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The  European  Commission  adopted,  following  a   proposal  by  Commssioner
Christos PAPOUTSIS,  the White Paper  on "An Energy  Policy for the  European
Union"  laying down  the guidelines  for Energy  policy over the  next years,
which can be  followed irrespective of the outcome  of the IGC discussions on
the possibility of more specific provisions for Energy in the Treaty.

The three pillars  and strategic objectives  of the  European Union's  Energy
policy in  the future  will be  overall competitiveness,  security of  energy
supply  and environmental protection. This  policy will be implemented mainly
by  means  of  integration  of   the  market,  management  of   the  external
dependency,  promotion of   sustainable  development  and  support of  energy
research and tecnology.

The  White Paper  is the result  of lengthy discussions  and consultations on
the Green  Paper which  the previous  Commission adopted  and published  last
January[1] . 

In  its first  part,  the White  Paper sets  out  an energy  framework, based
around  the above mentioned strategic objectives towards which both Community
and national energy  policies should converge.  The Commission  will use  all
the provisions of the Treaty and the  instruments at its disposal to  achieve
these objectives and  for ensuring the effectiveness of policies conducted at
national level that contribute to these aims.

The second part of  the White  Paper provides a  programme of activities  for
the Commission  for the  years ahead, which  takes account  of the limits  to
Community action  for reasons linked to  either subsidiarity  or to budgetary
constraints.  Implementation of this programme, updated every two years, will
pass through  the Community's  normal decision-making  process via  proposals
and Communications or new management approaches in existing machinery.

Upon the  adoption of  the White  Paper, Commissioner  C. PAPOUTSIS  said: "A
sound  and sustainable  energy  policy is  critical  for our  future economic
development.  This White  Paper will be  our blue-print  for action  into the
21st  century.  We  need  to   secure  our  energy  supplies,   both  through
diversification and better international cooperation. We need to  promote our
industry's  competitiveness and improve the business environment. At the same
time it is  crucial for our future,  and that of future generations,  that we
protect  the  environment  and  promote  an  environmentally-friendly  energy
policy. Our  policies  must  also  contribute to  job  creation  and  a  more
regionally balanced  development. However,  if we  are to  achieve all  these
objectives, the Commission  must raise the question of whether a modification
of the  Treaty is necessary as  Community action I believe is  now limited by
the absence of clear provisions."

A. Philosophy of the future approach

In pursuing  the energy  strategic objectives  for the  following years,  the
Union must  recognise that its forecast  energy dependence  will increase and
must also  take  into  account  the  fact  that  its  increasing  integration
involves greater solidarity with  respect to the enrgy  choises made by  each
Member State  and  the  economic  and  social  dimension  of  energy  policy,
particularly as  regards the  impact on  jobs. Finally,  the Union must  have
flexibility in  defining and implementing an  energy policy  since the energy
situation is always susceptible to change.

In considering these constraints  the approach adopted by the White  Paper is
based on four factors:

     First, market integration  which is the central,  determining factor  in
     the Community's  energy  policy, in  the  absence  of which  most  other
     activities would lose  their justification and would be done at national
     level.

     Secondly, competitiveness  and environmental protection which  require a
     balanced  approach that  is based  on internalisation  of costs achieved
     not only through fiscal policies  but also by developing  other measures
     in order to address urgently the environmental challenges.

     Thridly,  the  external dimension  which  is  an important  element  for
     Community  action  because  the EU's  energy  supplies come  mainly from
     outside  producers  and,   above  all,  the  future   growth  of  energy
     consumption in third countries will be a major cause for concern.

     Fourthly, security  of  supply which  must  continue  to be  a  constant
     concern and  in  view  of  the  level of  integration  of  the  consumer
     markets, of  external responsibilities and of the growing integration of
     the energy market, it must justify a common approach on Union level.

B. Guidelines for Energy policy implementation

Energy  policy  will  ultimately  be  judged   on  the  extent  to  which  it
contributes to the central objectives  of the Treaties, in  particular market
integration, sustainable  economic growth,  job creation  and prosperity  for
the  citizens.  In   this  context  the  strategic   objectives  of   overall
competitiveness,  security   of  supply  and  environmental   protection  are
considered as being most relevant to the energy sector.

