REPORT on possible solutions to the challenges in relation to oil supply

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

EXPLANATORY STATEMENT

OPINION of the Committee on Foreign Affairs (20.1.2009)

OPINION of the Committee on Economic and Monetary Affairs (12.12.2008)

OPINION of the Committee on the Internal Market and Consumer Protection (16.12.2008)

RESULT OF FINAL VOTE IN COMMITTEE

28.1.2009 - (2008/2212(INI))

Committee on Industry, Research and Energy
Rapporteur: Herbert Reul

Procedure : 2008/2212(INI)

Document stages in plenary

Document selected :

A6-0035/2009

Texts tabled :

A6-0035/2009

Debates :

PV 09/03/2009 - 26
CRE 09/03/2009 - 26

Votes :

PV 11/03/2009 - 5.18
Explanations of votes
Explanations of votes

Texts adopted :

P6_TA(2009)0118

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
EXPLANATORY STATEMENT
OPINION of the Committee on Foreign Affairs
OPINION of the Committee on Economic and Monetary Affairs
OPINION of the Committee on the Internal Market and Consumer Protection
RESULT OF FINAL VOTE IN COMMITTEE

on possible solutions to the challenges in relation to oil supply

(2008/2212(INI))

The European Parliament,

– having regard to the communication from the Commission ‘An energy policy for Europe’ (COM(2007)0001),

– having regard to the communication from the Commission of 13 June 2008 ‘Facing the challenge of higher oil prices’ (COM(2008)0384),

– having regard to Council Directive 73/238/EEC of 24 July 1973 on measures to mitigate the effects of difficulties in the supply of crude oil and petroleum products[1],

– having regard to Council Decision 77/706/EEC of 7 November 1977 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[2],

– having regard to Council Directive 2006/67/EC of 24 July 2006 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products[3],

– having regard to the Commission proposal of 5 November 2008 for a new directive imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products (COM(2008)0775),

– having regard to the communication from the Commission of 13 November 2008 on the second strategic energy review: an EU energy security and solidarity action plan (COM(2008)0776),

– having regard to the Green Paper of 12 November 2008 ‘Towards a secure, sustainable and competitive European energy network’,

– having regard to its resolution of 15 February 2007 on the macro-economic impact of the increase in the price of energy[4],

– having regard to its resolution of 29 September 2005 on oil dependency[5],

– having regard to its resolution of 19 June 2008 on the crisis in the fisheries sector caused by rising fuel prices[6],

– having regard to the Presidency Conclusions on security of energy supply at the European Council meeting of 15 and 16 October 2008,

– having regard to the Presidency Conclusions on the policy implications of high food and oil prices at the European Council meeting of 19 and 20 June 2008,

– having regard to the World Energy Outlook 2008 of the International Energy Agency (IEA) of 12 November 2008,

– having regard to exploratory opinion TEN/368 of the European Economic and Social Committee on possible solutions to the challenges in relation to oil supply,

– having regard to Rule 45 of its Rules of Procedure,

– having regard to the report of the Committee on Industry, Research and Energy and the opinions of the Committee on Foreign Affairs, the Committee on Economic and Monetary Affairs and the Committee on the Internal Market and Consumer Protection (A6‑0035/2009),

A. whereas increasing attention will have to be paid at European level to the diversification of energy supply routes and sources, energy savings and energy efficiency in order to guarantee the security of energy supply in the coming decades,

B. whereas it is becoming ever more urgent to develop a coherent and comprehensive Community energy policy in order to ensure security of supply at a time when the European Union is becoming increasingly dependent on imports,

C. whereas oil is a finite resource,

D. whereas oil production by the European Union and Norway still made a contribution towards meeting domestic demand of more than 30% in 2007,

E. whereas many oil resources, some of them easily extractable, are currently not made fully accessible in many countries of the world owing to environmental measures or in the context of resource management and the costs of oil extraction have doubled since 2005 owing to the general rise in the cost of raw materials and equipment,

F. whereas according to calculations by the US Energy Information Administration worldwide demand for oil will be more than a third higher in 2030 than it was in 2006 and demand in the European Union will rise by an average of 0.25% per year between 2005 and 2030, chiefly due to increased demand in the transport sector, which means that oil’s share of primary energy demand in the European Union in 2030 will stand at 35%,

G. whereas the European Union’s dependence on oil imports will rise to 95% by 2030, whilst at the same time conventional oil reserves will be increasingly concentrated in the countries in the strategic ellipse and growing competition in demand could create uncertainties in supply,

