Opinion of the European Economic and Social Committee on The energy supply of the EU: a strategy for an optimal energy mix
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: EU policy, energy diversification, energy policy, energy saving, energy supply, self-sufficiency in energy

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Opinion of the European Economic and Social Committee on The energy supply of the EU: a
strategy for an optimal energy mix

(2006/C 318/31)

In a letter dated 29 August 2005, the European Commission asked the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, to draw up an opinion
on: The energy supply of the EU: a strategy for an optimal energy mix.

The Section for Transport, Energy,
Infrastructure and Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 30 May 2006. The rapporteur was
Ms Sirkeinen.

At its 429th plenary session of 13 and 14 September 2006 (meeting of 13 September 2006) the European
Economic and Social Committee adopted the following opinion by 162 votes to 27, with 15 abstentions:

1. Conclusions and recommendations

substitute fully the traditional energy sources in the foresee-
able future.

1.1
The EESC finds that Europe needs to set a strategic goal
of a diversified energy mix, meeting optimally economic,
security of supply and climate policy objectives. All energy
sources and technologies have, in relation to these objectives,
benefits and drawbacks, which have to be taken into account in
an open and balanced way.

1.2

A diversified mix is needed:

— for reasonable energy costs by providing for fuel-to-fuel
competition and an optimal overall efficiency in energy
systems,
In addition, sources of
supply need to be diversified ensuring competition between
suppliers;

in particular electricity.

— for better security of supply by providing substitution
when delivery problems arise and to increase market power
of users;

— for European and even global solidarity concerning use of

resources and environmental effects.

avoided. Political,

External energy dependence of the EU area cannot
1.3
presently be
and technical
problems may arise from high and increasing dependence on
one source of supply, in particular from areas not respecting the
same rules of the game or with political unrest, as in the case of
oil and gas.

economical

The use of gas has increased and still

increases for
1.6
market reasons, but is also driven by political choices. It is now
obvious that the continuation of this trend is problematic. For
security of supply and cost reasons gas can hardly continue to
substitute coal, nor can gas substitute nuclear for reasons of
emissions. Voices have also been raised against energy use of the
finite supplies of gas, which is a valuable raw material for high
added industrial use, as is also oil.

1.7
In the light of the critical debate taking place in many
EU Member States, concerns regarding nuclear safety, decom-
missioning and spent fuel, an issue which has still not been
resolved in the majority of Member States, particularly as
regards final storage, have to be addressed in order to continue
and even increase the use of this technology, given its benefits
vis-à-vis climate change, low economic external dependence and
stable costs.
in the foreseeable future
possible substitution of nuclear power would be difficult to
achieve without increased use of fossil fuels.

In light of scenarios,

1.8
The EESC supports a careful approach to future
choices. It is not wise to assume that the future development is
completely predictable and that everything goes in perfect
accordance with policy goals or best expectations. Policy choices
need to ensure a sufficient supply of energy at reasonable prices
also under less beneficial developments. Anything else would be
gravely irresponsible.

1.4
Coal and uranium are available on the world market
from various sources, also within the EU, and thus not giving
rise to concern.

1.5
Increased use of renewables for electricity production
has a potential that needs to be tapped. But even when the
target for 2020 of 20 % renewables, proposed by the European
Parliament, would be met, it is not likely that renewables can

1.9
All options have to be kept open. The scenarios for
EU-25 presented in Chapter 4 clearly support this conclusion.
Even the scenario based on assumptions of the strongest devel-
opments of energy efficiency and increase of renewables do not
render any energy technology obsolete without negative impacts
on either environment or economy.

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The present mix should be developed by political
1.10
strategies towards less external dependence and more non-
emitting sources available in Europe, bearing in mind that
market actors make decisions on investments in various technol-
ogies.

other contexts it should be kept in mind that political decisions
regarding energy usually have strong economic, social and envir-
onmental effects, and that the dimensions and timescales of
changes are big.

1.11
The EESC recommends developing a strategy for an
optimal energy mix. In this context it is important to clarify
the roles of the EU, Member States, independent authorities and
market actors. Because of a high level of interdependence in
energy matters between Member States, a better coordination of
energy policy within the EU would increase the ability to react
to internal and external problems.

The strategy for an optimal energy mix should consist of the
following elements:

Energy efficiency,

1.12
including combined heat and
power production, is the first key answer to the energy policy
challenges. Better efficiency does not directly serve a balanced
mix, but supports all energy policy targets — competitiveness,
security of supply, climate change.

