House of Commons - European Scrutiny

Select Committee on European Scrutiny Thirty-Sixth Report

3 Trans-European Networks

(a)

(24941)

13297/03

COM(03) 561

(b)

(24970)

13244/03

COM(03) 564

ADD 1

Amended draft Regulation amending an amended draft Regulation to amend Council Regulation (EC) No. 2236/95 laying down general rules for the granting of Community financial aid in the field of Trans-European Networks.

Amended draft Decision amending an amended draft Decision to amend Council Decision No. 1692/96/EC on Community guidelines for the development of the Trans-European Transport Network.

Legal base (a) Article 156 EC; co-decision; QMV
(b) Articles 154-156 EC; co-decision; QMV

Documents originated 1 October 2003

Deposited in Parliament (a) 10 October 2003
(b) 24 October 2003

Department (a) Trade and Industry
(b) Transport

Basis of consideration (a) EM of 28 October 2003
(b) EM of 3 November 2003

Previous Committee Report None; but see for (a) (24246) 5847/03: HC 63-xiv (2002-03), paragraph 10 (5 March 2003)and for (b) (23870) 12817/02: HC 152-xli (2001-02), paragraph 2 (6 November 2002)

To be discussed in Council Not known

Committee's assessment Politically important

Committee's decision For debate in European Standing Committee A (with previous version of the draft Decision already recommended for debate)

Background

3.1 Trans-European Networks (TENs) comprise three sectors: energy, telecommunications and transport. Development of the TENs is promoted as a key element for the creation of the Internal Market and the reinforcement of economic and social cohesion. Such development includes the interconnection and interoperability of national networks as well as access to such networks. Funding from the TENs budget is intended to be a catalyst, with the greater part of the funding coming from either the public authorities of the Member States or, especially in the fields of telecommunications and energy, from the private sector. (The maximum level of support, from 1 January 2003, was increased under Regulation No. 1655/1999 from 10% to 20% of total investment costs for projects concerning satellite positioning and navigation systems[10]; for all other projects, the maximum is 10% of total project costs).

3.2 Over the last 21 months we have considered a number of proposals to revise the legislation relating to both the financing and the guidelines for TENs. The most recent proposals relevant to the present documents are an amended draft Regulation to allow a 20% contribution to cross-border transport projects and priority energy projects and an amended draft Decision to revise the guidelines on development of the Transport TEN (TEN-T)[11]. We have already recommended the latter document for debate in European Standing Committee A. We have considered earlier versions of both of the current documents[12].

3.3 We have also considered and cleared related proposals — to allow a 30% contribution to telecommunications projects and to revise the guidelines for the Energy TEN[13], which we understand are still current. Also relevant are the European Transport White Paper, which was debated in European Standing Committee A[14] and a recent Commission Communication about innovative funding arrangements for the TEN-T.[15]

The documents

3.4 Document (a) is a (three times) amended draft Regulation to amend Council Regulation No. 2236/95/EC so as to allow a 20% contribution to priority energy projects and a 30% contribution to cross-border transport projects. The measure would require financing based on a multi-annual legal commitment.

3.5 The current proposal is based on the conclusions and recommendations in a report by the High-Level Group on TEN-T, chaired by Mr Karel van Miert. It also takes into account a number of points raised in the recent Commission Communication on innovative funding. In support of the proposal the Commission sets out some of the difficulties in completing the TEN-T network and in meeting the objective of sustainable development highlighted in the European Transport White Paper. The Commission also sets out the added value it believes would be gained as a result of greater support for cross border projects, noting for instance that these projects are essential for connectivity along the major trans-European routes.

3.6 Document (b) is a (twice) amended draft Decision to amend Decision No 1692/96/EC so as to revise the guidelines on development of the TEN-T. The Commission's original proposal was to change priorities to give greater emphasis to rail and shipping and to more rigorous environmental assessment of projects. It proposed six new priority projects to be added to the 14 priority projects agreed at the Essen and Dublin European Councils.