H. whereas rising oil prices are to be expected in the long term,

I. whereas the rise of inflation, triggered by hikes in the price of oil and basic commodities has provoked an erosion of purchasing power,

J. whereas the price fluctuations in 2008 cannot be attributed solely to supply and demand at that particular point in time and are having negative effects on the economy,

K. whereas the development of new investment vehicles on the market for oil and other basic commodities has amplified the price volatility of those commodities; and whereas there is a need to ensure greater transparency on the energy markets,

1. Notes the fact that the aspect of supply security has again been placed at the centre of attention in the second energy strategy review; regrets, however, that the Commission has not learnt lessons from the economic crisis, which has shown that only a complete shift in EU energy policy will lead to a solution as regards security of supply, solidarity among Member States and employment, and in social, environmental and economic terms; regrets further the lack to date of a clear commitment to further change in energy policy and structure;

2. Stresses that, in addition to short-term measures to secure supply, account should also be taken of the long-term outlook;

3. Calls on the Commission to focus more on analysing the indirect as well as the direct impact of proposed measures on security of supply and costs when preparing legislative proposals;

Exploitation of existing resources

4. Notes that, according to various estimates, it will still be possible to extract sufficient oil to meet demand in the coming decades, even though consumers may have to pay higher prices for it; notes also that the conditions of investment must be improved, and stresses further in this regard that the sustained demand for oil has increasingly pushed supply to capacity limits;

5. Points to the uncertainty surrounding the question of when and to what extent a gap will develop between mounting demand and falling supply; is concerned that this uncertainty will increasingly be reflected in growing oil price volatility; is therefore convinced that all measures that could reduce demand for fossil energy sources should be vigorously pursued;

6. Supports the Commission’s proposal for the short-term measures to be taken if necessary to mitigate future oil price spikes; calls on Member States to provide financial support for investments in alternative energy sources such as renewable energy, and to prioritise consumer awareness measures promoting the purchase of energy-efficient goods and services in order to minimise long-term expense as well as to mitigate a future decrease in oil supply;

7. Calls for an intensification of efforts to make unconventional oil resources commercially viable, in order also to contribute to diversification in this way; calls at the same time for environmentally friendly extraction processes to be developed; stresses that a life-cycle approach concerning greenhouse gas emissions of fuels placed on the EU market, as introduced in the proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions from the use of road transport fuels and amending Council Directive 1999/32/EC as regards the specifications of fuels used by inland waterway vessels and repealing Directive 93/12/EEC, will provide a real incentive for the oil industry to reduce its climate impacts by improving its production processes;

8. Believes that the use of oil and other carbon-intensive energy sources should be reduced, both through increased energy efficiency and by a shift to more carbon-neutral solutions, such as nuclear energy and energy derived from renewable sources;

9. Takes the view that the extraction of existing resources is increasingly being hampered by political factors, including political instability, insufficient legal protection, but also environmental measures and resource management; calls, therefore, on the Commission to step up the dialogue with producing countries at all levels and to seek pragmatic solutions to disputes in the interests of both parties;

10. Points to the importance of the Arctic region as an oil-producing area, which is thought to contain up to a quarter of undiscovered reserves worldwide;

11. Emphasises the role of the Arctic in the formulation of the Energy Policy for Europe and in relation to climate change and sustainable development, as proposed by the March 2007 European Council; notes the importance of an equitable distribution of hydrocarbon resources in the Arctic, in accordance with international law, in the interests of overall international stability; calls on the Commission to pay specific attention to hydrocarbons in its abovementioned Communication on strategic issues related to the Arctic;

12. Calls on the Commission, in dialogue with the oil companies and producer countries, to seek ways in which steady investment can be secured despite fluctuating prices and profits;

13. Expects the petroleum companies to reinvest their substantial recent profits in exploration and development of new oil reserves and in promoting energy saving technology and research into oil substitutes (notably for transport applications);

14. Urges a more dynamic relationship between the European Union and the oil-producing countries involving a willingness to give as well as take on both sides and aiming towards a more stable and smoothed supply and pricing environment for oil, which would be in the interests of all parties concerned and the world economy at large;

15. Welcomes the Commission’s initiative to have a global political dialogue in the form of a high-level summit between oil-consuming and oil-producing countries in order to establish a fair balance between supply and demand on the oil market and to prevent oil-producing countries from maintaining oil prices at artificially high levels;

Market transparency and pricing

16. Is concerned at the increasing oil price volatility, which was a striking feature in 2008 and has a negative effect on the whole European Union economy and its consumers;

