward the new Regulation's entry into force to the
earliest possible date so that work can begin immediately. It is
important to emphasise that due to the lead times involved in
setting up the projects the road transport sector will undoubt-
edly experience a further increase in traffic, before new infra-
structure, including that for other forms of transport, becomes
available. This is not conducive to smooth and balanced opera-
tions.

(5) Exploratory opinion on the Revision of the list of trans-European
network (TEN) projects up to 2004 (OJ C 10 of 14.1.2004). In its
opinion, the EESC envisaged a levy of 1 cent per litre on all fuel
consumed in EU-25 for all transport of passengers or goods. At
current consumption rates (approximately 300 million tonnes), the
fund would receive some EUR 3 billion per annum.

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The EESC welcomes the Commission's proposal

5.4
to
adopt comitology rather than co-decision procedures, to define
the application of the rules that will govern the allocation of
aid. These choices tend towards more streamlined and simpli-
fied procedures, which is much to be desired. However, the
EESC is concerned that the proposed executive agency for the
trans-European transport network may be unable to fulfil its
role and that it may be more likely to duplicate the work of
other participating institutions. Ex ante clarification by the
Commission of the agency's future tasks would help to dissi-
pate doubts.

5.5
The EESC is in full agreement with the lines suggested
by the Commission proposals and reaffirms the need for an
increase in available funds. The establishment of the proposed
infrastructure will contribute to sustainable development since
80 % of the projects target alternatives to road transport and

will therefore result in lower emissions and congestion. Nor
should it be forgotten that the projects will have a positive
impact on employment in the medium term, and will result in
a no less important improvement to the European citizen's
quality of life in the long term, especially those living in major
transit areas.

In the final analysis, the Committee cannot but reassert
5.6
its wholehearted conviction that a trans-European energy and
transport network is a strategic necessity that plays an essential
role in creating conditions that guarantee the free circulation of
passengers, freight, and services. This is an indispensable objec-
in compliance with the
tive that cannot be circumvented if,
Lisbon Strategy, we are to build an integrated, competitive
European Union that respects the principles of ecocompatible
development.

Brussels, 10 March 2005.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

APPENDIX

to the opinion of the european economic and social committee

The following proposal for amendment was rejected, but received at least a quarter of the votes cast.

Point 5.2

Amend as follows:

‘5.2 Nevertheless, the EESC fears that despite the proposed increases the resources available will not always be suffi-
cient to stimulate investment and render the commitments undertaken irreversible. For this reason, the EESC
believes that a suggestion put forward in one of its previous opinions to create a European fund for transport
infrastructure remains worthy of consideration. It would be funded by a reasonable levy on European fuel
consumption in EU-25 without incurring a corresponding increase in excise tax. A second possibility would be
to restrict this proposal to those Member States involved in the TEN-T projects.’

Reason

As the rapporteur very rightly states, the Member States retain the right of decision on tax questions. The Committee
cannot and will not propose tax changes in the Member States.

Outcome of the vote:

For: 43

Against: 65

Abstentions: 9