Renewable energy sources have much potential

in
1.13
the EU and need support. Some technologies merely need some
efficiency development to be ready for market access, others
need more long term R&D. Policies have to be designed care-
fully so as not to contribute to the already strong push upwards
on energy prices.

Increase carefully,

1.14
following profound impact assess-
ments, the use of biofuels for transport. Firstly, the Directive
on the promotion of biofuels in force has to be imple-
mented. (1)

1.15
of measures (see 6.3.1.5).

Enhance energy efficiency in transport by a variety

1.16
There is an urgent need for even better nuclear safety
and a solution to the question of spent fuel, which is still unre-
solved in the majority of countries. The responsibility will have
to be carried by operators, and the safety authorities and rele-
vant international bodies will have to lay down appropriate
requirements. As regards the transport of spent fuels, both EU-
rules and international commitments have to be respected.

1.17
Put serious efforts into clean coal technologies —
improved power plant efficiency and commercial applications of
carbon capture and storage. This is particularly important in
view of global developments.

1.18
reserves,

Prepare for re-increased use of domestic EU coal
including use in liquid and gas forms. In this and

(1) Dir. 2003/30/EC, OJ L 123 of 17.05.2003.

1.19
In order to lessen problems of keeping and increasing
the share of gas in the energy mix, encourage investments in
liquefied natural gas terminals, with a view to diversify supply
sources of gas, and develop gas storage facilities and measures.

1.20
Sufficient investments in energy production and trans-
mission have to be ensured both by putting the legal framework
right and by appropriate financial measures. For instance, long-
term contracts can be a helpful instrument, within the limits set
by the need for sufficient competition.

1.21
The EU should speak with one voice and take its posi-
tion as one of the strongest actors — on the international scene
in negotiating with energy suppliers, in particular Russia. In
reacting and negotiating on energy supply issues, different
features of mutual dependencies need to be taken into account.
The Union cannot be an actor in the energy markets, but
energy being much in the hands of governments in many
supply countries, it should strongly support the interests of EU
actors.

1.22 When assessing the environment of energy choices,
external costs as well as the impact of subsidies have to be
analysed. Also, the impact of present and future climate and
environmental policy measures on the other energy policy
objectives — competitiveness and security of supply — as well
as on a diversified energy supply must be carefully assessed.

1.23
It is necessary to find a global solution to post-Kyoto
climate policies, involving at least all major emitters. Otherwise
there will not be any significant development
in mitigating
climate change, but there could be a risk of harming the EU's
economic and social developments.

renewable technologies still

Increase R&D efforts and EU support to energy R&D
1.24
in line with the high importance and great challenges of energy
In the shorter term direct efforts towards better
for society.
energy efficiency,
from the
market, clean coal technologies and nuclear safety. Many renew-
ables and efficiency technologies mainly need smart engineering
to lower their costs. Much basic and longer term research and
development work is needed to make the vision of an energy
scene with renewables, fusion and hydrogen possible. In the
meantime, also elements of other promising future visions need
to be encouraged and supported.

far

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2. Introduction

ering European options. The International Energy Agency IEA
presents its views of the world energy future in the World Energy
Outlook 2004 with two scenarios from 2004 to 2030.

2.1
Since 2002 the EESC has prepared several own initiative
and exploratory Opinions on different energy sources and tech-
nologies — nuclear, renewables, fossil fuels and energy effi-
ciency. This opinion builds on these, without specific referrals to
the more detailed information and discussion presented in
them.

2.2
Developments in the energy scene are impossible to
forecasts and scenarios have limitations.
exactly foresee. All
Surprising events or strong political actions can shift trends.
Policy considerations, let alone decisions, have, however, to be
based on profound information on the present situation, best
possible forecasts and scenarios as well as understanding of
drivers and breaks on change. This opinion is essentially based
on scenarios by the International Energy Agency IEA and the
European Commission, and covers a time period to 2030. After
that the picture is much less precise.

2.3
Choices of energy sources and technologies are made by
investors and can be influenced by political decisions. The EU
does not have direct power over Member States' choices of
influences indirectly through its environmental
sources, but
mandate. Member States should facilitate the use of
their
domestic resources as far as possible. The choices Member
States make influence one another. Also, energy users in
Member States without,
for instance, nuclear or coal power
production are part of an electricity market where nuclear and
coal are used.