17. Takes the view that fluctuations in the price of oil reflect an increased demand for oil, progressive depletion of oil reserves, changes in demographic and urbanisation trends, especially in emerging economies, where the rise in average income is causing an increase in demand, speculation on the commodity markets and global economic cycles; stresses also that oil and other commodities have been increasingly used for portfolio diversification as a result of the depreciation of the US dollar;

18. Expresses its concern at the volatility of oil prices and its impact on economic and financial stability; while recognising the benefits of active markets in oil and other energy products, urges the Commission and the Member States to ensure the highest practicable level of transparency in energy markets;

19. Recognises that the economies of oil exporters are also damaged by such volatility and a stabilisation of oil prices is therefore in the interest of both sides;

20. Welcomes the Commission’s Communication and echoes its concern over the recent oil price volatility and the negative effects thereof on inflation, competitiveness, trade and economic growth;

21. Considers that the main reason for the oil price rise in the past eight years lies with a strong growth in demand that has led to bottlenecks in the extraction, transport and refining of oil and to large windfall profits made by a few big oil oligopolies; recognises that the marked rise in prices for raw materials and speculative transactions on the financial markets have heightened the trend in oil prices;

22. Highlights the need to prioritise the monitoring of competition in the processing and sale of oil and petroleum products and to increase the transparency of data on commercial oil stocks;

23. Considers it vital to improve market transparency in order to stabilise oil prices; calls on the Commission to submit corresponding proposals to Parliament and the Council; points out that transparency must urgently be increased in the producer countries as well, and volumes of production and the level of reserves in particular must also be published in a transparent way; calls on the Commission and Member States to work towards greater transparency within the framework of their dialogues with producer countries;

24. Welcomes, in this context, the proposal for a study on the usefulness and cost of a weekly publication of the level of oil stocks put forward in the second strategic energy review; calls on the Commission to incorporate the results of the study in its future legislative measures; stresses at the same time that transparency must be achieved worldwide;

25. Points out that differing technical specifications for oil products in the main importing countries lead to market fragmentation that may play a key part in pushing up prices in the event of supply shortages; calls on the Commission to submit proposals outlining ways in which such constraints on market access can be removed;

26. Takes the view that the function of strategic reserves is to respond to physical bottlenecks arising from supply shortages; for this reason and for reasons of sustainable budgetary policy, rejects all attempts to counter oil price volatility by using these reserves;

27. Stresses the importance of actively working to make new alternative energy accessible to small businesses in order to make them less dependent on oil price fluctuations; recognises the importance of SMEs in the production of biofuels and other forms of renewable energy; is concerned about the technical and regulatory barriers which still exist in the production and commercialisation of those products and calls upon the Commission to work towards facilitating market access for those fuels;

28. Stresses that an effective emissions trading system and the adoption of a wide range of other energy saving measures should be important tools for stimulating the development of a wide-ranging, cutting-edge market for energy-efficient technologies and products; also underlines the importance of the application of the ‘polluter-pays’ principle; recalls that the greater the number of countries that put similar policies in place, the more limited their impact on the sectoral competitiveness of those policies;

Investments in oil extraction and processing

29. Notes that, according to the IEA, annual investments amounting to US$ 350 billion are necessary in the oil industry by 2020 in order to guarantee security of supply; calls on the Commission and the Member States to provide incentives for investment in their corresponding policies, also and in particular within the European Union; highlights the role of long-term investment security in this connection; rejects, however, the notion of public money being substituted for private investments and capital;

30. Is concerned at the effects of the current credit crisis on investment possibilities in the oil industry and calls on the Commission and Member States closely to coordinate their efforts to overcome the crisis;

31. Welcomes the contribution that could be made by the increased use of biofuels in the transport sector, particularly in increasing security of supply; notes that this will lead to consolidation and restructuring in the oil-processing industry; notes further that structural measures must also be taken in the transport sector in order to minimise the demand for oil;

32. Calls on the Member States and operators despite these developments to ensure that sufficient reserve capacities remain available in the European Union to offset bottlenecks arising from natural disasters, for example;

33. Calls on the Member States, the Commission and oil companies to ensure adequate training for the specialists who are required for research into oil reserves and for oil production;

Transport routes

34. Welcomes the results achieved within the framework of the Inogate Programme, particularly in the field of confidence-building measures; calls on the Commission to draw up a strategy outlining how such projects can be supported through flanking measures and how coordination can be improved;

35. Points to the crucial importance of good neighbourly relations among transit states and between them and their neighbouring countries and urges the Member States and the Commission to step up their efforts in this connection;

