The European Union in the World Europakommisjonens delegasjon til Norge og Island
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Speech by Mrs Loyola de Palacio, Vice-President of the European Commission at the Norwegian Polytechnic Association

Oslo, 7 February 2002


It’s a great pleasure for me to have the opportunity to talk to you about the ongoing structural reforms in the sectors of transport and energy, for which I am responsible within the European Commission. I will present them to you in the light of what the Commission expects from the European Council of Heads of State and Government which will be held in Barcelona on 15 and 16 March.

Indeed, a significant part of the Barcelona agenda is directly linked to my areas of competence, a fact that represents a huge personal challenge for carrying forward with the reform agenda.

Let me recall first that in March 2000, the Lisbon European Council set the ambitious ten-year goal of “making the Union the most dynamic, competitive, sustainable knowledge-based economy, enjoying full employment and strengthened economic and social cohesion”. I am aware that Norway is not directly a part in the Lisbon process as this falls outside the scope of the EEA Agreement, but surely Norway is affected and I hope the developments within the EU will be followed closely.

The Barcelona Council will assess progress towards the Lisbon objectives and will provide guidance and fresh political impetus to solve difficult policy issues.  We will also have the opportunity to see whether European leaders are ready to provide what it takes to achieve these objectives.

I will divide my speech of today, in three parts:

·        The context and content of the agenda for Barcelona.
·        The opening of gas and electricity markets and related infrastructure requirements.
·        The Commission’s proposal for a new transport policy especially in relation to the opening of railway markets and to the Galileo project.

Context and content of the Barcelona agenda

Born as a Common Market the EU has become over the years an Economic and Monetary Union, with a strong Cohesion policy and the development of an external policy. The terrorist attacks on the twin-towers have confirmed the need to stand together on world political matters, as well as in the economic ones.

The successful introduction of the Euro notes and coins, after a long collective effort of EU citizens and firms, represents in the short term an injection of much needed optimism, and in the longer run a facilitator of further EU integration. 

But, today I am talking to you, not about recent achievements but about what remains to be done on the way to a true internal market.

To different degrees, energy and some transport markets are dominated by large utilities, which are often hidden from competition; this hampers economic efficiency. Let me underline that the competition we advocate for is a  “regulated” one, where safety, social conditions and public service requirements are respected.

Market opening will not achieve much if national networks are not interconnected. One of the characteristics of the current economic slowdown is the current strong reduction of total investment. In 2001 investments grew only by less than 1% in  the euro area, compared to a GDP growth of 1.5%, which was also weak.  Investment has to be fostered in all sectors, not least in the transport and energy networks. If this is not done, the lack of investments in bottlenecks and poor network maintenance will hinder competition and it will reduce the competitiveness of the economy.

There are three priority areas where we in the Commission think that the European Council in Barcelona should give a decisive impulse to action:

-           The further development of employment policies to help the European Union to move closer to its goal of full employment and better jobs;

-            Increasing investment in knowledge to ensure future competitiveness and jobs, stepping up the effort in the areas of research, innovation, education and training;

-           and the third one, which is the one which concerns us the most today, is the objective of connecting Europe and connecting markets. This will be done through further  opening of the market and by completing the missing links in the network sectors, including transport, energy and telecommunications.

But above all, the Commission finds it essential that the Barcelona Council:

-           decides the dates and framework for the final stage of the liberalisation of electricity and gas markets;

-           and that it allows to start officially the development stage of the Galileo satellite navigation system.

I would now like to turn more specifically to the internal market for gas and electricity, including the need for investments in network infrastructure. I will address afterwards our transport policy.

The opening of the EU gas and electricity markets

At present, European’s energy markets are going through a process of fundamental change. We are gradually creating a functioning internal market where there is competition in the production and supply of electricity and gas and where customers will be able to exercise a right of choice.

The first steps in this process were taken in 1996 with the adoption of the electricity Directive, and with the gas Directive in 1998.  These opened a certain proportion of the market allowing a choice to be made by large users above a certain threshold. Much progress has been made since then and many Member States have already gone much faster and further than the minimum requirements. Already two thirds of electricity demand and nearly 80 % of gas demand is - at least in principle - open to EU-wide competition, and electricity prices have been reduced, often significantly.

In response to the call of the Lisbon European Council for a speeding-up of gas and electricity liberalisation, the Commission presented in March 2001 concrete proposals for an acceleration of the market opening.  It is indeed great time to extend the benefits of the internal market to all Community industry, first in 2003 for electricity markets and in 2004 for gas markets. Moreover, freedom of choice should be extended to ordinary households by 2005.

It is clear that important differences exist in the manner in which market opening has been implemented in Member States and in Norway. In some cases it would appear that the terms offered for network access are not allowing new entrants to compete on equal terms.

Without effective regulation of such issues, market opening will be constrained. This is particularly relevant to Member States where network owners remain integrated with companies in the competitive parts of the industry.

Ultimately the Commission favours a common standard throughout the EU on this issue, ensuring that network tariffs are fixed and published and that they are verified by an independent Regulator - as is already the case in 14 Member States and Norway. Moreover, transmission and distribution companies should be run separately from generation and sales, even if the ownership can remain within a single group holding.

 Energy infrastructure – a sine qua non for a real single market and for security of supply

The lack of sufficient energy generation and transportation infrastructure can have catastrophic implications with respect to the quality and security of supply.