2.4 Our key question is: Can we already now rule out
present or potential future systems or possible options? In
other words, do we know enough and are we confident enough
to narrow our choices by which to meet the goals of energy
policy — sufficient, secure energy supply, reasonable, competi-
tive prices and decreased burden on the environment and
climate? We seek to answer this question as well as presenting
related conclusions and recommendations.

3. Global energy market and carbon dioxide emission

developments

3.1
The world energy future has an effect on the European
energy future. Energy consumption now and growth are biggest
outside Europe. Global growing fossil
fuel demand has an
impact on prices and availability in Europe. Price changes also
lead to changes in energy choices, consumer and corporate
behaviour and direction of R&D-efforts. All this affects the situa-
tion in the EU, too. Therefore it is essential to have an overall
global picture of the energy future as a backdrop when consid-

The Reference Scenario (WEO-R04) takes account of those govern-
ment policies and measures that were enacted or adopted by
mid-2004. The World Alternative Policy scenario analyses (WEO-
A04) how the global energy market could evolve if the coun-
tries around the world would adopt a set of policies and
measures that they are either currently considering or might
reasonably be expected to implement over
the projection
period. Some parts of both the Reference and the Alternative
Scenario were updated in the IEA World Energy Outlook 2005
(WEO-R05, WEO-A05).

3.2 World primary energy demand in the WEO-R05
scenario is projected to expand by 52 % between 2002 and
2030. More than two-thirds of the increase will come from
developing countries. The annual rate of growth in energy
demand (1.6 %) will slow down from the 2.1 % level of the past
three decades. The transport and power-generation sectors will
absorb a growing share of global energy. World electricity
consumption will double over the period.

In the WEO-A05 scenario global energy demand would

3.3
be 10 % lower than in the WEO-R05 scenario.

3.4
Energy use in final sectors will grow by 1.6 % per year
through to 2030 (WEO-R04). Transport demand will grow
quickest, at 2.1 % per year. Residential and service sector
consumption will grow at an average annual rate of 1.5 %, as
will industrial demand.

3.5 World electricity demand will double between 2002
and 2030 in the WEO-R04 scenario. The largest sectoral increase
will be in the residential electricity consumption (119 %),
followed by the services sector (97 %) and industry (86 %).
About 4 800 GW of new capacity or nearly 10 000 new instal-
lations are needed to meet the projected increase in electricity
demand and to replace ageing infrastructure.

3.6
Fossil fuels will according to the WEO-R05 scenario
continue to dominate global energy use. They will account for
around 83 % of the increase in world primary energy demand.
The share of nuclear power falls from 6.4 % to 4.7 %, while the
share of renewable energy sources is projected to increase from
13 % to 14 %.

In the WEO-A04 fossil-fuel demand falls by 14 % in 2030 as
compared to WEO-RO4, while the use of nuclear power goes
up by 14 % and that of non-hydro renewable energy sources
(excluding biomass) rises by 27 %.

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3.7 Oil will remain the single largest fuel. Oil demand in the
world will grow by 1.4 % per year up to 2030 (WEO-R05).
OPEC's worldwide market share will rise from 39 % in 2004 to
50 % in 2030. Net
trade will more than
inter-regional oil
double during that period. Exports from the Middle East will
rise most.

ment effects of successfully implementing strong policies for
both energy efficiency and renewables as far as such measures
can be modelled. The HLEER-04 has not been updated, so
comparisons are made with the Baseline 2004 (BL-04), i.e. the
two scenarios are not directly comparable. The Commission has
not presented calculations of the cost difference between BL-
and HLEER-scenarios.

Primary oil demand is 11 % lower in WEO-A04 compared to
WEO-R04.

3.8
Natural gas demand will grow at a steady rate of 2.1 %
per year (WEO-R05). Consumption of natural gas will increase
by three quarters between 2003 and 2030. Gas-to-liquids plants
will emerge as a major new market for natural gas, making
possible the use of reserves located far from traditional markets.
Production will increase most in Russia and the Middle East.

Gas demand would be 10 % lower in WEO-A04.

3.9
Coal will continue to play a key role in the world energy
mix with the average annual rate of increase of 1.4 % (WEO-
R05). Coal demand will
in developing Asian
countries. The electricity sector will be responsible for over
95 % of the growth. Over 40 % of the world's coal reserves,
which are equal to almost 200 years of production at current
rates, is located in OECD countries.

increase most

Coal demand would be nearly a quarter lower in 2030 in the
Alternative scenario than in the Reference scenario.