36. Notes that oil pipelines have been excluded from the trans-European energy networks and calls on the Member States and the Commission to consider including oil infrastructure in the TEN-E in view of current developments, in particular falling domestic production and the simultaneous rise in dependence on imports and the need for new transport capacities;

37. Calls on the Commission and Member States to work towards stabilisation, in particular in producer countries threatened by political instability, within the framework of the common foreign, trade and security policy, since stability provides the basis for investment and prosperity;

38. Emphasises that new oil infrastructure projects such as the Odessa-Gdansk and Constanța-Trieste pipelines should continue to be high-priority projects of European interest;

39. Is concerned at the growing piracy that threatens international shipping and hence oil transport, and welcomes the Council’s Joint Action adopted on 10 November 2008 with a view to implementing an operation off the Horn of Africa to protect shipping against acts of piracy (Operation Atalanta);

40. Is also concerned at the threat to transport routes and strategic infrastructure posed by terrorism and calls on the Commission and Member States to step up the dialogue with key players;

Transport and buildings

41. Points to the potential for energy savings in the buildings sector, which could reduce demand for fossil energy sources such as oil and gas, and welcomes the efforts currently being made by the Commission and the Member States to make even better use of this potential;

42. Welcomes the European Union’s efforts to diversify energy sources in the transport sector; favours market-based approaches to the introduction of new technologies; recognises that price represents the best indicator for the competitiveness of new technologies; views as regrettable, however, the unambitious approach to exploiting the potential of energy-efficient, better-built, lighter vehicles;

43. Expresses doubts regarding the medium- and long-term suitability of first-generation biofuels as a substitute for oil; calls for increased efforts in researching synthetic fuels;

44. Is convinced that in the medium and long term the growth in oil consumption in the transport sector can be reduced only if the European Union and Member States take additional measures to shift transport and mobility towards more sustainable modes that consume little or no oil, such as rail, waterborne transport and intermodal mobility chains in urban areas (walking, cycling, public transport, vehicle sharing); is convinced, also, that considerable energy savings can be achieved through the more efficient use of modern traffic management systems to reduce delays and circuitous routes in road and air transport and shipping, and by intensifying efforts to promote green logistics;

Relations with countries with rising oil consumption

45. Urges the EU and the Member States to take steps to secure a binding, progressive and all-encompassing Treaty basis for a common European energy supply and security; underlines in this respect the vital importance of a coherent strategy as regards the EU’s main external suppliers; supports the Lisbon Treaty as a step in the right direction, containing as it does an energy solidarity clause and making energy policy a shared responsibility between the EU and the Member States; points out that the EU’s heavy dependency on fossil fuels may undermine the coherence and effectiveness of its common foreign and security policy;

46. Takes the view that increased account must be taken of energy-policy matters in the Union’s common external relations with countries whose energy consumption is rising sharply, and that the European Union must work towards cutting state subsidies for oil products;

47. Calls on the Commission to include measures in its common foreign, trade and neighbourhood policy that can contribute towards progress being made worldwide in removing the link between economic growth and oil consumption;

48. Points out, in particular, that the geopolitical impact of the changes in global conditions for international energy security and the consequences for future international governance policy have not yet been adequately considered and debated by the EU; takes the view that a continued reliance on national solutions must give way to new and close forms of political and economic cooperation between the EU, the US, Russia and China, which must also be given institutional form in the medium term;

49. Instructs its President to forward this resolution to the Council and Commission.

[1] OJ L 228, 16.8.1973, p. 1.
[2] OJ L 292, 16.11.1977, p. 9.
[3] OJ L 217, 8.8.2006, p. 8.
[4] Texts adopted, P6_TA(2007)0054.
[5] OJ C 227 E, 21.9.2006, p. 523.
[6] P6_TA(2008)0308.

Oil currently has a share of almost 37% of gross energy consumption in the European Union. This means that oil is by far the main source of primary energy, ahead of natural gas, solid fuels and nuclear energy. The Commission assumes that demand for oil in the EU will continue to rise until 2030, albeit only by 0.25% per year. Nevertheless, oil will remain the main source of primary energy in the EU in 2030, with a share of around 35% of gross energy consumption.

Whilst demand in the EU will rise only slowly, a much steeper rise in demand is to be expected worldwide. The US Energy Information Administration estimates that demand in 2030 will be more than a third higher than the 2006 level. Given that supply and refinery capacities are currently unable to keep pace with the rise in demand, the market situation will remain tense for the foreseeable future. However, the long-term oil price rise anticipated by the IEA in its most recent report will at the same time have the effect of slowing down the rise in demand.

