Opinion of the European Economic and Social Committee on ‘The social implications of transport and energy developments’

(2009/C 175/08)

On 17 January 2008, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on:

The social implications of transport and energy developments.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 10 November 2008. The rapporteur was Ms BATUT.

At its 449th plenary session, held on 3 and 4 December 2008 (meeting of 4 December), the European Economic and Social Committee adopted the following opinion by 107 votes to 29, with 15 abstentions.

1.   Conclusions and recommendations

1.1   Conclusions

1.1.1   Transport and energy, an inseparable pair which are vital for competitiveness, development, wellbeing and cohesion, are under three different kinds of pressure — economic, social and environmental — against the background of shortfalls in European energy supply and instability of external supply, which cause prices to fluctuate and may allow them to keep rising for a period of years.

The Committee considers that a broad-based, forward-looking debate is needed on the essential character of the transport-energy pair for the people of Europe, on the impact which it has on their way of life, especially in difficult times, and on the action which the European Union could take in this area in order to safeguard the wellbeing of its people.

1.1.2   Maintaining the European social model depends partly on the transport-energy pair, the rising price of which over the long term will affect the lives of individuals, businesses and employees, as well as mobility and employment in general. The transport-energy pair is becoming the fourth exclusion factor, alongside housing, employment and wages. The fact that some people do not have access to transport or energy excludes them from e-society. The success of the Lisbon strategy is under threat on three fronts — social, economic and environmental.

1.1.3   The market and prices: consumer prices incorporate factors like liberalisation, the euro exchange rate, the state of the financial markets, tax, the cost of renewables, the fight against climate change and external elements. The market cannot regulate everything on its own. Several instruments should be prepared to boost social inclusion and to promote a fairer apportionment of costs and prices.

1.2   Recommendations

1.2.1   The EESC considers that it would be socially useful at times of rising prices for the EU to encourage some categories of consumers to differentiate, on the basis of dialogue, between the ‘essential’ component, where support could be offered, and the ‘optional’ component of the consumption of transport and energy.

1.2.2   The Structural Funds could take on a new role in promoting energy solidarity and preserving public mobility

1.2.3   The allocation of public funds between R&D activities should be balanced at EU level to optimise climate protection and the Union's energy independence.

The EESC would like to see an ongoing effort to promote a level of research likely to lead to rapid and significant advances on new energy sources and their use, with no let-up in this constant effort as soon as prices fall, as happened following the first oil shock.

1.2.4   The legal rules on state aid should systematically exempt national support funds from competition rules concerning research, thus giving investors a degree of security likely to encourage the use of new technologies and the maintenance and creation of jobs.

1.2.5   The extension of the RSFF (1) to innovative SMEs would help to develop their competitiveness while encouraging specific improvements to the transport-energy pair.

1.2.6   The extension of the EGF  (2) and the broadening of its access criteria would help mitigate the negative impact on workers of measures to combat climate change.

1.2.7   In order to help the European economy remain competitive while also ensuring social cohesion, the Committee would like to see:

1.2.8   Moreover, at company level, the EESC considers it necessary, in relation to business and services in the European Union:

1.2.9   At EU level the EESC considers it necessary to open up civil dialogue:

2.   Possible areas of action for the EU

2.1   Diplomacy

2.1.1   The EU's energy independence, economic growth, maintaining Europeans' standard of living and social and environmental sustainability are connected with the supply capacity of the Member States.

2.2   Markets

2.2.1   Demand for transport and energy and the production of greenhouse gases are increasing. European markets for energy and the network industries remain fragmented, although there is a trend towards integration (2006 — linking of the markets of France, Belgium and the Netherlands, probably to be extended to include Germany in 2009, establishment of a European spot market (7), search for possible mergers). The path chosen, liberalisation with separation of networks (gas, electricity) may nonetheless pose threats in future, such as purchase by non-EU funds (sovereign wealth funds), acute shortages, with no jointly managed reserve capacity and lack of control over prices, with disastrous consequences for consumers. Nuclear power is once again a crucial issue for the European Union: it would be irresponsible not to address it at Community level.