3.10
Carbon dioxide global emissions will according to
the WEO-R05 scenario increase by 1.6 % per year over 2003-
2030. Nearly 70 % of the increase will come from developing
countries. Power generation is expected to contribute about half
the increase in global emissions. Transport stays the second
largest source for carbon dioxide emissions worldwide.

4.2
In the year 2005 primary energy use in the present
day EU-25 was composed of 18 % solid fuels (mainly coal),
37 % liquid fuels (oil), 24 % natural gas, 14 % nuclear and 7 %
renewable energy sources. Electricity was generated from 29 %
coal and lignite, 20 % gas, 31 % nuclear, 15 % renewables (incl.
big hydro) and 5 % petroleum products.

4.3
EU primary energy demand in the BL-05 Scenario is
projected to be 15 % higher in 2030 than it was 2000 (+0.5 %
pa), with a GDP growth of 79 %. The BL-05 shows a continua-
tion of the decoupling of energy demand from GDP. Energy
intensity (the ratio of energy use to GDP) is improving by 1.5 %
pa.

In the HLEER-04 scenario primary energy need is projected to
be -14.1 % below BL-04 levels in 2030, but still slightly above
the level in 2000.

4.4
Energy use in final sectors is projected to grow by
25 % to 2030 (BL-05). Energy demand for services is projected
to be 49 % higher in 2030 than it was in 2000. This develop-
ment is driven by increasing demand for electricity. Household
energy demand is expected to rise by 29 % between 2000 and
2030. Transport energy demand in 2030 is projected to be
21 % and industry 19 % higher than in 2000.

In the WEO-A05 scenario carbon dioxide emissions are 16 %
lower than in the Reference Scenario in 2030. The annual
growth rate over the projection period falls to 1.1 %.

In the HLEER-04 scenario energy demand is 10.9 % below BL-
04 levels in 2030.

4. Energy market and carbon dioxide emission develop-

ments in the EU

The

has made

European Commission

numerous
4.1
scenarios on the EU energy future with different assumptions.
In this chapter two different scenarios are presented. The Baseline
2005 scenario (BL-05) shows the future under current trends
and EU and Member States policies decided upon before the
end of 2004. The high levels of energy efficiency and renewables
(HLEER-04) scenario aims at simulating the energy and environ-

4.5
EU electricity demand will rise 43 % between 2005
and 2030 (BL-05). Demand growth will be especially rapid in
the household sector (62 %), followed by the tertiary sector
(53 %) and industry (26 %).

EU electricity production is expected to increase by
4.6
51 % between 2000 and 2030 (BL-05). An increasing share of
electricity will be produced in the form of combined heat and
power (up almost 10 percentage points to reach 24 % CHP
share in 2030). The structure of power generation changes
significantly in favour of renewables and natural gas while
nuclear and solid fuels losing market shares.

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In the HLEER-04 scenario the overall electricity production in
2030 is projected to fall 16 % from BL-04 levels. Solid fuels
and nuclear energy decrease by similar amounts of electricity
generation in absolute terms (-9.3 % from BL-04 in 2030
respectively).

next years, carbon dioxide emissions are projected to increase
exceeding the 1990 level by 3 % in 2010 and by 5 % in 2030.
In the long term, the moderate further carbon dioxide increase
reflects low energy consumption growth and the rather strong
role of the carbon dioxide free sources renewables and nuclear.

remains

the most

important

4.7 Oil
fuel, although its
consumption in 2030 should not exceed the current level (BL-
05). Natural gas demand is expected to expand considerably
(38 % up to 2030) after the substantial increase already seen in
the 1990s. Solid fuels are projected to decrease somewhat by
2020 but return almost to the current level in 2030, following
the high oil and gas prices and the nuclear phase-out in certain
Member States.

In HLEER-04 scenario lower energy needs, combined with
promotional policies
future
demand for fossil fuels. The biggest decline occurs for solid fuels
(-37.5 % from BL-04 levels).

significantly reduce

for RES,

In the HLEER-04 scenario carbon dioxide emissions are consid-
erably lower than under BL-04 developments (-11.9 % from the
BL-04 levels in 2010 and -22.5 % in 2030). The decrease from
2000 would be close to 10 %.

5. Policy challenges

5.1 Price developments

4.8
Renewables increase more than the other fuels in rela-
tive terms in BL-05 (more than doubling their contribution
from current levels by the year 2030). They contribute nearly as
much as natural gas towards the increase of energy demand.

