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Published 14 February 2007, updated 17 January 2011

With its emissions trading scheme (EU ETS) in place, Europe has opted for a 'market pull' approach to bringing low-carbon technologies onto the market. However, policymakers realise that new breakthrough technologies are also needed if deeper emission cuts are to be achieved in the long run (2020-2050 and beyond). In an attempt to match the US, the EU has greatly increased its research and development (R&D) funding for climate change technologies in the last few years.

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Summary

One of Europe's key instruments in tackling global warming is its emissions trading scheme (EU ETS), a system first envisaged in the 1997 Kyoto Protocol. The EU ETS encourages the uptake of climate-friendly technologies by rewarding businesses investing in green technologies, thus turning their investments into quick, short-term profits (see EurActiv LinksDossier). 

But the biggest challenge lies outside Europe. Energy-related CO2 emissions alone are expected to surge by 57% between 2005 and 2030, largely due to emerging economies such as China and India (IEA World Energy Outlook 2007). In this context, transferring climate-friendly technologies to the developing world appears as both an environmental imperative and an opportunity for businesses wishing to access these booming markets. 

Issues

Mitigation & adaptation

A number of technologies have already been identified to mitigate the effects of global warming. In the absence of a viable long-term alternative (e.g. hydrogen), it appears that a mix of solutions, including energy efficiency, alternative fuels and nuclear power, will be called into play. 

Some options are already being encouraged by EU policies (e.g. renewables), while others are still subject to further research (e.g. hydrogen, CO2 sequestration):

  • Energy efficiency (see EurActiv LinksDossier)
  • renewable energies (see EurActiv LinksDossier)
  • alternative fuels for transport (see EurActiv LinksDossier)
  • cleaner cars (see EurActiv LinksDossier)
  • carbon capture and storage (CCS) (see EurActiv LinksDossier)
  • hydrogen and fuel cells (see EurActiv LinksDossier)
  • nuclear, and; 
  • reducing methane and other dangerous greenhouse gases (GHGs). 

To deal with the consequences of climate change that cannot be avoided (floods, heatwaves, drought, rising sea levels, etc.), other so-called 'adaptation' technologies are envisaged: 

  • Infrastructure design (of cities, rural areas) such as sea defences and increased organic surface area in cities to help lower temperatures and reduce surface water flow from rain;
  • early warning and monitoring systems (e.g. earth observation systems such as the EU's Global Monitoring for Environment and Security, or GMES). 

Issues related to technology deployment

One major challenge in the fight against global warming is speeding up the roll-out of these technologies. But politicians face a number of difficult choices when selecting and deploying them. These mainly relate to:

  • The timeframe necessary to implement a given technology (e.g. it will take decades before hydrogen technologies can reach mass-market status, while energy-efficiency technologies are available right away);
  • the related short and long-term choices in R&D priorities (including budgets);
  • introducing fundamental changes to critical infrastructure when the viability of a given technology is still uncertain or resources are subject to other pressures (e.g. fuelling stations for hydrogen cars; shifting land use away from agriculture for large-scale biomass);
  • hesitation from financial markets in supporting heavy, long-term investments in new infrastructure in a fast-moving political and technological environment (e.g. third-generation European Pressurised Reactor nuclear power stations). This has been exacerbated by the current recession, whilst support is more urgently needed in efforts to shift to a low-carbon economy and create green jobs;
  • how far and for how long to provide financial and regulatory support to the most promising technologies before they are commercially competitive (e.g. CCS, renewables);
  • conveying the technologies to booming economies in the developing world without giving away strategic industrial intelligence (e.g. patent 'leakage' in China) (EurActiv 07/09/09);
  • public acceptance of/hostility to some energy sources (e.g. hostility to nuclear in Germany, though this is now changing (EurActiv 25/02/09));
  • resistance from industries and countries against the introduction of new energy production and consumption patterns with the potential to trigger regional political instability (e.g. oil, Saudi Arabia and the US). 

'Market pull' versus 'technology push'

With the CO2 emissions trading scheme (EU ETS), the EU resolutely opted for a strategy that provides strong incentives for businesses to switch to climate-friendly technologies in the short run (see EurActiv LinksDossier). 

But decision-makers now recognise that the 'market pull' approach is not enough and should be complemented with a 'technology push' approach based on large-scale research and technology deployment programmes (EurActiv 24/10/05). To this end, the EU is increasingly setting aside funds for research relating to climate change in the EU’s Framework Programme for Research and Technological Development. 