2.2.2   Travel is necessary for work, tourism and getting to know Europe and other Europeans. This declines when energy prices are too high, with serious implications for individuals, companies, employment and economic activity.

2.2.3   An energy mix and inter-European solidarity are needed to prevent further fragmentation of the market. A mobile and inclusive society needs coherent regulation and regulatory enforcement bodies. And civil society can point the way.

2.3   Price formation

2.3.1   Factors affecting the formation of the prices paid by the consumer:

2.3.2   The EESC believes that the role of the EU should be to promote solidarity, promote a master plan for a common industrial policy based on research into sustainable development and successful co-modality in the transport sector and improve European political stability through regulations. A serious study of the impact on prices of the separation of network and distribution or operating activities would be helpful in drawing up these policies.

2.4   Funding

2.4.1   Public funding

It is only necessary here to highlight certain aspects relating to the social implications (9). In the case of public funds, careful thought should be given at Community level to their allocation between activities yielding benefits in the short term and research work, in order to obtain the best balance at EU level between climate protection, the Union's energy independence and public welfare. Any balances remaining from the Community budget that have been allocated but not used should systematically be placed in a fund to support research and innovation. A guarantee could be given under the State aid legislation that national funds would be exempt from the application of the competition rules, which would give legal certainty to investors, thereby encouraging the use of new technologies and the creation and maintenance of employment. Support should be given to SMEs to help them reach the critical level of growth defined in Lisbon in 2000, maintain and increase employment and maintain their innovation capacity.

2.4.2   Aid for consumers

The European Union has powerful tools (Structural Funds, regional policy). Before the crisis the international experts thought that the upward trend in energy prices was a long-term phenomenon. The European Commission might examine the Community solidarity needed to limit exclusion by energy poverty should prices go up again and thus avoid a damaging impact on the EU's GDP, and in the event of a depression (falling prices accompanied by falling consumption as a result of reduced purchasing power, among other things), in order to support demand.

One of the social implications of transport and energy developments is to make everyone prisoners of rising prices when external pressures generated by globalisation and the financialisation of the economy, which led to the crisis, are depressing household incomes and purchasing power and the EU is experiencing under-employment. Furthermore, prices depend, to a large extent, on indirect taxation, which is not progressive.

The EESC believes that it would be socially useful for the EU to encourage price differentiation between ‘essential’ and ‘optional’ travel for the first kilometres travelled and the first litres of petrol and kilowatts of electricity used, based on an estimate of use and categories of user, to be determined by dialogue. Aid systems, for the benefit of the most disadvantaged, could then be established for the essential component.

The EESC considers that studies should be carried out on the feasibility of a European energy SGI which could be harnessed to the common energy policy. A common approach to prices would make this parameter a tool for maintaining economic development while also tackling climate change and promoting consumer interests by a fairer allocation of costs.

2.5   Taxation

2.5.1   Taxation plays a part in price formation (the environmental badge is the most recent example of this). The Member States have retained a certain amount of discretion. A policy of closer market integration would no doubt lead the EU to review the tax situation and would mean greater transparency for the citizen-consumer.

2.5.2   The TIPP, an excise duty defined by the Union, is levied by volume and VAT by value. VAT, like any indirect tax, is regressive, in that everyone has to pay it regardless of their income: the most disadvantaged socio-economic groups are therefore hardest hit. The people of the Member States are, however, unequal when it comes to tax at the pump, and this should be the subject of public studies and enquiries aimed at consumers with a view to finding the best solution leading to convergence. ‘European’ diesel would have an immediate transparency effect (10).

2.6   Research

2.6.1   The new impetus to productive investment must be on a scale likely to lead to significant and rapid advances, without which it will be impossible to ensure that the EU maintains its leading role in the fight against climate change, or to preserve the living standards of Europeans or the future of Europe. A free system for granting European patents in the field of renewable energies and clean, economic transport would reduce the lead time between discovery and marketing. Such a policy would not be incompatible with Article 194(1)(c) of the Treaty of Lisbon. We have to take certain reasonable risks. A 20 % increase in energy efficiency is now a requirement for EIB investments. This could be aimed at innovation (11) and made available to a number of companies.

