9 Security of energy supply
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12228/02
COM(02)488
| (a) Commission Communication: The internal market in energy: Coordinated measures on the security of energy supply
(b) Draft Directive concerning the alignment of measures with regard to security of supply for petroleum products
(c) Draft Directive concerning measures to safeguard security of natural gas supply
(d) Draft Council Directive repealing Council Directives 68/414/EEC and 98/93/EC imposing an obligation on Member States of the EEC to maintain minimum stocks of crude oil and/or petroleum products, and Council Directive 73/238/EEC on measures to mitigate the effects of difficulties in the supply of crude oil and petroleum products
(e) Draft Council Decision repealing Council Decision 68/416/EEC on the conclusion and implementation of individual agreements between governments relating to the obligation of Member States to maintain minimum stocks of crude oil and/or petroleum products and Council Decision 77/706/EEC on the setting of a Community target for a reduction in the consumption of primary sources of energy in the event of difficulties in the supply of crude oil and petroleum products
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| Legal base | (a) —
(b) and (c) Article 95 EC; co-decision; QMV
(d) and (e) Article 100 EC; unanimity
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| Department | Trade and Industry
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| Basis of consideration | Minister's letter of 10 March 2004
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| Previous Committee Report | HC 63-i (2002-03), para 1 (20 November 2002), HC 63-xvii (2002-03), para 1 (2 April 2003) and HC 42-iii (2003-04), para 11 (17 December 2003)
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| To be discussed in Council | Not applicable
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| Committee's assessment | Politically important
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| Committee's decision | Cleared (following debate in European Standing Committee C on 8 April 2003)
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Background
9.1 In September 2002, the Commission set out its latest thinking
(document (a)) on the need to safeguard the Communitys energy
supplies. In particular, it noted that, despite the measures
taken to establish the internal market, the Communitys structural
weakness resulting from its reliance on imports makes it vulnerable
to external factors. It also pointed out that, although rules
for the maintenance of stocks of crude oil and petroleum products
are laid down by both the International Energy Agency (IEA) and
the Community itself, the mechanisms concerned are no longer suited
to present circumstances, and it highlighted the lack of any Community
decision-making power to dispose of oil stocks on the market.
It therefore suggested that a more coordinated approach was required,
based upon pre-defined mechanisms. The Communication was accompanied
by two specific legislative proposals, one (document (b)) dealing
with the organisation and coordinated use of oil stocks,
and the other (document (c)) with the security of gas supplies.
9.2 We noted in our Report of 20 November 2002 that
the Government had made it clear that the UK was opposed to these
proposals, and that it also had reservations about the suggestion
that they should be based on Article 95 of the EC Treaty, believing
that Article 100 (which provided the legal base for the existing
oil stocking Directives) may be more appropriate. We therefore
concluded that the proposals should be debated in European Standing
Committee C, and that debate took place on 8 April 2003, immediately
after we had produced a further Report on 2 April 2003 drawing
attention to a number of compromise proposals put forward by the
then Greek Presidency.
9.3 We subsequently received a letter of 3 December
2003 from the Minister of State for Energy, e-commerce and Postal
Services at the Department of Trade and Industry (Mr Stephen Timms),
in which he said that, at the Energy Council held on 14 May 2003,
his predecessor had maintained the UK's opposition to the proposal
relating to oil (document (b)), and that other Member States had
also opposed it. Since then, there had been no discussion within
the Council at either ministerial or official level, and, when
the European Parliament gave the proposal a first reading on 17-20
November, it voted to reject it, and called upon the Commission
to withdraw it. The Minister added that the Commission had not
yet done so, but that, in the course of the debate, the Commissioner
had said that she would not bring forward any new legislative
proposal in this field if the Parliament voted against it.
9.4 Since the Minister made no reference to the corresponding
proposal on gas supplies (document (c)), we asked in our Report
of 17 December to be kept in touch with any further discussion
which had taken place on that.
Ministers letter of 10 March 2004
9.5 In his letter of 10 March 2004, the Minister
says that a general approach to this issue was agreed at the Energy
Council on 15 December 2003, which represented a substantial improvement
on the original Commission proposal, and was in line with the
UK position. In particular, he says that the agreed text does
not require any adjustments to the UK's own system, and that earlier
references to intervention by the Commission have been deleted,
following intensive lobbying from the UK, Germany and the Netherlands.
The Minister is confident that the remaining requirement to monitor
and report is neither interventionist nor unduly intrusive, and
he points out that national indicative targets for gas storage
are now optional.
9.6 As a result of these changes, the Minister considers
that the measure in question is a useful addition to Member States'
and Community policies in this area, and he summarises its effect
in the following terms:
"The current text therefore requires Member
States to define and publish non-discriminatory and transparent
national security of supply policies compatible with the internal
market, and allows special protection to be extended to household
consumers. It outlines a step-by-step approach to dealing with
a major supply disruption at Community level that recognises the
role of the market in providing the initial response. It establishes
a Gas Coordination Group, consisting of representatives from Member
States, and from industry and consumer bodies, which will provide
guidance, and assist in coordinating a response in the event of
a major disruption at Community level. Community action (in the
form of the Commission submitting a proposal to Council) will
only come into play as a very last resort."
9.7 The Minister also refers to the latest position
on the proposed legal base. He says that, following the advice
of the Council Legal Service, this has been amended to Article
100 (which only requires the European Parliament to be consulted,
whereas Article 95 requires co-decision). However, the Commission
is still maintaining that Article 95 is the correct base, and
the amended text, along with the change in legal base, is now
being considered by the European Parliament. The Minister says
that he will write to us again, once this issue has been resolved.
Conclusion
9.8 The clearance of the document following the
debate in European Standing Committee C means that we are simply
noting these developments and reporting them to the House. However,
we are grateful for the Minister's undertaking to keep us informed
of any further developments on the choice of legal base.
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