EU, national R&D programmes lack coordination

However, there is general recognition that more radical technological breakthroughs in the energy sector are also needed in order to achieve deeper CO2 emission cuts in the long run. Research and deployment programmes (or drastic improvements of existing ones) are therefore crucial in this respect. 

According to the Commission, the budget of the 6th Community Framework Programme for Research (FP6) represented only about 5% of all public, non-military research spending in the EU. 

Funds earmarked under FP6 for research in climate-friendly technologies, including nuclear, amounted to only €2.2 billion spread over the period 2002-2006. The Commission pointed out that the 2.2 billion euro figure was in fact higher, since the EU budget covers only part of the funding, with the other part provided by the member states. 

But the lack of coordination between national and EU research programmes means that there are no statistics specifying how much public money is invested overall (not to mention that national programmes can sometimes compete against each other). By comparison, the United States has been pursuing its federal Climate Change Technology Programme to push climate-friendly technologies onto US and international markets, which had a requested budget of $4.6bn (€3.1bn) for the 2009 financial year (EurActiv 28/11/05). 

Current EU budget and energy technology financing plan

Under the Seventh Framework Programme (FP7), which runs from 2007 to 2011, the funds allocated for climate-related research have substantially increased to €9.8bn. The Commission reports that research is focused on four main areas:

  • Environment (total budget €1.89 billion),
  • energy (total budget €2.35 billion),
  • transport (total budget €4.16 billion), and; 
  • space and Global Monitoring for Environment and Security (GMES) (total budget €1.43 billion). 

A further €2.7 billion under FP7 is reserved for nuclear fusion and fission research and radiation protection. 

The Commission is expected to deliver in October 2009 its long awaited funding proposal for a Strategic Energy Technology Plan (SET Plan), which sets out the financing of the research and implementation of low-carbon technologies in Europe. The SET plan was originally proposed in November 2007, but proposals for how to finance the EU's various research initiatives have been delayed several times (EurActiv 09/07/09). 

International cooperation

On the international scene, the EU is fostering bilateral technology partnerships with major emerging countries:

  • The EU-China Partnership on Climate Change, which aims mainly at building a demonstration coal power plant in China using 'zero-emissions' CO2 capture and storage technology (EurActiv 05/09/05). The European Commission announced the financing details of the project in June 2009;
  • The India-EU Initiative on Clean Development and Climate Change, which includes stepping up cooperation under the Kyoto Protocol's Clean Development Mechanism (CDM). 

However, these international partnerships sometimes compete with others developed outside the framework of the Kyoto Protocol, such as the US-led Asia-Pacific Partnership on Clean Development (EurActiv 12/01/06). The EU is seeking further cooperation with other countries via:

  • Negotiations launched in December 2005 in Montreal under the framework of the United Framework Convention on Climate Change (EurActiv 12/12/05), which will culminate in the United Nations Climate Change Conference in Copenhagen in December 2009;
  • the G8 and its 2005 action plan adopted at Gleneagles (EurActiv 08/07/05);
  • international cooperation projects such as the Carbon Sequestration Leadership Forum and the International Partnership for the Hydrogen Economy. 

Ambitious international R&D projects have also been launched for the very long term, such as the International Thermonuclear Experimental Reactor (ITER) developed by the EU, China, Japan, Russia, South Korea and the United States. The EU will take on 40% of the project's total cost (€4.57bn) while the host country, France, will pay 10%. The remaining five partners will invest 10% each. The site is now being prepared for construction to begin in 2010, with the aim of making the reactor operational by 2018.

The cost of building and running the reactor over its thirty-year lifetime is around €10bn, and the programme aims to demonstrate conclusively that nuclear fusion can be an energy source. The project has attracted fierce criticism, however, for not being commercially viable and several parties have raised safety concerns (EurActiv 29/06/05). 

Kyoto Protocol's Clean Development Mechanism (CDM)

The UN Kyoto Protocol envisages market-based instruments that facilitate technology transfer to developing nations. The Clean Development Mechanism (CDM) is designed to help rich nations meet their Kyoto targets by promoting emissions-saving projects in the developing world, thereby stimulating the deployment of cleaner technologies and foreign direct investment. 

However, the large amount of red tape and over-allocation of carbon credits associated with the system mean that it has not been a great success, and the World Bank has acknowledged that the CDM system needs to be reformed soon (EurActiv 28/05/09). 

The EU has proposed to reform the CDM so that only the least-developed countries would get project-based funding, while more advanced developing countries would take part in the crediting system. The option to count carbon offsets towards a country's emission reduction target has been criticised for providing rich nations with an excuse to ignore their domestic emissions reduction targets (EurActiv 27/05/08). 

