16 ENERGY POLICY FOR THE ENLARGED EUROPEAN
UNION
(24642)
9785/03
COM(03) 262
| Commission Communication on the development of energy policy for the
enlarged European Union, its neighbours and partner countries.
|
| Legal base | —
|
| Document originated | 13 May 2003
|
| Deposited in Parliament |
19 June 2003 |
| Department | Trade and Industry
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| Basis of consideration |
EM of 3 July 2003 |
| Previous Committee Report |
None |
| To be discussed in Council
| December 2003 |
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
16.1 According to the Commission, the Community's neighbouring
countries play a vital role in its energy policy, in that they
supply a major part of its natural gas and, increasingly, oil
— a role which it says will grow significantly in the future.
It has therefore sought in this Communication to focus on the
steps necessary for an energy strategy for the enlarged EU and
its neighbours to be achieved.
The current document
16.2 In its introduction, the Commission highlights five
particular areas. On the creation of a European internal
market for electricity and gas, it notes that structural
developments within the Community are being mirrored in almost
all its neighbouring countries, and that the aim should be the
progressive creation of an integrated market which is not simply
limited to Member States. It suggests that, provided there is
a level playing field, this would lead to increased competition
and lower prices, to increased environmental protection over a
wider area, and to enhanced security of supply throughout Europe,
but it also envisages this being achieved, not by the wholesale
exportation of a regulatory framework, but by aiming for "substantially
similar" standards and levels of market access, coupled with
the installation of additional infrastructure as necessary. On
energy and environment, the Commission says it will be
necessary to develop demand management and energy efficiency,
both to assure energy security in the long term and in relation
to such areas as climate change and other environmental problems.
As regards security of supply and the development of new infrastructure,
it notes the reference in its Green Paper of 2000 that the Community
imports almost two-thirds of its fossil fuel requirements, and
that, on the basis of present trends, that figure is set to increase
.[46] More specifically,
it notes the potential for increased exchanges of electricity,
the need for new investment to open up new gas fields and pipelines,
and the issues of maritime safety and security of supply which
arise from oil. It suggests that nuclear energy inevitably
forms a major part of any energy policy involving the Community's
neighbours, and considers that its recent proposals on the safety
of nuclear installations and the management of radioactive waste
should form the basis of future discussions, as should the negotiation
of an agreement with Russia on trade in nuclear materials. Lastly,
it points out that neighbouring countries are strongly encouraged
to participate in activities under the Sixth Research and Technological
Development Framework Programme (2002-06).
16.3 The Communication then considers the
ways in which these objectives can be achieved, notably through
three existing co-operation mechanisms — the EU-Russia Energy
Dialogue; the Euro-Mediterranean Energy Forum; and the South-East
Europe Regional Energy Forum. It says that the clear medium-term
objective should be the creation of a "real" European
electricity and gas market, going beyond simple questions of open
trade, and including potentially more than 35 countries with a
population exceeding 600 million. However, it recognises that
this will necessarily have to be established on a step-by-step
basis, embracing initially the ten new Member States, followed
by the adoption of the Community acquis for electricity
(and subsequently gas) by the countries in south-east Europe,
and the creation of a Europe-Med electricity and gas market.
In the case of Russia, which it points out is already the Community's
largest single energy partner, the Commission says that concrete
discussions have now commenced to identify the issues which need
to be addressed regarding substantial equivalence of market opening,
environmental protection and safety for electricity, and that
these now need to progress, together with feasibility studies
on the interconnection between the Union for Co-ordination of
Transmission of Electricity[47]
and networks in the Newly Independent States, so as to enable
a formal agreement to be concluded between the Community and Russia
opening the way for fair and free trade in electricity. Other
potential partners identified include Belarus and Ukraine, and
countries in the Caspian Basin, such as Kazakhstan and Azerbaijan.
16.4 The Communication pays particular attention
to the need for new infrastructure if the enlarged European market
envisaged is to function effectively, and in particular the need
for close collaboration between the Community and supply countries,
as well as those involved as transit regions, to ensure future
supplies, particularly of oil and gas, where it identifies a range
of potential projects.[48]
It stresses the importance of the Community's financial and political
commitment, and proposes concrete action, whereby the Trans European
Network (TEN) mechanism would be revised to allow the eligibility
of projects identified in the Communication (though retaining
the principle that the private sector should be the primary source
of investment). It also suggests that the mechanisms should be
revised to permit participation in the cost of political risk
insurance; and indicates that existing and new Community mechanisms
for supporting the development of energy infrastructure inside
and outside the enlarged Community should be better co-ordinated,
with the creation of a new general and overall energy infrastructure
financing instrument, so as to ensure that any project which crosses
multiple funding jurisdictions is not hampered by failures of
co-ordination or a critical absence of funds. The Commission
also envisages the close involvement of all neighbouring countries
in developments regarding the technical harmonisation and inter-operability
of gas and electricity networks now being addressed within the
Community through the Florence and Madrid Regulatory Fora, leading
progressively to their full participation.
The Government's view
16.5 In his Explanatory Memorandum of 3
July 2003, the Minister for Energy, E-Commerce and Postal Services
at the Department of Trade and Industry (Mr Stephen Timms) says
that the actions proposed in the Communication are largely uncontentious,
and that the Government supports the focus on the single market
and on the diversity of international energy suppliers. That
said, he questions the Communication's emphasis in three areas,
namely:
- the importance of Russia as
an energy supplier, which the UK recognises, but believes is over-emphasized,
especially for gas, in relation to other energy suppliers (the
Minister also notes the importance of competition between supplier
countries);
- the tendency to over-emphasize the importance
of the Commission's bilateral political dialogue, as compared
with its role in helping to establish an appropriate framework
for commercial decision-making;
- the lack of any mention of multilateral fora,
such as the World Trade Organisation and the Energy Charter Treaty.
The Minister also says that, to the extent that interconnection
projects should in the main be built by private sector companies
in market conditions, the actual and potential benefits of the
TENs may be exaggerated.
Conclusion
16.6 Since the importance of the security
of the Community's energy supplies has already been identified
in an earlier Commission Green Paper, we are, in clearing this
document, drawing to the attention of the House the steps advocated
by the Commission within the context of the enlarged Community
to extend its energy policy to neighbouring and partner countries,
notably Russia, and those in south-east Europe and the Mediterranean.
46 (22096) 5619/01; see HC 28-xi (2000-01), paragraph
2 (4 April 2001). Back
47
The body responsible for co-ordinating and setting standards for
the operation of the continental European grid. Back
48
Including the Northern Trans-European gas pipeline, approximately
1,300 kilometres long, which would transport gas from north of
St Petersburg to Germany under the Baltic Sea and thence to the
UK via the Netherlands. Back
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