The end of the age of oil has already been predicted on many occasions. Reference is repeatedly made to the concept of ‘peak oil’ in this context. It must be borne in mind that more reserves are available now than ever before. Even though oil is a finite resource, past developments show that no one can accurately predict when a cut in production caused by the natural depletion of resources will occur and whether this will happen gradually, abruptly or with intermediate peaks.

Constraints on extraction arise partly for geological and technological reasons. However, most obstacles to the expansion of production are to be found above ground - political instability in some countries, sanctions, insufficient legal protection, environmental measures and targeted resource management restrict production potential.

Despite this tense market situation, it must not be forgotten that, at 1200 billion barrels, oil reserves are now around twice as high as in 1980. By contrast, demand has only risen from almost 62 million barrels per day to around 85 million barrels per day over the same period. On this basis, the calculation for the ‘life’ of reserves gives a figure of 41.6 years, which is longer than that forecast in 1980.

At the same time, it must be recognised that the concept of reserves is dynamic: it depends not only on new discoveries but also and quite decisively on technological innovations and the oil price, since reserves denote the economically exploitable portion of resources. Total oil resources are sufficient for several centuries, and it is only the volume of easily extracted oil that has not risen as strongly in recent years as had previously been the case.

A further factor is the growing concentration of easily extractable reserves in a small number of countries in the ‘strategic ellipse’. This is clearly demonstrated by the ratio between production and the level of reserves. It should also be borne in mind, however, that this ratio can never be more than a snapshot. New discoveries in other parts of the world, for example in the Arctic or off the coast of Greenland, or technological progress that would allow the economic extraction of non-conventional reserves, would alter the ratio in favour of other regions - if only to a limited extent.

At the same time, extraction within the EU is declining. Even though Norway and the EU Member States currently still cover around 30% of demand themselves, as things stand production must be expected to decline significantly by 2030. The consequence is that the EU’s dependence on imports will reach around 95% in the coming decades, according to the Commission’s data.

These factors must be reflected in energy policy. On the one hand, short-term response mechanisms are required, which the EU has had at its disposal since the end of the 1960s in the form of strategic reserves of oil and oil products. The revision of the corresponding directive that has now been proposed by the Commission will be critically scrutinised in the European Parliament.

On the other hand, security of supply can be guaranteed in the long term only if corresponding plans are made. The time frame for investments in infrastructure frequently runs to 40 years or more. It is by no means easy to think on such a scale. However, strategic plans of this nature must also be produced at European level. The crucial challenge will perhaps be to increase supply and at the same time significantly to reduce the growth in demand. This report supports this realisation.

Three elements are of strategic importance to boosting supply: first of all, according to the IEA, over $ 350 billion per year must be invested worldwide in the coming decades in the development of new oil wells and expansion of infrastructure (pipelines, ships, ports, refineries, etc.). This will be possible only if undertakings are guaranteed security for their investments both within and outside the EU. This also includes the possibility of obtaining an adequate return on investment.

The key instrument for safeguarding supply is the diversification of sources. Non-conventional sources of oil such as oil shale or oil sands and extra-heavy oil also offer great advantages from the point of view of security of supplies, since they are distributed among a large number of countries.

Secondly, research must be intensified at the same time. The use of new materials, for example, can significantly reduce operating costs or make less environmentally damaging drilling possible. New extraction techniques will lead to an increase in reserves to a much greater extent in the future than is currently the case. Around 80% of non-conventional resources are to be found in oil shale. This potential needs to be unlocked both economically and ecologically. Training engineers and fostering cooperation between industry and research bodies will therefore remain a significant area of action in the future.

Thirdly, several geopolitical conflicts need to be resolved in the coming years. Iraq is now slowly beginning to produce oil in larger quantities following the stabilisation of the security situation. Iran possesses huge reserves, but for political reasons they can currently make only a very small contribution to easing the tension on the oil markets.

The recent conflict between Georgia and Russia and the growing number of attacks by pirates on tankers in recent months have highlighted how vulnerable transport routes can be. Bearing in mind that terrorists could also have an interest in hijacking a VLCC, the urgent need for a response from the international community becomes even clearer.

The fact that guaranteeing the security of supply must start long before the EU’s borders is illustrated by the political unrest in the Nigerian oil-producing areas, for example. In the face of these challenges, closer coordination in EU foreign policy is urgently necessary.

The Member States have already achieved a great deal of progress on the demand side. The share of oil-fired heating in the EU stands at around 20%. Particularly in response to the two oil crises, many heating systems have already been replaced by efficient modern systems. The recent record highs in the oil price, often backed up by national support programmes and improved insulation, have also led to a further ‘efficiency wave’. Overall, consumption in this area has dropped since the 1980s.