In the HLEER-04 scenario promotional policies for RES bring a
large increase in renewables deployment in the EU-25 energy
system. The increase is 43.3 % above the BL-04 levels in 2030.

4.9
Nuclear in the BL-05 is somewhat smaller in 2030 than
it was in 2000 (-11 %), because of the political decisions on
nuclear phase-out in certain old Member States and plants with
safety concerns in some new Member States.

5.1.1
Price increases that are demand-driven and global —
although they affect consumers — do not have a strong effect
on the national economies, when price increases create demand
in producer countries. Price increases in one economic area, as
now partly is the case with electricity, harm both consumers
and competitiveness. Higher prices, in the longer term, change
the competitive situation of different energy sources and tech-
nologies, the profitability of efficiency measures as well as beha-
viour in general.

5.1.2 Oil and oil product prices have risen dramatically in
recent years. Several reasons could keep oil prices high or even
raise them in the years to come, mainly:

— strong demand-side pressures from fast economic growth in

Asian countries,

In the HLEER-04 scenario the share of nuclear would be 19.9 %
smaller than in the BL-04.

— under investment in supply infrastructure, as well as

4.10
Import dependency continues to grow reaching 65 %
in 2030, which is up nearly 15 % points from today's level (BL-
05). Import dependency for oil continues to be highest reaching
94 % in 2030. Natural gas import dependency rises from just
over 50 % at present to 84 % in 2030. Similarly, solid fuel
supplies will be increasingly based on imports reaching 59 % in
2030.

In the HLEER-04 scenario import dependency would be 4–6 %
lower than in the BL-04.

Carbon dioxide emissions sank between 1990 and
4.11
2000. Today they have returned to the 1990 level. Over the

— geopolitical factors and political instability.

5.1.3
Gas prices have risen strongly in all regions, following
oil prices. In Europe gas prices are normally indexed to oil
prices. As European supplies are concentrated in Russia and
Norway, and LNG is not likely to become competitive soon, the
price link will remain. Gas-to-gas competition could put down-
ward pressure on gas prices, but the effect would largely be
offset by rising supply costs.

5.1.4
Coal prices are likely to be moderate in the long term,
because many market fundamentals remain unchanged. There
are many existing and potential suppliers, the market is still
highly competitive and coal prices are expected to remain low
relative to the prices of other primary energy commodities.

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The capital costs of renewable energy are assumed to
5.1.5
go on declining in the future. The fastest rate of decline will
come in costs of photovoltaics, which is today's most capital-
intensive energy system. Substantial decreases are also expected
in the capital costs of offshore wind, solar thermal and tidal and
wave technologies. The cost of hydropower generally is low and
stable, the potential for newbuild is limited and increasingly
costly.

5.1.6
Electricity prices have risen in the EU for several
reasons. Higher gas prices contribute to electricity prices in
most parts of the EU, where gas is the marginal fuel for genera-
tion. It is difficult, however, to justify higher prices for electricity
generated in coal-fired power stations by reference to rising raw
material prices. The tightening balance between supply and
demand also has started to reflect on prices. Energy supply
companies sometimes quote emissions trading as the reason for
higher prices adding the ‘cost’ of emissions rights to retail
prices, although they have been allocated these rights free of
charge. Measures to support renewable energy sources have in
some cases increased electricity prices, as have also taxes and
other levies. In addition, the Commission presently investigates
whether insufficient competition in the electricity market has
had an adverse effect on prices.

5.2 Security of supply

5.2.1
In its Green Paper on security of supply the Commis-
sion pointed out its serious concern on the issue. EU external
energy dependence was forecasted to grow from 50 % to 70 %
in three decades. In its Opinion on the Green Paper the EESC (2)
strongly shared this concern. Today the question of security of
supply is even much more pressing.

Dependence on oil imports from external sources is
5.2.2
growing and increasingly concentrated in the Middle East. Also
growing gas demand increases dependence on external sources
is growing and concentrating on Russia. An additional concern
is transportation via long pipelines often through politically
unstable regions.

5.2.3
Some network failures have pointed the attention, in
addition to managerial and some regulatory problems, to insuf-
ficient investments in relation to increased transmission demand
and distances. The interconnection of both electricity and gas
grids throughout Europe has advanced, but important structural
bottlenecks
exist between Member States. Regulation of
networks has to support safety, quality and sufficient invest-
ment.