The opportunity for SMEs to benefit from the RSFF (see point 1.2.5) could increase the implementation of innovations in all regions. For example, car-sharing initiatives are developing but, as in St Brieuc and Rennes (12), they are dependent on the level of local subsidies, although they offer mobility, lower CO2 emissions, time savings and social benefits through their accessibility to the disadvantaged, given the modest cost of using the service.

2.7   The regions

2.7.1   Transport and energy are the lifeblood of the regions and an opportunity for local development (see the impact of the opening of high-speed train lines on France's regions). But transport, which was traditionally a driving force for the economy and spatial planning, becomes a hindrance when energy costs are high.

2.7.2   The EU is adopting a policy on energy and the climate with quantitative targets and it will need instruments to measure them. It would be interesting to measure the qualitative aspects in a harmonised way throughout the Union, and the regional dimension of energy and transport is well placed for evaluating the expression of needs. At local level a detailed knowledge of trends makes it easier to manage resources.

2.7.3   The regions receive aid from the EU's regional policy. The breakdown of this aid could be used as a research indicator of public welfare with regard to transport and energy. Developments in the transport-energy pair can affect entire areas of the economy, with serious social consequences when their combined negative trends hit a sector like fisheries, whose profits have already been eroded by successive price increases in these two areas.

2.7.4   The distribution of economic activities and the management of residential mobility in the cities  (13) determine daily commuting. A binding local employment clause could be supported, as appropriate, by the Structural Funds (whereby a percentage of jobs would be reserved for local residents and tax benefits would be granted to firms that adopted this policy). Employment, housing, equal opportunities and hence wages and the fourth factor of transport may or may not play a part in promoting social inclusion.

Solutions which avoid the social impact of adjusting costs borne by the community can be found, for example by the coordinating and drawing up of new priorities for urban policy in the areas of housing, employment and transport.

With a legally secure national and European framework, the sharing of actions between the regional and local authorities, companies and households could be optimised.

2.8   Public services

2.8.1   For energy the situation is ‘oligopolistic’ rather than fully competitive. The impact on access to the network and price policy is seen in an unfavourable light by the consumer (e.g. closure of small stations and bus services deemed unprofitable, consumer price rises, cost of energy etc.). National public services operate at the intersection between regulations, the actions of the regions, respect for the fundamental rights of the citizen and employment.

The role of government is to mitigate the impact of change and the resulting uncertainty for the public. Local authorities should act to cushion economic and financial shocks in their areas. Being in the front line of transport/energy developments, they are seeking solutions.

There is a need for new governance instruments operating at the local, regional, national and Community levels. Community programmes could be better publicised and more open to experimentation.

2.8.2   The distribution of jobs in local labour markets would be improved by being linked to the organisation of urban transport. The role played by the local public employment services is very important; they should take account of the new constraints on energy and transport.

2.8.3   Regional network coverage is the result of political choices and investment. Action on price formation means ensuring access and affordable prices and the inclusion of the disadvantaged. Transport, the need for it, its high cost, and in some cases its scarcity, can be regarded as the fourth factor in exclusion, after housing, employment and income. There is also a need for careful monitoring of the social consequences of the new obligations which will be imposed on transport (energy-climate package). Economic efficiency can be sought in a systemic approach to transport policy, intermodal links, competitiveness and profitability of all the geographical areas and time slots (14), and technological and social research so as to optimise resources and reduce costs. This requires political will and the involvement of stakeholders.

2.9   Health

Transport and energy developments also have an impact on public health, which justifies taking steps to offset earlier choices, subject to compliance with the Energy and Climate Package, already being prepared in the Commission White Paper on transport.

2.9.1   The causes of damage to health arising from regular daily use of transport for long commuting journeys have an impact on social systems: difficulties of staying in work, stress, asthenia, given the range of ailments observed in adults: allergies and RSI, and in young children: allergies, bronchiolitis, etc.

