European Community (Hansard, 5 March 1979)

§ Mr. Benn

1. The 27 March Council of EEC Energy Ministers is expected to consider the following items:

(1) Further steps necessary to implement the Council Regulations of 12 June 1978 on demonstration projects in the field of energy saving and the exploitation of new energy sources.
(2) Proposed Council Directives on the indication by labelling of the energy consumption of domestic appliances, and applying this to electric ovens.
(3) Commission communication on Community external relations in energy supply.
(4) Proposed Council Regulation to provide Community support for hydrocarbon exploration projects.
(5) Proposals for Community financial support to promote: the use of coal for electricity generation; coal and coke for the iron and steel industry of the Community; intra-Community trade in power station coal.
(6) Proposed Council Decision amending EEC Decision 77/186 exporting of crude oil and petroleum products from one Member 596 State to another in the event of supply difficulties.

2. Other energy topics under consideration in Council Working Groups, and expected to be discussed at later Councils are:

(1) Problems of the refining industry in the Community.
(2) Commission communications on the disposal of radioactive wastes, the reprocessing of irradiated fuels, and the fast breeder option.
(3) Draft framework Directive on the approximation of laws on appliances using gaseous fuels, and draft Directive applying this to instantaneous water heaters.
(4) Proposed Council Decision adopting an energy research and development programme for 1979 to 1983.
(5) Proposed Council Decision adopting a Euratom research programme concerning the decommissioning of nuclear power plants.
(6) Proposed Decision adopting a Euratom research programme on codes and standards for the structural integrity of components of fast breeder reactors.
(7) Proposed Decision adopting a programme of research for Euratom on safety in thermal water reactors.
(8) Proposed Decision adopting a Euratom research programme in the field of controlled thermonuclear fusion and plasma physics.
(9) Proposed Directive on the storage of crude oil and petroleum products.

3. I have also been discussing with the Commission some aspects of the United Kingdom's energy policy:—

(a) BGC's access to natural gas supplies

The Commission has raised the question of BGC's role in natural gas purchasing. I was told in July last year by two Commissioners that the Commission was looking at the question, but, apart from enquiring informally to establish that they knew and correctly understood the relevant legislative provisions, they have not yet pursued it. BGC does not have a monopoly of access to natural gas, licensees being free to re-export it once landed, and free to use the gas themselves for industrial non-fuel purposes or, with my consent, to sell it for such purposes to another company. We see no reason to doubt that BGC's position is compatible with the Treaty of Rome. But any change in present practice enforced on us by the EEC would affect a vital national interest.

(b) Refinery policy

The Commission variously proposed to the Council of Ministers during 1977 and 1978 that there should be a standstill on building new distillation capacity, encouragement to withdraw some capacity from service, and 597W indicative guidelines for the maximum desirable level of increase in operational throughput. However, the Council were not able to agree to such propositions, at the Energy Council on 30 May 1978. The Commission has referred to them since. The Commission continues to make reports to the Council on the refinery situation which the Council is keeping under review.

The Commission has sought clarification of the "full and fair opportunity" policy, which the Government have given, explaining that it is designed to make United Kingdom operators fully aware of the capacity of our offshore supplies industry and to give it a fair chance to compete for business, that there is no preference for United Kingdom suppliers, and that the Memorandum of Understanding governing the Code of Practice which has been agreed with the United Kingdom Offshore Operators Association makes clear that we apply the policy in a manner consistent with our EEC obligations. Discussions with the Commission are continuing.

(d) Landing Requirement

All petroleum production licences for the UK Continental Shelf contain a provision that petroleum won and saved from the licensed area, other than that used at the field, shall be delivered on shore in the United Kingdom unless I give notice of my consent to delivery elsewhere. The Commission has questioned whether this requirement is compatible with the Treaty of Rome which requires that there should be free movement of goods in intra-Community trade, but the Government have pointed out that we see no reason to doubt the compatibility of the requirement with the Treaty. Discussions are continuing with the Commission to see whether we can convince them on this point having regard particularly to the waivers of the landing requirement which we have given and to the appreciable exports of oil which are taking place.

(e) Central Management and Control

The Commission has questioned the provision in United Kingdom petroleum licences which enables me to revoke a licence if a licensee ceases to have its central management and control in the United Kingdom. A licensee is not required to be incorporated in the United Kingdom, but the licence condition effectively requires staff in the company's United Kingdom office to have sufficient authority to take responsible, and, where necessary immediate, decisions on operational matters, for example in emergencies, and to act as a base for the United Kingdom taxation and exchange control. We have explained to the Commission the reasons for this requirement, which contains no discriminatory conditions linked to nationality of the licensee.

(f) Offshore Supplies Interest Relief Grant Scheme

The interest relief grant scheme provides grants of 3 per cent a year for up to eight years on loans raised from authorised banks 598W to finance up to 80 per cent. of the United Kingdom content of contracts placed with United Kingdom firms for goods and services used in the construction and installation of oil and gas production facilities on the UKCS. The Commission has expressed its concern that the scheme may give United Kingdom suppliers an unfair advantage in intra-Community trade. The Government have replied that we consider an effective scheme necessary to counter subsidised competition from suppliers in other countries. The threat of court action against Her Majesty's Government has often been mentioned. We do not believe that the scheme causes distortions in intra-Community trade and we are continuing to discuss the matter with the Commission.

(g) Euratom and Nuclear Policy

The Commission, reinforced by a recent Court decision, has been having discussions with member States on a proposal to activate some dormant provisions of the Euratom Treaty concerned with the supply of nuclear material, which would give it effective control over certain key aspects of our nuclear policy which in the view of Her Majesty's Government must remain with national governments. This would be completely unacceptable.

Another part of the Treaty, which has also remained dormant, gives the Community ownership of all special fissile material in the civil field, although member States retain unlimited rights of consumption and use over it—but not the right to sell it outside the Community without the permission of the Commission.