Investments in power stations and oil refineries have
5.2.4
been low in the last two decades. As for electricity, the period of
overcapacity is ending and investments of 600-750 GW of
power generation capacity are needed until 2030 in order to

(2) ‘Towards a European Strategy for Energy Supply Security’, OJ C 221 of

07.08.2001.

meet rising electricity demand and replace ageing plants. The
need for investment in additional generation capacity, in particu-
lar for peak load, could be partly counteracted by fully intercon-
nected grids.

5.2.5
EU policies to increase the use of renewable energy
sources are a powerful move to counteract increasing external
dependence. At the same time greenhouse gas emissions will be
mitigated and, in some cases, grid dependence decreased. In the
case of biomass and biofuels, longer term optimal use of land
has to be observed.

Uranium is to 95 % imported to the EU from various
5.2.6
sources. According to the IAEA and the OECD–Nuclear Energy
Agency present known economic uranium sources
should
satisfy world demand at its present level for 50 years. Potential
deposits based on geological readings defer
the exhaustion
prospect to 280 years. Later on new technologies may provide
further fuel supply options.

5.3 Climate change

The EU has taken the global lead in tackling climate
5.3.1
change. EU policies are unique, highly advanced and ambitious,
in particular
the emissions trading scheme and enhancing
renewables. Many other parts of the world, including the biggest
emitters, have not followed suit.

5.3.2
In the context of global warming trends the Kyoto
targets are modest, but nevertheless they seem to be hard to
meet for most EU Member States.

5.3.3 Most reductions so far have been achieved by substi-
tuting coal by gas in heating and electricity generation (in the
UK) and through closing down and renewing old production
units in the eastern parts of Germany. Many of the present and
future emission reductions are more cumbersome and costly.

It is necessary to find a global solution to post-
5.3.4
Kyoto climate policies,
involving at least all major emitters.
Otherwise there will not be any significant development in miti-
gating climate change, but there could be a risk of harming the
EU's economic and social developments.

6. Future options

6.1 Long-term vision

At present

6.1.1
it seems that one ideal future energy
vision, minimizing environmental and climate impacts as well
as securing sufficient global supply, would consist of renewable
energy sources for heat and variable electricity loads, nuclear
fusion for base load and the use of hydrogen as an energy

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carrier. Such an energy mix is not expected to be operational by
2050, probably much later. Another vision shows high energy
efficiency, renewables supported by a technological solution to
electricity storage — for instance hydrogen — and coal coupled
with CO2 capture and storage.

6.1.2
Fusion technology still entails big challenges and
uncertainty. Some basic technical breakthroughs are needed and,
in particular, much development to reach economic viability. A
widespread hydrogen economy, again, requires abundant avail-
ability of electricity. Hydrogen based on renewables or gas
cannot, at least not alone, provide for a fully-fledged hydrogen
economy.

The global potential of renewable energy sources,
6.1.3
limitations and the
when taking into account some natural
economy, is difficult to establish. Some studies have pointed to
the possibility of close to a 100 % share of renewables in 2050
in Europe, but this view is not broadly shared nor do Commis-
sion scenarios support this — even the most renewables-inten-
sive alternative scenario gives a 15 % share of renewables in
2030. So far the use of renewable energy sources in EU-25 has
developed slower than targets set.

6.2 Energy efficiency

6.2.1
Energy efficiency and energy saving are key elements of
energy policy. The EESC has recently, in its Opinion responding
to the Green Paper on energy efficiency, strongly supported
actions in this policy area and commented on a large number of
potential instruments and measures.

6.2.2
Better efficiency has an influence on the future energy
mix. The relative decrease in demand would through market
forces be directed to a decreased use of the most uneconomic
source of supply, or possibly by political measures to the least
desired source.

6.2.3
In its recent Green Paper on energy efficiency the
Commission estimates the potential of economic efficiency
improvements to be 20 %, 1.5 % annually and thereby going
back to the demand level of 1990 for EU-25. The scenarios
published by the Commission do not show such a decrease by
2030, not even the one assuming the strongest policy measures.

6.2.4
The EESC in its opinion strongly supports the idea of
better energy efficiency as a prerequisite for sustainable develop-
ment, competitiveness and economic independence. Better
energy efficiency simply makes good economic sense, when not
driven too far. Enhancing energy efficiency is an everyday prac-
tice in enterprises and voluntary agreements a functioning tool.
In other sectors many measures are required, like awareness and
knowledge spreading as well as appropriate economic measures.

The EESC sees, however, the goals presented in the Green Paper
as optimistic.