The use of non-sustainable energy causes pollution of air, fresh and salt water, soil, the food derived from it. Moreover, the return to nuclear energy with its potential dangers should be given consideration, as well as public education on nuclear energy, which is becoming a necessity in view of the increase in demand for this form of energy in the Member States which produce it and their ageing nuclear power plants.

2.10   Employment

2.10.1   Growth (Lisbon strategy) and sustainable development come up against expensive energy and transport and now the effects of the financial crisis. Social and employment-related issues connected with the social dimension of the Lisbon strategy must be taken into account. Liberalisation has already had major consequences for workers in the gas/electricity sector.

2.10.2   The increasing ‘communitarisation’ of climate policy in the EU call for a genuine social dialogue at macroeconomic level, leading to negotiations on future ‘climate plans’ for Europe, in order to avoid distorting competition and social dumping. The European Commission could help the social partners by introducing a mechanism enabling them to anticipate, prevent and, where necessary, take flanking measures to accompany the far-reaching economic and social changes which will result from the implementation of the new climate policies which will affect transport and energy.

2.10.3   The EESC believes that the resources devoted to applied research should be genuinely increased so that the development of innovative technologies can create jobs, in particular in SMEs and micro-businesses.

2.10.4   The EESC supports extension of the EGF (European Globalisation Adjustment Fund) to limit the negative effects on workers of measures to tackle climate change. The EESC considers that all disadvantaged social groups who are at risk of poverty or who suffer from exclusion should be covered, and that the workings of this fund consequently need to be reviewed, beginning with widening of the criteria for access to the EGF.

2.10.5   The EESC considers that unavoidable expenditure is weighing increasingly on the least well-off, threatening their e-integration, another factor contributing to loss of employment and social exclusion. The EU must ensure that prices remain affordable for ordinary people, while reinforcing energy security.

2.11   Social dialogue within companies

2.11.1   Developments in transport and energy have an impact at microeconomic level within the company, and the social dialogue should take account of this.

This is a whole new area for social dialogue within companies.

2.12   Culture and education

2.12.1   Transport and energy have long had a cultural dimension, which has been made accessible to many citizens as a result of the democratisation of transport and energy. This dimension, which has become part and parcel of European integration, must be preserved. It is a human challenge for the understanding and practice of European diversity.

2.12.2   The EESC therefore believes that the developments now underway present an opportunity to promote citizenship education starting in schools for a better understanding of other Europeans and a properly managed use of transport and energy resources. It would also aim to teach everyday acts of citizenship, while at the same time taking account of the most disadvantaged groups in society, such as the disabled, the elderly and those suffering from social exclusion. Such education could be combined with health education, which it would usefully complement (16).

2.13   Action of organised civil society

2.13.1   Individual action

Everyone is obliged to acquaint themselves with, and is entitled to expect transparency in, the decisions that come from both the institutions and structures such as regulatory bodies. The EESC believes that a major publicity campaign is needed.

The EESC reiterates its support for the Commission's proposal of 5 July 2007 (17) for a European Charter on the Rights of Energy Consumers, which would guarantee their rights, the protection of which ‘cannot be left to market forces alone’ (Charter points 1.2 and 1.8).

2.13.2   Public action

Responding to the challenges of energy policy calls for a degree of social mobilisation which requires the support of citizens and voluntary effort on their part.

To this end the EESC suggests raising public and consumer awareness by carbon labelling of all consumer products.

Even when people have the opportunity to make responsible choices, they do not have the necessary information. Two complementary levels of action would enable the Union to act while maintaining the competitiveness of its businesses:

This labelling system, comparable to that for VAT, would raise people's awareness when consuming goods and services. ‘ APC-Added Production of CO2 ’ would be shown on every accounting document, from the till receipt from the supermarket to the pay slip. It would apply to every product and service and would enable everyone in the EU to see what was at stake on the basis of objective information.

Payment of the costs of CO2 production would not be linked to this. The priority at this point is to raise awareness among everyone using a simple method in all sectors.