The California crisis provides a number of lessons for Europe including the importance of ensuring proper incentives to develop generation capacity and build new lines and the need to combine sound open market rules with appropriate and measured administrative procedures within a stable regulatory framework to ensure this.

This is one of the reasons why the Commission presented in December last year a Communication on European Energy Infrastructure. The purpose has been to identify existing bottlenecks and examine measures that could be used to encourage new developments.

The Commission's Communication has shown that the electricity supply and interconnection capacity balance is tight and fragile in a number of Member States and clearly requires reinforcements to ensure continued and enhanced security of supply in a situation of growing demand. A number of Member States clearly suffer from low generation reserve margins or low levels of interconnection with adjacent systems creating bottlenecks at a number of critical locations in the internal market. These problems need to be solved urgently.

The Commission has therefore proposed a number of actions, which appear necessary in order to improve the situation with regard to EU energy infrastructure. These actions will notably aim at an improved use of existing infrastructure and at ensuring a stable and favourable regulatory environment for investments in new infrastructure. They will also re-focus Community financial support to priority projects through a revision of the TEN-Energy Guidelines which proposes to concentrate efforts on twelve Priority Projects of particular European interest.

The new European Transport Policy

I will now draw an outline of our proposal for a new Common Transport Policy and explain how the Commission intends to pursue the opening of the transport markets with particular emphasis in the railway sector. I will then finally address the case of the Galileo project.

The Commission’s White Paper of September last year, identifies the policy guidelines and the measures the Commission believes should be applied to achieve a sustainable transport system.

Since the establishment of an internal market for transport services back in 1992, with the exception of railways, we managed to push forward liberalisation, to reduce transport prices and offer more choice to consumers and operators. Success however, comes with a price to pay. These policy achievements led to serious problems of congestion, pollution and safety, notably in the road sector. Such costs reduce European competitiveness and reduce the health and leisure of European citizens.

In the new White Paper, around 60 measures are set out with the expectation of achieving a significant break in the link between economic and transport growth, without restricting mobility.

Achieving this goal requires a comprehensive strategy. The transport measures proposed, focus on shifting the balance between modes of transport. This will be done by adopting measures leading to the revitalisation of modes alternative to road, by implementing targeted investment to eliminate bottlenecks in the Trans-European transport network and by better reflecting infrastructure costs. Safety and user’s rights also constitute top priorities in all transport modes.

The Commission plans include:

-            improving the quality of the road sector by ensuring that social and safety legislation is effectively enforced;
-           in the aviation sector, the Single European Sky plans are already underway to reorganise Europe’s sky which suffers from the over-fragmentation of its traffic management systems;
-           in the maritime sector there is also the clear need to manage port access and short sea shipping. Here the Commission intends to develop “sea motorways” and to ensure fair and open access to port facilities;
-           a
proposal for the revision of the TENs focuses on the priorities that are likely to improve the existing capacity shortages in the network, notably those that hinder the creation of a trans-European railway freight network. Among the eight new priority projects proposed, I would like to mention the Fehmarnbelt fixed link between Denmark and Germany, which will further improve the access between the Scandinavian Peninsula and Member States to the South;  
-           the creation of safety agencies for air, railways and maritime transport will also contribute to the application of harmonised rules within the Union.

Clearly, shifting the balance of transport will also require taking measures at national, regional and local level in the context of the whole range of other economic, social, land use and urban policies.

Opening the railways markets

The 15 March 2003 will become a historic date as 50 000 kms of the trans-European rail freight network will be opened to competition for international goods services, while the rest of the network will be open by 2008. The Commission has put forward in January a second package of measures, which will speed up the integration of an “European railway area”. These measures concern the opening of national freight services, common safety methods and updated interoperability Directives.

This package will be complemented by the gradual creation of a dedicated freight network and by the removal of infrastructure bottlenecks – all this is absolutely necessary if rail is to regain its rightful share of transport.

A range of related measures are also geared to helping modal shift. The Commission’s intermodality strategy is to be substantially augmented with the new Marco Polo programme endowed with a financial assistance package of €23 million per year over five years.


I would now like to conclude by spending a few words on the GALILEO project.

Galileo is a test to determine whether the Union can develop independent technological platforms.

  The European Council has repeatedly emphasised the strategic importance of the Galileo programme, but a much needed final decision to launch the project has yet to come.

 The GALILEO satellite radionavigation system enables users equipped with a receiver to receive signals from several satellites and determine his exact position in time and space.

 GALILEO will provide considerable advantages in many sectors of the economy. In road and rail transport, for example, it will make it possible to predict and manage journey times. Satellite radionavigation is also increasingly of benefit to fisheries and agriculture, oil prospecting, civil protection activities, etc.

 I do hope that the current uncertainty around the future of this strategic project will soon be dissipated by a clear political commitment of the EU leaders in Barcelona. As in many other policy areas that I described today, decision time has now come.


  These interwoven policy strands of market opening, better regulation, correct pricing, and targeted investment will all contribute to the Commission’s overall goal of achieving for the European Union an own path to sustainable development.

When we talk about market opening, we are not making innovative proposals. The internal market horizon of 1992 is already ten years behind us and the sectors of railways, gas and electricity are the laggards of the market opening process. Therefore, the time of deliberation is over. It is really the time to show the political determination that the Treaty on the Union requires.

Political determination at Community and national level is also vital for pursuing the efficient use and development of infrastructure on a constant basis.

I am convinced that here in Norway, you will not only feel the change which is about to be produced, but you will also continue to participate in it through the EEA framework as an active and solid player.