In spite of efficiency measures,

6.2.5
the
scenarios it seems unlikely that energy demand would turn
towards a decrease before 2030 in EU-25, possibly it could even
increase. A stronger development of energy efficiency would
bring great benefits.

in the light of

6.3 Options in fields of use

In order to analyse energy mix options in relation to the above-
mentioned policy challenges, it is helpful to look at the different
sectors of primary energy use — transport, heating and electri-
city separately. They are only marginally interdependent.

6.3.1 Transpor t

6.3.1.1
Transport is almost fully dependent on liquid fuels,
in practice oil products. Presently the only substitute is, to some
extent, electrical rail transport. A small but growing part of gas
is used in public transport, which provides for diversification
but encounters the questions linked to increased use of gas.

6.3.1.2
EU has a target for substituting oil-based fuels with
biofuels up to 5.75 % by 2010. With present high oil prices
much higher
substitution rates are widely discussed. The
Commission presented a Communication on increased use of
biofuels in February 2006 (Biomass Action Plan). When plan-
ning for policies in that direction many factors have to be taken
into account, like net energy balances, trade, finance, environ-
ment and agricultural policies as well as costs to users. Addi-
tional important issues are a secured continuous supply as well
as the impact on alternative uses of biomass.

6.3.1.3
Fuel cell driven cars are in the testing phase. A key
issue is what the fuel would be. In the future hydrogen may be
produced from renewables or natural gas as well as from water
by electricity. So far, fuel cells are much more expensive than
combustion motors.

6.3.1.4
carrier for transport, for example plug-in hybrid vehicles.

Electricity can offer a viable alternate as an energy

There is no fast way in sight to an oil-free transport
6.3.1.5
system. Therefore strong efforts have to be directed to increase
energy efficiency in transport by:

— better engine and fuel technology,

— lighter cars, more efficient road goods transport vehicles,

— better public transport, supported by road tolls in city

centres,

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— transfer as much as possible to rail and waterways, given

6.3.3 Electr icity

that they work efficiently,

— counteracting congestion, for instance by flexible working

hours.

Transport needs can be decreased by regional planning and tele-
working.

For a more general in-depth analysis of the European transport
infrastructure and its future challenges please see the EESC
opinion ‘Preparing transport infrastructure for the future: plan-
ning and neighbouring countries — sustainable mobility —
financing’.

6.3.3.1
Sources of electricity generation are diverse — coal,
gas, oil, hydro, nuclear and wind as well as non-fossil solid
fuels, like biomass. Photovoltaic and tidal technologies are under
development.

6.3.3.2
The majority of power plants in Europe are coming
up for replacement in the near future. This is the case for the
major kind of plants, based on fossil fuels, as well as for nuclear.
This gives a unique possibility for a major move towards non-
carbon energy sources and at the same time a decrease in
external dependency as well as an improvement of efficiency in
electricity generation.

6.3.2 Heating and cooling

6.3.2.1
In Europe predominantly fossil fuels are used for
heating — oil, gas and coal. The share of gas is increasing fast.
Electricity is used to some extent, while biomass has entered the
scene in the north and solar in the south. For cooling electricity
is still the dominant source, but other options,
in particular
district cooling services from CHP-plants are gaining ground.

40 % of energy in Europe is used in buildings, for
6.3.2.2
heating and cooling. According to experts the potential
for
better energy efficiency and savings is big, and the EU has
already acted on this.

Renewables have a big potential

6.3.2.3
in this area.
Biomass could be much more widely used in modern area or
district heating and cooling systems, combined with electricity
production when applicable. Geothermal energy offers almost
untapped potentials. Solar heating is surprisingly little developed
in some southern countries.
the extraction of
ambient heat via heat pumps represent an abundant and energy
efficient source of renewable energy.

In addition,

6.3.2.4
Heating and cooling represent very local use of
energy. Measures to enhance efficient energy use in buildings
need to be taken locally. At the EU-level actions should be taken
to support technology development, share knowledge and best
practices and ensure a functioning internal market for related
products and services.

Brussels, 13 September 2006.

Energy efficiency measures

adopted
6.3.3.3
throughout the electricity chain — from fuel and power plant
technology to eco-efficient design of electricity-using products.

can be

The general view is, however,

6.3.3.4
that electricity
demand will still grow for a few decades and nearly 400 GW
of new power plants, or some 400-800 of them, have to be
constructed in the EU-25 in order to cover increased demand.
In addition new plants of hundreds of GW are needed to replace
old ones.