Geo-engineering 

To add to mitigation and adaptation, there has been growing interest in geo-engineering, which is an approach to tackling climate change which involves large-scale human intervention in the Earth's climate system. It is hoped that geo-engineering could provide an alternative to cutting emissions as a method of mitigating global warming. 

The Royal Society, a UK-based fellowship of 1,400 scientists, recently released a paper in which it said geo-engineering options would not be the "silver bullet" in fighting climate change, but that some, such as artificial methods of capturing CO2 from the atmosphere, "could potentially be useful in the future" to stop climate change.

Despite this, there have been "no major directed programmes of research on the subject," the Royal Society believes. It is pressing for geo-engineering methods to be considered as part of a wider range of options for tackling climate change, and for the British government to set up a geo-engineering research and development programme. 

The UK-based Institute of Mechanical Engineers studied hundreds of geo-engineering options and concluded that currently only three were practically feasible:

  • Artificial trees to capture atmospheric CO2 which would then be stored underground (EurActiv 28/08/09);
  • coating buildings with algae, which captures CO2 through photosynthesis. The algae strips can then be used in biofuel production (EurActiv 27/07/09), and;
  • fitting buildings with reflective surfaces that direct solar radiation back into space. 

Another form of geo-engineering which is being investigated is biochar. This technology involves the slow burning of biomass in a process called pyrolysis, which leaves solid carbon charcoal or 'biochar' as a residue. The biochar is then put into the earth, where it is supposed to retain the carbon for a significant amount of time and improve soil fertility. An additional advantage of biochar may be that it can be used in developing countries as a fairly low-tech option (EurActiv 09/09/09). The merits of biochar are disputed, but interest in it is growing, with the recent founding of organisations such as the International Biochar Initiative.

There are, however, a significant number of scientists opposed to radical geo-engineering. They believe it is dangerous to tamper with the Earth's climate systems, arguing that they are not well enough understood (EurActiv 14/09/09). In any case, the vast majority of geo-engineering options are still in the conceptual, planning or pilot stages of development, and would still require large amounts of research and testing before possibly being ready and safe enough for widespread use. 

Positions

Danish Climate and Energy Minister Connie Hedegaard said recently that "technology will become increasingly important in our efforts to deal with the towering challenge of climate change," but at the moment "collaboration on technology is urgently needed. The world cannot afford that developing countries take the same, fossil-fuelled path to prosperity that industrialised nations did," she declared. 

Hedegaard, who will host the UN Climate Change Conference (COP 15) in Copenhagen, argued that "although the potential of clean technologies is hailed across the globe, the cold numbers tell a sobering story. Over the last 25 years, public energy R&D funding has fallen by 50% in major developed countries. A new climate agreement needs to ensure the funds necessary for a comprehensive technological transformation," she emphasised. 

The European Commission believes energy technologies will play a cental role in achieving climate change objectives and put Europe on course for a low-carbon economy. However, in its energy and climate change package of 10 January 2007, the Commission also warned that "business as usual" on energy research was simply "not an option" for Europe.

"All member states have their own research programmes on energy, mostly with similar objectives and targeting the same technologies. In addition, public and private research centres, universities and dedicated agencies complete a picture of scattered, fragmented and sub-critical capacities," the Commission said, calling on the the EU to "act jointly and urgently".

Professor Dieter Helm, of the Smith School of Enterprise and the Environment at the University of Oxford, heavily criticised the EU's climate change and energy package in a recent paper, saying it was little more than "a politically neat but economically inefficient set of targets".

European employers organisation BusinessEurope says technological improvements will be essential for achieving GHG reductions "without compromising on better living standards in both developing and developed countries". 

The organisation called for government incentives to promote research, but warns that expectations regarding the pace of technological innovation and deployment should be realistic.

New technologies, it argues, "will often call for adapting or renewing basic infrastructures of society, requiring substantial investments, which will only be undertaken in a context of sustained economic growth".

BusinessEurope says that market-based instruments such as CDMs should be made more efficient, transparent and less bureaucratic. "Artificial ceilings on the use of credits from JI/CDM (Joint Implementation/Clean Development Mechanism) must not be introduced, as these would reduce the effectiveness of the mechanisms and potentially limit the development of projects," UNICE argues.

US oil major ExxonMobil says advanced oil exploration and drilling techniques are already giving access to previously untapped oil and gas resources. It believes that such technologies can today guarantee sufficient fossil fuels supplies to meet the world's growing energy demand in the foreseeable future.