Support for biofuels was also identified as a means of curbing the growth in demand for oil. This would make it possible to reduce imports of diesel in particular. However, it must be borne in mind in this connection that the current efforts to bring about a clear increase in the share of biofuels in road transport by up to 20% will also lead to restructuring and job losses in the undertakings affected.

At the Spring Summit in March 2007 the EU Heads of State and Government set the target of achieving a 20% improvement in energy efficiency by 2020. Thanks to the proposed legislation, currently at the planning stage, the EU is moving in the right direction. Nevertheless, market economy instruments should be given priority over rigid rules on percentages or consumption if we are to avoid becoming a planned economy. Moreover, efficiency must not take precedence over safety aspects, for example in the case of the rolling resistance of tyres.

The transport sector shows the largest increase in demand, despite the efficiency improvements made. The reasons are to be found in the fundamental importance of mobility for the economy as a whole and the widespread desire for individual mobility among the public. There has also been a significant expansion in air transport in recent years, both in the EU and worldwide.

Given the transport sector’s high degree of dependence, a new component needs to be introduced alongside the classical diversification of sources of supply: the diversification of engine technologies, including initiatives linked to electric vehicles. The potential in the coming decades is vast, particularly in urban transport. Corresponding programmes to promote research should also be intensified, such as cooperation between manufacturers and research bodies. Heat production can serve as a model: natural gas heating systems are available alongside oil-fired or electric heating systems, and the use of district heating, ground-source heating and pellets is also rising in the EU.

However, action to steer demand must not be restricted to the EU. The EU’s percentage share in worldwide oil consumption will continue to fall in the coming years. This is already determined by the strong increase in demand outside the EU. It will therefore be crucial for the EU’s security of supply to curb the growth in demand at world level as well, without jeopardising the growth targets of either third countries or the EU itself. An important aspect here is the promotion of market economy pricing mechanisms in third countries - for example through the abolition of state fuel subsidies.

All these measures require investments. Investments are possible only if sufficient capital is made available, and a return is to be expected. In this light, the current credit crisis - that is threatening to spread into an economic crisis - needs to be overcome as quickly as possible. At the same time the question arises as to whether the state should collect additional billions of euros each year from consumers thanks to climate policy instruments, or whether the money should not remain with those who are required to make the necessary investments.

The challenges for the EU’s future oil supply security have grown over the past decade. However, they can be tackled with targeted supply and demand side intervention, provided that we can mobilise the political will, international coordination and cooperation, and the power to innovate.

for the Committee on Industry, Research and Energy

on facing oil challenges
(2008/2212(INI))

Rapporteur: Justas Vincas Paleckis

SUGGESTIONS

The Committee on Foreign Affairs calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1. Welcomes the Commission’s communications entitled “Facing the challenge of higher oil prices”[1] and “Second Strategic Energy Review – an EU Energy Security and Solidarity Action Plan”[2]; points out that, despite the drop in oil prices in the second half of 2008 as a result of the global financial crisis, the slow progress in switching to more sustainable fuels, declining output from the world’s oilfields and the continuing growth in demand, primarily driven by the emerging economies, inevitably mean a return, once the international crisis is over, to the tightening of the fossil fuel markets and increasing import dependency for the consuming countries;

2. Urges the EU and the Member States to take steps to secure a binding, progressive and all-encompassing Treaty basis for a common European energy supply and security; underlines in this respect the vital importance of a coherent strategy vis-à-vis the EU’s main external suppliers; supports the Lisbon Treaty, which contains an energy solidarity clause and makes energy policy a shared responsibility between the EU and the Member States, as a step in the right direction; points out that the heavy dependency of the EU on fossil fuels may undermine the coherence and effectiveness of its common foreign and security policy;

3. Points out that, in particular, the geopolitical impact of the changes in global conditions for international energy security and the consequences for future international governance policy have not yet been adequately considered and debated by the EU; considers that a continued reliance on national solutions must give way to new and close forms of political and economic cooperation between the EU, the US, Russia and China, which must also be given institutional form in the medium term;