3.7 The main elements of the current proposal, which is intended to be complementary to document (a), are:

a revised list of priority projects (which we annex). It is based on projects due to commence by 2010 and comprises the relevant projects in the original proposal and recommended in the van Miert report, plus three others not selected by the van Miert group;
application of a "European interest" label to these projects giving them priority for Community funds, but also placing an obligation on Member States to carry out, on certain cross-border sections, co-ordinated evaluation and public consultation procedures, or a trans-national enquiry;
a new mechanism for supporting "motorways of the sea" to encourage Member States to launch new regular trans-national cargo shipping lines;
the possibility of designating a "European coordinator" for projects or groups of projects located on the same European route. The coordinator, acting in the name and on behalf of the Commission, would encourage better synchronisation of investment and also give advice on the financial package for the projects; and
an extension of the deadline for completing the TEN-T from 2010 to 2020.

The Government's view

3.8 On document (a), the Parliamentary Under-Secretary of State for Small Business and Enterprise, Department of Trade and Industry (Nigel Griffiths) says:

"The current Financial Perspective covers the period 2000-2006. The Commission has stated in its report that this action would not result in any additional costs beyond those already foreseen for that Financial Perspective. However, under Article 19 of the Regulation (Revision clause) the Commission would be required to submit its proposals to continue or amend the regulation before the end of 2006.

"TENs funding is meant to act as a catalyst to get financially viable projects off the ground. The UK has not been convinced that an increase to 30% can be justified when, to date, few if any projects have received even the current maximum of 10%. Moreover we believe that delays to the completion of the TEN-T are due in the first instance to problems in planning, design and management of projects and are not solely down to financing difficulties.

"The Commission considers the budgetary impact of increasing the intervention rate from 10% to 30% for the identified priority TEN-T projects over the period 2007-2013 to be modest. It has set out, in a table in section 4 of its Explanatory Memorandum, the cost to the TEN-T budget if all of the identified cross border projects were allocated the maximum level of EC funding proposed. However the UK is concerned that the cost in the table's 30% scenario already exceeds the average annual transport expenditure under the current Financial Perspective, giving fresh impetus to fears that the Commission is paving the way for a significant increase to the overall TENs budget in the next Financial Perspective running from 2007. Furthermore, if the proposed cross border elements were fully funded this would not allow for spending on other TEN-T projects, including the non-cross border sections of the 22 [now known to be 29] priority projects.

"Increasing the intervention rate to 30% would therefore reduce the number of projects that could be supported, creating a real danger that limited Community resources would be focused narrowly on projects with limited financial and economic viability but high prestige value, instead of on more viable projects that would have wider EU benefits. These are likely to be projects that are less attractive to private finance and which are therefore less consistent with the purpose of TEN financing.

"The UK is also concerned that the proposed amendment may set a precedent for increases in the other TEN networks (where there are proposals to increase the funding ceiling to 20%) and where, for energy, the Commission is overly focused on increasing EU-level involvement in infrastructure rather than on setting the framework that would enable the private sector to fund it. It is also wary about the proposed inclusion of a provision that would enable the Commission to demand reimbursement of aid paid if a project has not been completed.

"In the light of these reservations the UK is unable to support the Commission's proposal."

3.9 On the policy implications of document (b), we are told by the Parliamentary Under-Secretary of State, Department of Transport (Mr David Jamieson):

"The UK broadly welcomes the proposed new priority projects which have emerged from the High Level Group and is pleased to see the rail/road Ireland-UK-continental Europe project on the list. We believe it is an important signal that projects in and between the countries on the periphery of the Union are of equal "European interest" to those in the centre of the Community.

"The UK recognises the important role that short sea shipping can play in the development of a more sustainable transport system, and, in principle, it supports the motorways of the sea concept. But, as the Commission recognises, the provision of aid to individual ports clearly has the potential to distort competition. So we shall be looking very closely at the Commission's proposal to ensure that they support all aspects of the Single Market. The UK does not subsidise UK Ports and would therefore be unable to take advantage of this proposal as it stands. Furthermore, the TEN-T concerns infrastructure development and we would want to resist any suggestion that TEN grant should be used to provide start up aid for shipping services.

"In the foreseeable future it seems unlikely that the Commission's proposal for the appointment of European coordinators and for coordinated evaluation procedures for trans-national projects or cross border sections of priority projects would impact on the UK. Nonetheless, we shall need to look carefully at the proposal to ensure that the principles of subsidiarity and proportionality are upheld."

