12 September 1994

Doc. 7138

1403-8/9/94-3-E

OPINION

on the energy/environment interface

(Rapporteur: Mr GJELLEROD,

Denmark, Socialist Group)

1.       The Committee on Science and Technology has prepared a provisional report on the "energy-environment interface" (Doc. 7122 prov.) which, after final approval by that committee on 12 September 1994, will come before the Assembly at its autumn 1994 part-session. The present opinion may have to be updated to take into account any changes finally decided on by the Committee on Science and Technology.

2.       The report provides an excellent overview and analysis of the present European energy situation, and the options open for the future. It devotes considerable attention to the current state of research and development in the energy technology field, and to the prospects for modifying the consumption of energy in desired directions (referred to as the "incentive structure" of energy consumption).

3.       Your Rapporteur agrees with the report when it considers nuclear power a "transition technology" on our way to safer forms of energy, and also supports its belief in the potential to turn coal into a "clean" and competitive source of energy. However, he does not concur in the implicit conclusion that renewable energy resources will at best stand a chance of being of marginal importance. Instead, co-ordinated research and development actions should be strengthened, with the aim of reducing the cost of renewable energy. Here a more balanced approach in the report would have been preferable.

4.       Similar lack of balance is found in the concluding chapter (VII) of the report, where it is stated: "It has to be borne in mind that most natural gas is Russian, and furthermore that clean use of coal is now possible and that it is premature to abandon it as being dirtier than other fuels".

5.       In your Rapporteur's opinion the report has not gone deeply enough into the interesting question of greater imports of Russian natural gas into the rest of Europe. And yet these could help reduce some severe environmental problems in both Russia and Europe as a whole, while at the same time helping the Russian economy.

6.       Enhanced imports of Russian gas to other European countries could ensure that the use of the, environmentally speaking, best fossil fuel is strengthened and secured. At the same time the Russian economy could earn much-needed foreign currency. Additionally, the Russian gas transportation grid could be repaired and improved, permitting (1) the huge and detrimental leaks of methane into the atmosphere to be turned into income for that country, and (2) other European countries to have natural gas replace more polluting fuels.

7.       Indeed, reducing energy waste in this and other sectors is the goal of the "Energy Efficiency Project" launched by the United Nations Economic Commission for Europe in 1991. Involving the whole of the continent through the pan-European membership of the UN-ECE, the project aims to enhance trade and co-operation in energy-efficient technology. Higher energy efficiency in central and eastern Europe in particular, it is hoped, will lead to a better environment, improved living conditions and increased productivity in industry.

8.       The report devotes considerable attention to the transport sector's use of different forms of energy. Generally speaking, it is important that the transport sector should pay the real, or total, cost of the energy it uses. This includes environmental costs. In its Resolution 1023 (1994) on European transport problems (Reply to the 38th and 39th annual reports of the European Conference of Ministers of Transport), the Assembly noted that "the environmental problems caused by road vehicles in particular, will make it necessary to consider ways of checking further expansion of road traffic, to devise more environmentally-friendly and energy-efficient lorries and cars, and to promote a reorientation from road to rail or combined (road/rail) transport". The text goes on to call on ECMT and Council of Europe member states to "introduce gradually co-ordinated solutions to the issue of the taxation of road transport, aiming to have vehicles pay for road costs in a first stage, and for the external costs they engender in a second stage".

9.       Any reduction in energy consumption — except when it is caused by recession — requires political determination at both national and international level. It is particularly hard to muster in times of low energy prices, especially of oil. Indeed, several world summits of the 1970s and early 1980s made urgent pleas for a reduction of energy consumption. Most of these ambitions came to little as, subsequently, oil prices came down to ease the burden on the world economy.

10.       Today's oil prices are more or less on the level, in real dollar terms, with those prevailing before the first oil crisis in 1973. In large measure this is due to the substantial gains in energy efficiency which have been reached over the last twenty years, and also to the fundamental changes in the world economy that have taken place in the same period. It is worth highlighting in this context the important role played by the International Energy Agency (IEA), which was indeed created in the wake of the first oil crisis, in co-ordinating energy policies among OECD member countries, preparing for emergencies and, more recently, assisting the countries of central and eastern Europe.