4. Notes with concern energy nationalism among the key energy players and increasingly politicised energy relations between the oil exporting and importing countries, including a higher risk of tensions and conflicts; strongly supports the Commission’s proposal that the EU should engage in close dialogue with key oil suppliers such as Norway, OPEC and Russia, with a view to reinforcing energy interdependence and energy security for the whole of the EU, with a particular focus on greater efficiency, equal market access, non-discrimination and transparency; commends the Commission on its work on intensifying energy dialogues, resulting in particular in a number of memoranda of understanding with the eastern neighbours and Central Asian countries, and looks forward to more progress with southern partners; stresses that energy dialogues should in no way take place at the expense of frank and results-oriented dialogues on human rights; is disappointed by the lack of active and transparent monitoring of the energy sector, especially the oil and gas sectors, as regards competition in processing, production and sale and research activities; requests the Commission to present proposals embodying a more cohesive and comprehensive strategy in this regard and embracing a successful foreign energy policy;

5. Despite the welcome fall in oil prices, and in view of the cyclic behaviour of prices, expects that prices will rise again once the present economic crisis is over; therefore reiterates the importance of greater diversification of the EU’s energy sources and supply routes, in order to mitigate the effects of a possible future oil crunch, while recognising the diversity of situations in which various Member States find themselves when it comes to energy mix, import dependency and infrastructure availability, particularly for “energy islands” in the EU; supports a greater use of sustainable biofuels and acknowledges the importance of renewable energy sources in order to improve energy security; notes that non-conventional oil is expected to play an important role in counterbalancing the decline in production from existing fields; underlines that new oil infrastructure projects such as the Odessa-Gdansk and Constanța-Trieste pipelines should continue to be high-priority projects of European interest;

6. Emphasises that, by reducing dependency on fossil fuels, the EU would not only ensure its energy security but would also contribute to dealing with the challenges posed by climate change; underlines the importance of increased funding for research into, and the development of, newer and greener technologies;

7. Considers that the rising macroeconomic costs of energy consumption and environmental pollution also have substantial negative impacts on the functioning of the European social model, because Europe’s dependency on oil and gas imports means that the overall cost of fossil fuels in the distributional conflict with emerging markets in Asia as well as the US will increase dramatically, and this growing expenditure on energy consumption will necessarily shrink the proportion of financing available to fund our social model; for that reason, not least, regards the promotion of renewable energies as an opportunity to create many permanent jobs for skilled workers;

8. Emphasises the role of the Arctic in the formulation of the Energy Policy for Europe and in relation to climate change and sustainable development, as proposed by the March 2007 European Council; notes the importance of an equitable distribution of hydrocarbon resources in the Arctic, in accordance with international law, for the sake of overall international stability; calls on the Commission to pay specific attention to hydrocarbons in its Communication on strategic issues related to the Arctic.

RESULT OF FINAL VOTE IN COMMITTEE

[1] COM(2008)0384.
[2] SEC(2008)2794 and SEC(2008)2795.

for the Committee on Industry, Research and Energy

on Facing oil challenges
(2008/2212(INI))

Rapporteur: Pervenche Berès

SUGGESTIONS

The Committee on Economic and Monetary Affairs calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

A. whereas the price of oil increased from less than USD 50 per barrel in early 2000, to more than USD 140 in August 2008, and then sharply fell to less than USD 60 dollars per barrel,

B. whereas the higher prices of oil and other basic commodities have raised the costs of production and put upward pressure on overall prices, because of the strong links across commodities,

C. whereas the rise of inflation, triggered by hikes in the price of oil and basic commodities has provoked an erosion of purchasing power,

D. whereas the development of new investment vehicles on the market for oil and other basic commodities, has amplified the price volatility of those commodities; and whereas there is a need to ensure greater transparency on the energy markets,

1. Takes the view that fluctuations in the price of oil reflects an increased demand for oil, progressive depletion of the oil reserves, changes in demographic and urbanisation trends, especially in emerging economies, where the rise in average income is causing an increase in demand, speculation on the commodity markets and global economic cycles; stresses also that oil and other commodities have been increasingly used for portfolio diversification as a result of the depreciation of the US dollar;

2. Expresses its concern about the volatility of oil prices and its impact on economic and financial stability; while recognising the benefits of active markets in oil and other energy products, urges the Commission and the Member States to ensure the highest practicable level of transparency in energy markets;

3. Believes that the use of oil and other carbon-intensive energy sources should be reduced, both through increased energy efficiency and by a shift to more carbon-neutral solutions, such as nuclear energy and energy derived from renewable sources;

4. Stresses that sustained demand for oil has increasingly pushed supply up against capacity limits; urges for an improvement of data transparency in regard to energy statistics, especially in respect with oil stock levels;

