Transport, Telecommunications and Energy Council (Hansard, 6 January 2004)

§ Mr. Timms

Anne Lambert, Deputy Permanent Representative to the European Union, represented the UK at the EU Energy Council in Brussels on 15 December.

The Council considered several matters of interest to the United Kingdom. Chief among these were the directive on gas security of supply and a proposed directive on energy efficiency standards for energy using products.

The Presidency introduced a short debate on a proposal on eco-design requirements for energy using products, which will set common EU energy efficiency standards for Energy Using Products (EuP), and is intended to make environmental improvements in areas that market forces cannot not handle. Describing it as a framework directive with a flexible approach, which took account of the characteristics of each sector, the Commission said that it wished to use the proposal to encourage industry to agree sectoral voluntary agreements. The Commission commended an integrated rather than thematic or sectoral approach, but rejected the idea of a priority product list as likely to trigger lengthy debates with industry on what should be included or excluded.

Member states broadly welcomed the proposal and its general approach of setting selection criteria but leaving the detailed product selection to a Regulatory Committee, but many saw more clarification on the detail as needed. Most supported an integrated approach and rejected the notion of a priority product list, though some MS asked the Commission to list the kind of products expected to be covered by the instrument. The UK suggested that the Commission develop a consultation strategy to identify the product categories. Others urged that the directive sets out clearly the criteria to be applied to product selection and emphasised the need to assess the impact on competitiveness, in particular the potential adverse impact on SMEs.

230W Following withdrawal of reserves by the UK and others, a general approach was agreed on the Presidency text for the proposed gas security of supply directive which sets minimum European security of supply standards and requires member states to define and publish non-discriminatory and transparent national security of supply policies compatible with the internal market. It establishes a Gas Coordination Group, outlines an approach to dealing with a major supply disruption at Community level, puts in place reporting and monitoring requirements, and provides for Commission intervention in the case of a perceived insufficiency of supplies to meet long-term gas demand. The Commission's agreement to the text, including a legal base of Article 100 EC was subject to a new Recital stating that security of supply obligations should not impede the functioning of the internal market nor impose unreasonable and disproportionate burdens.

The Commission presented a package of proposals on energy security: a Regulation on access to gas network in the internal market which mirrors a similar electricity Regulation adopted earlier this year as part of the internal market package; a directive on security of electricity supply and infrastructure investment, mirroring the gas measures agreed earlier; and a directive on energy end-use efficiency and energy services, which sets an energy efficiency savings target.

In lunchtime discussion on security of supply, the Commission argued that the need for action was underlined by forecasts showing the EU's need for 700 MW of extra weekly capacity by 2012 and given the 6–7 year time lag needed for building new capacity. The UK and most other member states argued against market intervention, stating that Governments and regulators were not responsible for investment in capacity or networks, and that the key need was for a stable investment framework. Drawing attention to our domestic evidence of the market working and sending investment signals, the UK emphasised that the Directive should not interfere with effective liberalisation and that we would not support any measures to control prices. Some member states supported the Commission's ideas, arguing the need for reinforced co-operation between transmission operators and regulators and for further reflection on the cause of recent price increases, which some consumers blamed on liberalisation, and for new impetus on interconnection.

In a short exchange on cost of compliance with the Kyoto Protocol, the Commission argued that the EU needs to embrace technology to combat climate change and for all options to be explored including nuclear. The Commission also said there was a need for the EU and its MS to re-assess the EU position in the light of Russia's failure to ratify the Kyoto Treaty.

Council Conclusions on Energy in a Wider Europe were adopted.

The Presidency, with Greece and the Commission, reported on the Euro-Med Ministerial conference in Rome on 1-2 December. With 38 participating countries, involving industry participation from the oil, gas and electricity sectors and with the objective of implementing the conclusions of the Athens ministerial in May 2003, the event had been a success.

231W The Commission briefed on the Energy Charter Treaty, the EU/Russia dialogue and relations with South East Europe. On the Energy Charter, given that Russia had not yet ratified and was still creating difficulties over the transit protocol, the Commission said that the EU and others needed to consider how to take things forward. In contrast, the Commission argued, progress had been made in the EU/Russia dialogue, e.g. investment increases in Russia by EU companies, and resolution of the problem of destination clauses (which prevent on-selling of Russian gas by the initial importing MS). The Commission defended itself against accusations of lack of transparency in the EU/Russia energy dialogue.

In a presentation on the International Partnership for Hydrogen, the Commission saw hydrogen as important as an environmentally friendly energy source and with transport potential, and urged international cooperation as essential in order to achieve the technological breakthrough needed to take forward its development.

Reporting on the joint informal Environment and Energy Council held at Montecatini in July 2003, the Presidency pointed to its success as a forum for bringing together environmental, energy, economic, market and other related topics as having been confirmed by the recent COP9 conclusions. Finally, Greece gave a report on the Ministerial Conference on the South-East European energy market in Athens on 8 December. An MoU had been agreed covering gas and electricity, to which the EU was a signatory.