These objectives  set out in the White Paper can be  achieved by means of the
following policy guidelines:

1. Integration of the Market

The setting of  a general policy framework for  the smooth functioning of the
internal energy  market   can give  all market  players stable and  long-term
signals for investment.  These framework conditions need to take into account
the diverse market structures as well as the supply and demand situations  of
the member States  with the objective  of securing  more compatible  national
situations  which would  ensure that  obstacles do  not arise  to the  smooth
functioning of the market.

The primary  goal will be to  liberalise the internal market  for electricity
and natural gas. But, for economic operators  to have full confidence in  the
internal energy  market and to be assured  that market principles prevail, it
will be essential that there is a maximum  of transparency and consistency in
applying the competition provisions of the Treaties.

On the  other hand, less  intervention in the  energy market will require  an
efficient monitoring  tool  in order  to  analyse  and to  understand  market
developments and to  ensure that structural and technical  changes are not in
conflict with energy policy goals. 

Finally, in view of the size  of investments in the energy area and the  role
of enterprises, a  first priority will be  to ensure that policy  initiatives
in the energy and  other sectors are as neutral as  possible as regards their
impact on the energy market and ultimately investment decisions.

2. Managing External Dependency

The growing  energy dependency  of the  Union should  be a  point of  concern
given the  political risks in some  important supplier  countries and growing
world energy consumption.  However, although security  of supply  in all  its
aspects needs to  be kept  under review, it  does not  currently justify  new
crisis  measures.  On the  other hand,  there  is a  scope  for strengthening
security of supply  by effective internal policy corrections to market rules,
by encouraging fuel diversification, by enlarging choises with  the promotion
of  energy  efficiency,   renewables  and  by  putting  in  place  a  careful
surveillance of the energy situation.

An important energy  policy goal will be  to ensure continuity of  supply but
also  the  development  of international  energy  relations  by  cooperation,
dialogue and assistance.

3. Sustainable development

Improving competitiveness and protecting the environment  are not necessarily
in conflict.  The Fifth  Action Programme  for sustainable development  takes
the view that internalisation of external  costs and benefits could offer the
best and  most efficient way of  integrating environmental  concerns since it
has the advantage that it is working  with the market rather than against it.
It is believed  that in  the medium term, at  least, even if  fiscal measures
continue to  be developed, the internalisation  of external  costs other than
through taxation needs to be given a higher profile.

Furthermore,   energy  efficient   technologies  and   practice   and  energy
conservation  need to  be  fully exploited  by  mobilising all  available and
consistent with  the competitiveness objective  instruments to contribute  to
energy efficiency.  In  addition,  given  that  they  produce  little  or  no
pollution, the renewable  energy sources should  be promoted  and offered  an
increased share in the EU's energy balance.

Energy  is important  and  even fundamental  for  local activities  and local
life.  Consequently, the role  of local  authorities in  the field  of energy
should be  given  more recognition  in  both  national and  Community  energy
policies.

4. Technology and Energy

Advanced  energy   technology  can   make  a   significant  contribution   to
sustainable development,  diversification and production  of energy. The  RTD
specific programmes JOULE and  THERMIE are important, but more can and should
be done. This  means improving collaboration between  companies in  different
Member  States by  promoting integrated  and clearly  targeted projects  with
considerable  potential for  replication. It  also  means establishing  close
cooperation  and understanding  between the  different  stages of  technology
development and measures to improve their market application.

The Commission  could,  in cooperation  with  the  Member States,  develop  a
global RTD strategy for energy  technology to ensure that a continuum  exists
between R&D  and demonstration and  dissemination. Therefore, the  Commission
will compile a  database and atlas of energy  technology to help establish EU
needs  and  demands  in  this  area  and  develop  priorities  for  Community
activities.

Finally, taking into  account that special  efforts should  be undertaken  to
make recently developed  energy technology better known, the  Commission will
seek ways to reform and improve energy technology dissemination activities.

C. Work Programme

On the  basis of  the White Paper,  the Commission  will, within the  various
fields of action covered, follow a work programme over a  five year period in
order to use, on  a long term basis, Community instruments  for drawing up an
energy policy that meets the strategic objectives. 

Independently of  the management of current  actions and  of the organisation
of the  activities currently in progress,  the Work  Programme will establish
new actions,  whose launching will  depend upon  Commission initiatives,  new
approaches to the management  of existing instruments and initiatives already
in progress. 

[1]  COM (94) 659 final, 11.01.1995

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