11.       Conscious efforts to change the price equation in the energy market are urgently needed, more so than general political declarations of good will. Subsidies to promote the greater use of selected sources of energy remain an important means to this end, and are essential for the maturing of alternative technologies. For instance, a "CO₂-tax", discussed at length in the report of the Committee on Science and Technology, could be easily used for subsidies to promote the introduction of promising alternative sources of energy.

12.       The report highlights the considerable progress made recently within the European Union to promote a common strategy, while recognising that it can be "built only around fairly general principles", since the energy consumption in Europe varies considerably from country to country.

13.       The formation of a European Union "internal energy market" is still an issue under debate. In February 1991 the European Commission submitted two draft directives aiming at an internal market for electricity and natural gas. In brief, the proposals called for the introduction of a transparent and non-discriminatory system for granting production and transportation licences in electricity and gas (KOM (91) 548 Final). The Council of Ministers of the European Union, as well as the European Parliament, have since then debated the matter repeatedly. The Council of Ministers emphasised the need to render the electricity and natural gas markets more open and competitive, while preserving the environment and protecting small consumers. It also recalled the considerable differences among European Union member states in the organisation of these markets. The European Parliament for its part stressed the need for a gradual harmonisation of national legislations, and called for the establishment of a supervising body.

14.       As encouraging as all this is, it does, however, raise several questions. Firstly, what will be the effects of such an internal energy market on the ability of governments jointly or individually to exercise a measure of control over the energy sector, in particular for the sake of protecting the environment? Secondly, how will the creation of such a market affect the integration of the energy sector in central and eastern Europe with that in the western half of the continent? The European Energy Charter of 1991 — so far signed by fifty European and non-European states — is a good beginning, but it must be made sure that a European Union internal energy market does not run counter to ambitions to harmonise policies at a pan-European level.

15.       Your Rapporteur strongly supports the report's call for greater use of combined heat and power district systems. These make it possible to supply even remote areas — which are not connected to the main energy network of, say, electricity and gas — with economically produced energy. Their potential is all the greater since recent technological advances permit them to be fuelled with combinations of biomass, waste and natural gas.

16.       Although this may be less obvious, there is an important democratic dimension to energy production systems of this kind. Their creation and management demand a high degree of decentralisation and co-operation both within and among local and regional authorities. In the Rapporteur's own country Denmark, for example, municipalities have had to profoundly "think through" their long-term energy requirements, and have had to work in unison with their neighbours in setting up the combined heat and power installations in question. Decentralised decision-making structures are in this way encouraged, and local democracy becomes real since it has to draw on the efforts of so many. This holds for Europe in general and in particular for its central and eastern parts.

17.       What is the connection between economic growth and energy consumption? The report rightly questions the traditional assumption, which holds that economic growth will inevitably lead to a similar (or greater) percentage increase in energy consumption. However, our societies produce less and less raw materials and manufactures — and more and more services, and lighter and less bulky finished products. As a result and due to the introduction of energy-saving measures, the link between economic growth and energy consumption is becoming weaker and weaker.

18.       Recent research regarding the economic sacrifices that would result from a CO₂ tax suggest that they would be limited, especially if substitution possibilities are available to households and enterprises. This seems indeed to be the case. Moreover, the recycling of the revenues from such a tax to other forms of energy, and toward a reduction of other taxes, will serve to limit any distortions to the economy that might otherwise have occurred.

19.       Turning to the energy situation in central and eastern Europe much has changed for the better, especially in central Europe. However, in eastern Europe, and particularly Russia, massive waste of energy still results from excessively low prices, and from faulty equipment such as leaking pipelines. The report rightly calls for greater co-operation between western and eastern Europe in order to reduce waste, in accordance with the principle that "a barrel of oil saved is a barrel of oil produced". World market prices on energy should be the guiding principle in order to promote the rational use of energy in those countries. At the same time, programmes to neutralise the social consequences of such a policy should be promoted.

20.       Finally, your Rapporteur wishes to mention the potential of geothermal energy sources. This renewable and environment-friendly energy source is rapidly becoming attractive also from a commercial point of view, since it is now possible to extract energy even at low temperatures, using it in combination with various fuels for district heating. The potential is particularly pronounced in large parts of eastern Europe, where projects to exploit it are taking shape.

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      Reporting committee: Committee on Science and Technology (Doc. 7122).

      Committee for opinion: Committee on Economic Affairs and Development.

      References to committee: Doc. 6389 and Reference No. 1957 of 28 June 1994.

      Opinion approved by the committee on 7 September 1994.