EU Energy Policy Blog

Over the last 4 years the EU has begun the process of moving towards a sustainable, secure and competitive energy future. Indeed it has undergone an energy revolution. This can be seen not just in the policies that it has agreed, but the simple fact that for the first time in its history it has taken a conscious decision to collectively direct its own energy future, rather than simply leaving the market to provide its needs. I would like to reflect on what has already been achieved towards the creation of a new European Energy Policy and, probably more importantly, reflect on the direction that our energy policy will now need to take to meet the future, much greater, energy challenges that face us.

It is clear that we are at the beginning of what has correctly been called the “third industrial revolution” – the rapid development of an entirely new energy system. We can expect a massive shift towards a carbon-free electricity system, huge pressure to reduce energy consumption and transport on the basis of renewable electricity. To make this shift in a manner that maintains, and in fact increases the EU’s competitiveness, means that stimulating rapid technological development in these areas has to be a central part of the EU’s energy policy. Indeed, this is at the heart of the question: how can the EU turn the challenges of climate change and energy security into an opportunity?

The global market for windmills and solar/PV panels has already been exploding. This is but the tip of the iceberg. Imagine the level of investment in low-carbon energy and energy efficiency technologies and services that will result when the whole world follows the EU’s initiative and commits to reducing greenhouse gases globally by between 50 and 80% by 2050.

Thus, the low carbon energy industry, including renewables, a smart electricity grid, carbon sequestration, next generation nuclear, electric and hydrogen vehicles, battery technology and energy efficient products and services will almost undoubtedly represent the greatest industrial growth sectors over the next decades. The EU already has a first-mover advantage in terms of installing renewables, and this has had an effect in promoting European companies, which are world leaders in renewable energy. The EU has to use this as a springboard in further efficiencies as well as in new generations of low-carbon technologies.

The EU technology push and energy strategy

The European Council has recognised the importance of this challenge, welcoming the Strategic Energy Technology Plan that the Commission tabled together with the first Strategic Energy Review.

In essence the Technology Plan proposes to better coordinate the energy research money spent at Community and national level to ensure that every Euro is well-spent and to invest far more in low carbon energy innovation. In terms of funding, the Strategic Technology Plan notes the decline in energy research spending in Europe since the 70′s and 80′s. If we had maintained our levels of technology investment at those levels, government investment in energy technology would be four times what it is today.

The actions necessary to address the first of these challenges, coordination of spending, are well under way, with the establishment of a new Energy research governance in Europe and the setting up of six European Industrial Initiatives: wind, solar, bio-energy, carbon capture and storage, smart electricity grids and sustainable nuclear fission. The initiatives are being developed in close cooperation with European industry, using existing Technology Platforms. In practical terms, this means integration of public efforts, European industry and researchers. These initiatives have to be targeted to achieve concrete results in a specified time-scale.

In addition to the better planning and the better use of the resources, it is clear that the EU needs to increase funding for energy technology, both publically and privately. This has been recommended in the most prominent reports published recently, like the Stern Report, the reports from the Inter-governmental Panel on Climate Change, and the International Energy Agency.

As the Strategic Energy Technology Plan outlines, it is necessary to progressively increase resources over the next years to double the current public effort in research. This question will be central to the Technology Financing Plan, to be tabled by the Commission next year.

Of course, increasing funding will not alone provide a complete solution; the Strategic Energy Technology Plan will also need to catalyse a substantial effort to incentivise our educational institutions to invest in this area, attracting more scientists and engineers to the field of energy. Furthermore, the decision to allocate an important part of the “new entrants reserve” of ETS credits post 2013 and the Commission’s proposals to re-allocate 1.25 billion Euros of the existing EU budget to CCS demonstration plants and 500 million to offshore wind demonstration projects already this year will, if approved by Council and Parliament, give a massive and much needed boost to low-carbon energy research. The Technology Financing Plan will therefore need to address not only the issue of how much research funding is available, but how this can best catalyse private investment and spread the use of the resultant technology.

In summary, we need to acknowledge the vital and strategic role of energy technology for the EU, jointly plan our actions, effectively implement our current policies through a more targeted and powerful instruments, increase our financial and human resources and reinforce international cooperation.

The EU achieving its 20-20-20 policy to change its 2050 horizon

The EU is clearly at the start of what will be a long, difficult, but tremendously exciting process. We have a unique opportunity. Although, it is true, the increasingly difficult global economic outlook makes the implementation of the European 20-20-20 initiative and increased investment in energy technologies more difficult in the very short-term, they are truly vital. They represent a solidarity pact with future generations of European citizens and, I strongly believe, the basis of a huge economic opportunity for Europe. Furthermore, the economic crisis will cause significant difficulties for many of our citizens. Yet unabated climate change has the potential to cause far greater hardship and the need to invest to guarantee all of our citizens’ real energy security has never been clearer.

Within a single generation we can give Europe a truly sustainable energy system, that is clean, and that provides us long-term energy security and a very large degree of energy independence. We can develop an energy industry in Europe that is the motor of our economy, producing jobs in Europe rather than exporting wealth to energy producers outside the EU. If we invest wisely in research and give European companies the right incentives to become world-leaders in renewable and other low-carbon energy technologies, we can put the EU at the forefront of the third industrial revolution in the same way as the US investment in computing put them at the forefront of the second.

And this can be, must be, the centrepiece of a wider European sustainability policy rather than an end in itself. Surely the EU is able to develop, over the next five to ten years, a road-map towards a truly sustainable Europe, committing the EU to live and work in a long-term sustainable way by 2050. This would need to cover agriculture, fisheries, transport, land-use, forestry, housing, and much more. It would need to catalyse changes in education, research, and the development of our cities. There are many grounds to believe that such a commitment would be truly welcomed by Europe’s citizens, particularly the younger generation that will have to inherit the consequences of today’s decisions.

If we invest strongly and wisely in technology, and if we recognise that the third industrial revolution means that research should be considered as a central pillar of our economic policy, there is also every reason that we can achieve a sustainable economy in a manner that will enhance our standards of living, welfare and happiness. There is also every reason why the EU is in a unique place to take the leadership in this challenge, as it has done with energy and climate change.

At the end of the day, it is climate change and the challenge of energy security that has led us to really begin debating such fundamental questions on a more practical level. There is indeed a silver lining in every cloud.

Andris Piebalgs, Commissioner for Energy

P.S. a more expanded version to be found in my book “Europe’s New Energy Policy”.

This entry was posted on Tuesday, February 10th, 2009 at 3:28 pm and is filed under Climate Change. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.