The EESC considers that international trade negotiations could adopt this European practice. The results could be included in trade documents that have already been standardised, along the lines of Edifact and subject to annual monitoring by civil society: the Economic Commission for Europe, for example, reports to the United Nations Economic and Social Council (ECOSOC) annually on the state of Edifact.

The EU has a head start in recognising the need to consider transport, energy and the environment together as three parts of the same policy. It could turn this to good account at international level.

(1)  RSFF: Risk-Sharing Finance Facility, a cooperation agreement set up by the EIB on 5.6.2007 and intended for RDI in Europe, with EUR 10 bn of funding.

(2)  European Globalisation Adjustment Fund.

(3)  Definition of co-modality: ‘the efficient use of different modes of transport on their own and in combinations’, June 2006 mid-term review of the Commission White Paper on European transport policy for 2010: time to decide.

(4)  Article 73 TEC: ‘Aids shall be compatible with this Treaty if they meet the needs of coordination of transport or if they represent reimbursement for the discharge of certain obligations inherent in the concept of a public service’. See also Regulation (EEC) No 1107/70 of the Council of 4 June 1970 on the granting of aids for transport by rail, road and inland waterway, OJ L 130, 15.6.1970, p. 1-3 and Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70.

(5)  Electronic Data Interchange For Administration, Commerce, and Transport, a UN standard which defines both syntax and content: this is adapted by national and sectoral standardisation bodies to ensure that the needs of each activity are taken into account.

(6)  The 56-member Economic Commission for Europe (UNECE), is one of the five regional commissions of the UN's Economic and Social Council (ECOSOC). In addition to Europe, it also covers the United States, Canada, Israel and the Central Asian republics.

(7)  A spot market deals in currencies, rates or commodities for same-day or next-day delivery.

(8)  The German Federal Statistical Office DESTATIS estimates that energy prices have pushed up producer prices by 3.8 % in one year. In the same period, prices rose by 7 %, oil derivatives by 19 % and electricity by nearly 10 %. Without energy, prices would have risen by only 2.7 % over the year, according to DESTATIS. (Quoted by the newspaper Les Echos, France, 21-22 March 2008.)

(9)  EESC opinion, in particular Alleweldt, Preparing transport infrastructure for the future, CESE 93/2004, 28.1.2004; Krzaklewski, Trans-European networks: Towards an integrated approach, 28.3.2008, OJ C 204, 9.8.2008, p. 25.

(10)  ‘Taxes on fuel complete the transport infrastructure charging picture by adding external costs to the prices paid by users. In particular, they incorporate the external cost component linked to greenhouse gas emissions. With the road transport sector now fully opened up to competition, the absence of harmonised fuel taxes seems increasingly to be an obstacle to the smooth functioning of the internal market.’ White Paper — European transport policy for 2010: time to decide, European Commission, 2001.

(11)  See EESC Opinion, Rapporteur Mr Wolf, The possible positive or negative impact of increased environmental and energy requirements (policies) on the competitiveness of EU industry, 20.2.2008, OJ C 162, 25.6.2008, p. 72.

(12)  Breton municipality, France: the study group drawing up this opinion held a hearing in St Brieuc.

(13)  EESC Opinion, rapporteur Mr Ribbe,Transport in urban and metropolitan areas, OJ C 168, 20.7.2007, p. 77.

(14)  St Brieuc, Brittany, France — hearing of 6 October: establishment of ‘virtual’ local on-demand transport routes with a computerised coordination centre for the integrated of transport mode use by local users and providing information on other networks (ITS, Intelligent Transport System).

(15)  Eco-Management and Audit Scheme (EMAS)-type certification, 1995 Regulation, revised in 2002 and 2004, Regulation 761/2001 on voluntary participation.

(16)  See EESC Opinion, Rapporteur Ms Sharma, Obesity in Europe — role and responsibilities of civil society, OJ C 24, 31.1.2006, p. 63.

(17)  EESC opinion, rapporteur Mr Iozia, Towards a European Charter on the Rights of Energy Consumers, 16.1.2008, OJ C 151, 17.6.2008, p. 27.

(18)  EESC opinion, Wolf, referred to above.