Documents considered by the Committee on 18 March 2015 - European Scrutiny Contents


24 Consumption of primary sources of energy

Committee's assessment Politically important
Committee's decisionCleared from scrutiny
Document detailsDraft Council Decision repealing the setting of a Community target for a reduction in the consumption of primary sources of energy in the event of supply difficulties
Legal baseArticle 122(1) TFEU; QMV
DepartmentEnergy and Climate Change
Document numbers(36680), 6542/15, COM(15) 720

Summary and Committee's conclusions

24.1 The Commission says that the mitigation of disruptions to the supply of crude oil and petroleum products can be achieved either by increasing supply or reducing demand, with the release of emergency oil stocks being a key tool. In particular, Directive 2009/119/EC requires Member States to hold such stocks and to release them in a co-ordinated fashion in the event of a major supply disruption, and a similar obligation applies to members of the International Energy Agency (IEA). At the same time, Council Decision 77/706/EEC allows the Commission to require EU Member States to reduce their consumption of petroleum products by up to 10%, and to take all necessary steps to do this, this too being broadly aligned with an IEA requirement.

24.2 However, the Commission says that the release of emergency stocks is now seen as the main response tool, also that it has never taken steps to enforce demand reduction under Decision 77/706/EEC. It also notes that Directive 2009/119/EC requires Member States to have in place procedures to impose demand restraint measures if needed, and it considers this requirement to be sufficient, making it unnecessary to maintain the overlapping demand restraint measure set out in Decision 77/706/EEC. This draft Council Decision would therefore repeal that earlier Decision

24.3 The Government says that the repeal of Council Decision 77/706/EEC will not impact on UK policy in this area, since the Energy Act 1976 and Civil Contingencies Act 2004 provide statutory powers for emergency situations, which operate independently of these Decisions. It also notes that the UK approach to fuel resilience focuses primarily on supply side measures.

24.4 This repeal appears to be a logical step, and welcome insofar as it introduces a degree of legislative simplification into this area. Consequently, although we are drawing it to the attention of the House, we are content to clear it.

Full details of the document: Draft Council Decision repealing 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 and Commission Decision 79/639/EEC laying down detailed rules for the implementation of Council Decision 77/706/EEC: (36680), 6542/15, COM(15) 720.

Background

24.5 According to the Commission, there are two broad options available to mitigate a disruption to the supply of crude oil and petroleum products — to increase supply or reduce demand — and it notes that a key tool for increasing supply temporarily is the release of emergency oil stocks. In particular, Directive 2009/119/EC requires Member States to hold such stocks that could be released in a co-ordinated fashion in the event of a major supply disruption, and a similar obligation applies to those Member States, including the UK, which are also members of the International Energy Agency (IEA).

24.6 As regards demand reduction, Council Decision 77/706/EEC allows the Commission to require EU Member States to reduce their consumption of petroleum products by up to 10%, and to take all necessary steps to do this. This too was broadly aligned with the IEA's requirement at the time that its members should have sufficient measures in place to reduce consumption by 7% or 10% in the event of a reduction of oil supplies. However, the Commission says that the release of emergency stocks has since come to be considered the main response tool in the event of an emergency, both within the EU and the IEA. In particular, this approach enables a bridge to be built swiftly until the market is able to find alternative sources, without disturbing economic activity or public life, in contrast to demand restraint measures, which arequire a level of public acceptance difficult to obtain.

24.7 The Commission also notes that it has never taken steps to enforce demand reduction under Decision 77/706/EEC, whereas there have been three co-ordinated releases of emergency oil stocks[54] to respond to global supply disruptions. It adds that the shift towards addressing disruptions through supply rather than demand measures, in particular through the use of oil stocks, was reinforced through the revisions to Directive 2009/119/EC. This came into force from 2013, and strengthened the framework for the maintenance and availability of emergency stocks, and set new requirements including the need to hold at least one-third of the oil stocking obligation as the most used finished oil products (petrol, diesel and jet), to enhance the ability of the EU to respond effectively to supply disruptions.

The current document

24.8 As the Directive also requires Member States to have in place procedures to impose demand restraint measures if needed, the Commission considers this to be sufficient, and that it is unnecessary to maintain the overlapping demand restraint measure set out in Decision 77/706/EEC. This draft Council Decision would therefore repeal that Decision (and Commission Decision 79/639/EEC, which laid down detailed rules on how the demand reduction target would be set).

The Government's view

24.9 In his Explanatory Memorandum of 10 March 2015, the Minister of State for Energy (Matthew Hancock) says that the repeal of Council Decision 77/706/EEC and Commission Decision 79/639/EEC will not impact on UK policy regarding the disruption of crude oil and petroleum products, since the Energy Act 1976 and Civil Contingencies Act 2004 provide statutory powers for emergency situations, which operate independently of these Decisions.

24.10 He also notes that the UK approach to fuel resilience focuses primarily on supply side measures; that emergency oil stocks are seen as a key method of responding to a substantial disruption; that it holds such stocks as required through its membership of the IEA and the EU; and that the Energy Act 1976 empowers the Government to direct companies to hold stocks of oil which could be released to the market if needed, and to regulate or prohibit the production, supply, acquisition or use of fuel. Also, the National Emergency Plan for Fuel sets out the measures which the Government could take to avoid disruption to essential services during a period of shortage and how these would be implemented, placing the initial responsibility on suppliers.

Previous Committee Reports

None.


54   A release of oil stocks by IEA member countries in the build up to the Gulf War in 1991; after Hurricanes Katrina and Rita in 2005; and following disruption of oil supplies from Libya in 2011. Back


 
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