3.10 On the financial implications of the proposal the Minister says:

"While broadly welcoming the proposed new priority projects we must also be cautious. The Commission has suggested that the cost of developing the new priority projects will be around €220 billion of which approx. €80 billion will be needed by 2006. And the total cost of completing the TEN is expected to be about €600 billion between now and 2020. The UK remains a firm believer in the need for budgetary discipline in the EU and will want to be satisfied that the adoption of revised TEN guidelines does not precursor demands for unsustainable increases in Community support for the development of the network in the next and subsequent financial perspectives, or place unmanageable pressures on the current TENs budget.

"We are concerned at any suggestion that the proposal to amend the trans-European transport network (TEN-T) guidelines goes hand in [hand] with amendments to the Financing Regulation, which we are unable to support.

"The UK has not been convinced by the arguments that the Commission has made in support of its 2001 financing Regulation proposal to increase the maximum rate of grant for transport TEN projects from 10% to 20%. We are even more sceptical of the current proposal to increase the maximum intervention rate to 30%. TENS funding is meant to act as a catalyst to get financially viable projects off the ground. The UK has not been convinced that an increase to 30% can be justified when, to date, few if any projects have received even the current maximum of 10%. We believe that delays to the completion of the TEN-T are due in the first instance to problems in planning, design and management of projects and are not solely down to financing difficulties.

"The Commission considers the budgetary impact of increasing the intervention rate from 10% to 30% for the identified priority TEN-T projects over the period 2007-2013 to be modest. However, the UK is concerned that the cost already exceeds the average annual transport expenditure under the current Financial Perspective, giving fresh impetus to fears that the Commission is paving the way for a significant increase to the overall TENs budget in the next Financial Perspective running from 2007."

Conclusion

3.11 These documents relate to an important area of Community policy. We have already recommended the previous version of the draft Decision for debate in European Standing Committee A[16] and have no hesitation in recommending that these two documents should be debated in European Standing Committee A at the same time.

3.12 Amongst issues Members may wish to explore further with the Minister are the Government's views on:

whether the balance of projects between various transport modes is right;
whether there are too few or too many projects proposed, and whether those proposed are the right ones;
to what extent, and for what purpose, Community finance should be used in TENs projects;
from where else in the budget, if the overall Financial Perspective envelope is to be maintained, TENs projects might be financed; and
the subsidiarity and proportionality issue raised by the proposed European coordinator role.

ANNEX

Priority projects introduced by the amended draft Decision (document (b))

1. Railway line Berlin-Verona/Milano-Bologna-Napoli-Messina-Palermo

Halle/Leipzig-Nürnberg (2015);
Nürnberg-München (2006);
München-Kufstein (2015);
Kufstein-Innsbruck (2009);
Brenner tunnel (2015), cross-border section;
Verona-Napoli (2007);
Milano-Bologna (2006);
Rail/road bridge over the Strait of Messina-Palermo (2015).

2. High-speed railway line Paris-Bruxelles/Brussel-Köln-Amsterdam-London

Channel tunnel-London (2007);
Bruxelles/Brussel-Liège-Köln (2007);
Bruxelles/Brussel-Rotterdam-Amsterdam (2007).

3. High-speed railway lines of south-west Europe

Lisboa/Porto-Madrid (2011);
Madrid-Barcelona (2005);
Barcelona-Figueras-Perpignan (2008);
Perpignan-Montpellier (2015);
Montpellier-Nîmes (2010);
Madrid-Vitoria-Irun/Hendaye (2010);
Irun/Hendaye-Dax, cross-border section (2010);
Dax-Bordeaux (2020);
Bordeaux-Tours (2015).

4. High-speed railway line east

Paris-Baudrecourt (2007);
Metz-Luxembourg (2007);
Saarbrücken-Mannheim (2007).

5. Betuwe line (2007)

6. Railway line Lyon-Trieste/Koper-Ljubljana-Budapest-Ukrainian border

Lyon-St Jean de Maurienne (2015);
Mont-Cenis tunnel (2015-2017), cross-border section;
Bussoleno-Torino (2011);
Torino-Venezia (2010);
Venezia-Trieste/Koper-Divaca (2015);
Ljubljana-Budapest (2015).