An optimal power supply mix includes different
6.3.3.5
types of generation capacity, responding to different demands.
Base load capacity, for stable and continuous demand, is opti-
mally provided by hydropower, nuclear or combustion plants
using less expensive fuels like coal. Variable loads — the
majority of use — require easily regulated supply, like hydro-
power or thermal power. Peak loads are preferably supplied by
plants with low capital costs, usually coupled with high running
costs, like gas turbines. Base load capacity can also be utilised to
increase hydropower for peak load use. The use of intermittent
power sources requires easily regulated back-up supply.

6.3.3.6
Sufficient and successfully functioning transmission
grids, including interconnectors, are needed to make the use of
power plants more efficient and decrease the need for newbuild.
On the other hand, the system needs to be optimized so as not
to use long distance transmission instead of building power
plants where demand is high. Distributed generation, preferably
CHP-plants, are an option to be developed. Well designed
demand-side management could decrease peak demand in a
well functioning market.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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Official Journal of the European Union

C 318/193

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.

New point, 2.2.1

‘The EESC would point out that the forecasts on which this opinion is based could prove to be wrong or out-dated in
the light of current developments on the energy markets, in particular the trend in the price of oil. In the case of all
forecasts, a factor of decisive importance is the general terms of reference used and over the last few months the data
in question has changed to a crucial degree. To illustrate this point, a study (1) drawn up on behalf of the Federal
Ministry of Economic Affairs in Germany came to the conclusion that, on the basis of a future price of oil of USD
60 per barrel — the price level which is now expected — energy consumption is set to decline by 17 % by 2030
and there will be an increase in the use of coal and renewable sources of energy. Hitherto, it was assumed, on the
basis an expected future price of oil of USD 37 a barrel, that energy consumption would increase.’

Reason

Clearly, any assertions we make have to be based on particular forecasts and the rapporteur rightly quotes scenarios
advanced by the International Energy Agency and the European Commission. The EESC should, however, at least incorpo-
rate the latest developments into its opinion, without having to change its conclusions as a result.

Outcome of the vote:

For: 69

Against: 85

Abstentions: 19

Point 2.3

Amend as follows:

‘Choices of energy sources and technologies are made by investors and can be influenced by political decisions. The
EU does not have direct power over Member States' choices of sources, but influences indirectly through its environ-
mental mandate. Member States should facilitate the use of their domestic resources as far as possible. The choices
Member States make influence one another. Also, energy users in Member States without, for instance, nuclear or
coal power production are part of an electricity market where nuclear and coal are used.’

Reason

This statement is incorrect as currently formulated. Countries which do without, or intend to do without, nuclear energy
often have sufficient alternative generating capacity. The fact that, for example, nuclear power is imported into Germany
from France or the Czech Republic has to do with the European internal market and the fact that surplus capacity has
been deliberately generated in certain countries. It is not because an alleged energy shortfall can only be covered by
foreign nuclear power stations.

Outcome of the vote:

For: 60

Against: 115

Abstentions: 13

Point 5.2.6

Amend as follows:

‘Uranium is to 95 % imported to the EU from various sources. According to the IAEA and the OECD–Nuclear
Energy Agency present known economic uranium sources should satisfy world demand at its present level for 50
years. Potential deposits based on geological readings defer the exhaustion prospect to 280 years. This period is likely
to be radically shortened, however, if certain countries' nuclear power plant construction plans come to fruition.
Thus, for example, India is planning to increase its nuclear power generation capacity from 3,000 MW at present to
300,000 MW, which would clearly have a serious impact on the global availability of uranium. Later on new technol-
ogies may provide further fuel supply options, but such technologies are not yet proven or actually available.’

(1) Study drawn up by the Prognos Institut of Basel and the Energy Industry Institute (Energiewirtschaftliches Institut) of the University of

Cologne.

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Reason

Clarification.

Outcome of the vote:

For: 62

Against: 124

Abstentions: 6

Point 6.3.3.2

Amend as follows:

‘The majority of power plants in Europe are coming up for replacement in the near future. This is the case for the
major kind of plants, based on fossil fuels, as well as for nuclear. This gives a unique possibility for a major move
towards non-carbon energy sources less environmentally damaging energy generation systems (district heating plants
and clean coal technology) and at the same time a decrease in external dependency as well as an improvement of effi-
ciency in electricity generation.’

Reason

Self-explanatory. See also the observations on clean coal technologies set out in points 1.17 and 1.18 of the opinion.

Outcome of the vote:

For: 62

Against: 121

Abstentions: 12