"We are not saying that there isn't anything that you can do right now," said Sherri Stuewer, vice-president for safety, health and environment at ExxonMobil in an interview with EurActiv. "Energy efficiency has a lot to offer in the near term but what we are trying to say is that efficiency and today's technology will not solve this problem [climate change] for the long-term". 

And this is where Exxon believes it can make a difference, with an R&D programme it has launched in partnership with Stanford University. Stuewer says the programme focuses efforts on "high-risk, high-reward breakthrough technologies that could really make a difference" in lowering greenhouse gas emissions. "We need more, we need new technologies," she said.

Environmental NGOs have always favoured an approach to greenhouse gas emission reduction that focuses on renewable energy and demand reduction, using combinations of incentives for clean technology, legislative requirements and fiscal instruments. "The environmental community has been sceptical of technological panaceas, end-of-pipe solutions," says Climate Action Network Europe (CAN Europe), because they can have "unintended consequences". CAN Europe nevertheless points to "the possibility of an electric/hydrogen future based on renewable energy".

Christian Egenhofer, a senior researcher at the Centre for European Policy Studies  (CEPS) in Brussels, believes it is well worth developing "breakthrough" technologies for the longer term. "If you look at the targets that need to be achieved under the UNFCCC, then you will need breakthrough technologies by 2050. And you don't get these without putting money into research and collaboration projects," Egenhofer told EurActiv. However, he says it would be wrong to assume that one or a few 'killer technologies', such as hydrogen, can do the job. "Rather we will need a broad range of technologies: clean coal technologies, various renewables, carbon capture and storage, nuclear, to name but a few."

The Pew Center on Global Climate Change, a Washington-based think-tank, says that reducing greenhouse gas emissions "will require a broad portfolio of policies to foster technology development". But it says that "R&D alone is not enough". 

"Because the benefits of technological innovation come only with widespread adoption […] the policy portfolio should support diffusion of knowledge and deployment of new technologies as well as research and discovery," the Pew Center said in a 2003 study. 

"Well-crafted policies can help nourish an energy technology revolution over the next half century as astonishing as the information technology revolution of the last half century," the think-tank believes.

Others believe that technologies are only a pipe dream and that real progress can only be brought about via radical lifestyle change. 

Professor Wolfgang Sachs, from the Wuppertal Institute in Germany, points to the volume effects of rising global consumption, which leads to demand growing faster than eco-efficiency gains. He cited the car industry as an example, saying that the considerable energy savings made on cars' oil consumption were being eaten up by volume effects: "You can forget about eco-efficiency [of cars] if China's demand continues to grow," he points out. 

Instead, Sachs supports the concept of eco-sufficiency, which advocates an overall reduction in the consumption of non-renewable resources.

Timeline

  • 23 Nov. 2006: EU energy ministers back Commission's Energy Efficiency Action Plan (see conclusions).
  • 10 Jan. 2007: Commission presents 'energy and climate change package' including a Strategic Energy Review focusing on both external and internal aspects of EU energy policy. The package contains proposals for specific targets on:  
    • Renewable energy (20% by 2020)
    • Greenhouse gas emissions reduction (20% by 2020) 
  • 9 March 2007: EU summit backs package, agrees two-year action plan to launch a common energy policy.
  • 22 Nov. 2007: Commission Communication on a Strategic Energy Technology Plan (SET-Plan).
  • 23 Jan. 2008: Commission presents a proposal for a directive on CO2 capture and storage technology (CCS).
  • 12 Dec. 2008: EU summit agrees to provide 300 million allowances from the Emissions Trading Scheme (EU ETS) to subsidise CCS demonstration plants (EurActiv 12/12/08).
  • 17 Dec. 2008: Parliament adopts CCS Directive (EurActiv 18/12/08).
  • 24 June 2009: Commission presents a communication on plans to spend €60 million on a CCS project in China, in a bid to raise public financing for the development of the technology in developing countries (EurActiv 25/06/09).
  • Nov. 2009: Commission to present second Energy Saving Action Plan for 2010 onwards.
  • End of 2009: Commission to release funding proposals for SET Plan.
  • 2020: EU target date to achieve objectives of the climate-energy package:
    • Renewable energy (20% by 2020).
    • Greenhouse gas emissions reduction (20% by 2020).
    • Renewable energy in transport including green biofuels and clean electricity (10% by 2020).
    • Energy savings (20% by 2020; non-binding).

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