5. Points out that the European Union will have to face even more the challenge of lasting high and volatile oil prices and the economic impacts connected to them, considering that newly-discovered resources have tended to be smaller and more expensive to develop, being increasingly offshore, and that the costs of exploration, development and production will become higher, making it more urgent to switch to alternative and renewable energy sources and to develop energy-saving technologies;

6. Urges the Commission and the Member States to review seriously not only the environmental but also the economic and security aspects of a dependency on energy from non-renewable sources;

7. Stresses that an effective emissions trading system and the adoption of a wide range of other energy saving measures should be important tools for stimulating the development of a wide-ranging, cutting-edge market for energy-efficient technologies and products; also underlines the importance of the application of the ‘polluter-pays’ principle; recalls that the greater the number of countries that put similar policies in place, the more limited the impact on sectoral competitiveness of those policies;

8. Urges a more dynamic relationship between the European Union and the oil-producing countries involving a willingness to give as well as take on both sides and aiming towards a more stable and smoothed supply and pricing environment for oil, which would be in the interests of all parties concerned and the world economy at large;

9. Expects the petroleum companies to reinvest their substantial recent profits in exploration and development of new oil reserves and in promoting energy saving technology and research into oil substitutes (notably for transport applications).

RESULT OF FINAL VOTE IN COMMITTEE

for the Committee on Industry, Research and Energy

on facing oil challenges
(2008/2212(INI))

Rapporteur: Colm Burke

SUGGESTIONS

The Committee on the Internal Market and Consumer Protection calls on the Committee on Industry, Research and Energy, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1. Welcomes the Commission’s Communication and echoes its concern over the recent oil price volatility and the negative effects thereof on inflation, competitiveness, trade and economic growth;

2. Recognises demand growth as a cause of the recent oil price volatility; laments the continuing use of subsidies in third countries because of their negative long-term effects on public finances and consumers;

3. Emphasises that limited capacity for the expansion of new supplies and extraneous factors such as the weak dollar and the turmoil in financial markets have also contributed to oil price volatility;

4. Supports the Commission’s proposal for the short-term measures to be taken if necessary to mitigate future oil price spikes; calls on Member States to provide financial support for investments in alternative energy sources such as renewable energy, and to prioritise consumer awareness measures promoting the purchase of energy-efficient goods and services in order to minimise long-term expense as well as to mitigate a future decrease in oil supply;

5. Welcomes the Commission’s initiative to have a global political dialogue in the form of a high-level summit between oil-consuming and oil-producing countries in order to establish a fair balance between supply and demand on the oil market and to prevent oil-producing countries from maintaining oil prices at artificially high levels;

6. Highlights the need to prioritise the monitoring of competition in the processing and sale of oil and petroleum products and to increase the transparency of data on commercial oil stocks;

7. Welcomes the Commission’s intention to focus on emergency oil stocks in its second strategic energy review; is of the opinion that emergency oil stocks should serve as a buffer against short-term prices shocks and could therefore serve to limit price volatility, thereby increasing predictability for consumers;

8. Points out that oil undertakings should be allowed to reinvest profits in exploration, extraction and new technologies, which should be the most effective method for lowering prices in the medium to long term;

9. Stresses that market measures and political action should be used in a complementary way in order to address oil price volatility efficiently.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

Result of final vote

+:

–:

0:

Members present for the final vote

Vittorio Agnoletto, Angelika Beer, Monika Beňová, Giorgos Dimitrakopoulos, Michael Gahler, Jas Gawronski, Alfred Gomolka, Klaus Hänsch, Richard Howitt, Ioannis Kasoulides, Maria Eleni Koppa, Helmut Kuhne, Vytautas Landsbergis, Johannes Lebech, Francisco José Millán Mon, Philippe Morillon, Baroness Nicholson of Winterbourne, Raimon Obiols i Germà, Vural Öger, Janusz Onyszkiewicz, Justas Vincas Paleckis, Ioan Mircea Paşcu, Alojz Peterle, João de Deus Pinheiro, Samuli Pohjamo, Bernd Posselt, Libor Rouček, Christian Rovsing, Flaviu Călin Rus, Katrin Saks, José Ignacio Salafranca Sánchez-Neyra, Jacek Saryusz-Wolski, György Schöpflin, Hannes Swoboda, István Szent-Iványi, Konrad Szymański, Charles Tannock, Inese Vaidere, Geoffrey Van Orden, Ari Vatanen, Andrzej Wielowieyski, Zbigniew Zaleski, Josef Zieleniec

Substitute(s) present for the final vote

Alexandra Dobolyi, Árpád Duka-Zólyomi, Kinga Gál, Aurelio Juri, Inger Segelström

Legal notice - Privacy policy