7. Motorway route Igoumenitsa/Patra-Athina-Sofia-Budapest

Via Egnatia (2006);
Pathe (2008);
- Sofia-Kulata-Greek/Bulgarian border motorway (2010), with Promahon-Kulata as cross-border section;
Nadlac-Sibiu motorway (branch towards Bucuresti and Constanta) (2007).

8. Multimodal link Portugal/Spain-rest of Europe

Railway line Coruña-Lisboa-Sines (2010);
Railway line Lisboa-Valladolid (2010);
Railway line Lisboa-Faro (2004);
Lisboa-Valladolid motorway (2010);
Coruña-Lisboa motorway (2003);
Sevilla-Lisboa motorway (completed 2001) [sic];
New Lisboa airport (2015).

9. Railway line Cork-Dublin-Belfast-Stranraer (2001)

10. Malpensa (completed 2001) [sic]

11. Öresund fixed link (completed 2000) [sic]

12. Nordic triangle railway line/road

Road and railway projects in Sweden (2010);
Helsinki-Turku motorway (2010);
Railway line Kerava-Lahti (2006);
Helsinki-Vaalimaa motorway (2015);
Railway line Helsinki-Vainikkala (Russian border) (2014).

13. UK/Ireland/Benelux road link (2010)

14. West coast main line (2007)

15. Galileo (2008)

16. Freight railway line Sines-Madrid-Paris

New high-capacity rail link across the Pyrenees;
Railway line Sines-Badajoz (2010).

17. Railway line Paris-Strasbourg-Stuttgart-Wien-Bratislava

Paris-Baudrecourt (2007);
Metz-Luxembourg (2007);
Saarbrücken-Mannheim (2007);
- Baudrecourt-Strasbourg-Stuttgart (2015) with the Kehl bridge as cross-border section;
Stuttgart-Ulm (2012);
München-Salzburg (2015), cross-border section;
Salzburg-Wien (2012);
Wien-Bratislava (2010), cross-border section.

18. Rhine/Meuse-Main-Danube inland waterway route

Rhine-Meuse (2019) with the lock of Lanaye as cross-border section;

Vilshofen-Straubing (2013);
Wien-Bratislava (2015) cross-border section;
Palkovicovo-Mohàcs (2014);
Bottlenecks in Romania and Bulgaria (2011).

19. High-speed rail interoperability on the Iberian peninsula

Madrid-Andalucía (2010);
North-east (2010);
Madrid-Levante and Mediterranean (2010);
North/North-west corridor, including Vigo-Porto (2010);
Extremadura (2010).

20. Fehmarn Belt railway line

Fehmarn Belt fixed rail/road link (2014);
Railway line for access in Denmark from Öresund (2015);
Railway line for access in Germany from Hannover (2015);
Railway line Hannover-Hamburg/Bremen (2015).

21. Motorways of the sea

Projects concerning one of the following motorways of the sea:

Motorway of the Baltic Sea (linking the Baltic Sea Member States with Member States in Central and Western Europe) (2010);
Motorway of the sea of western Europe (leading from the Iberian peninsula via the Atlantic Arc to the North Sea and the Irish Sea) (2010);
Motorway of the sea of south-east Europe (connecting the Adriatic Sea to the Ionian Sea and the Eastern Mediterranean to include Cyprus) (2010);
Motorway of the sea of south-west Europe (western Mediterranean), connecting Spain, France, Italy and including Malta, and linking with the motorway of the sea of south-east Europe. (2010)

22. Railway line Athina-Sofia-Budapest-Wien-Praha-Nürnberg/Dresden

Railway line Greek/Bulgarian border-Kulata-Sofia-Vidin/Calafat (2015);
Railway line Curtici-Brasov (towards Bucuresti and Constanta) (2010);

Railway line Budapest-Wien (2010), cross-border section;
- Railway line Breclav-Praha-Nürnberg (2010), with Nürnberg-Praha as cross-border section.

23. Railway line Gdansk-Warszawa-Brno/Bratislava-Wien