EU struggling to secure funds for 'low carbon future'

  

The European Commission has proposed industrial initiatives and greater research efforts as part of plans to increase the uptake of low CO2 technologies in the EU, but postponed difficult financing questions to next year. 

Innovate or import

Presented in Brussels on 22 November by EU Energy Commissioner Andris Piebalgs and EU Research Commissioner Janez Potočnik as "a very courageous step", the Strategic Energy Technology Plan (SET Plan) describes Europe's dependency on fossil fuels and under-investment in clean technologies as "the greatest and widest-ranging market failure ever seen".

"If we fall behind in the intensifying global race to win low carbon technology markets, we may need to rely on imported technologies to meet our targets, missing out on huge commercial opportunities for EU businesses", the document says.

Hedging bets?

Speaking to reporters in Brussels on 22 November, Piebalgs pointed to increasing venture capital flows toward clean technologies in the US, Japan and China, but lamented that the same trend cannot be confirmed in the EU.

Research and development investments in the energy sector have decreased in the EU since the 1980s, and most European energy firms spend less than 1% of their net sales on clean technology innovation, according to the Commission.

Public sector leadership

Public intervention in support of energy innovation is "both necessary and justified" in order to overcome the 'valley of death' market gap for low carbon technologies that is characterised by a lack of "market appetite" and business incentives, according to the SET Plan. 

"Industry should be prepared to increase investment and take greater risks", according to the plan. But "it is the task of governments to lead" the process, announced Piebalgs, who said that the Commission is hoping a new directive on renewable energies, to be proposed on 23 January, will instil industry confidence and increase private investment flows. 

A 'collective endeavour'

The SET plan calls for greater cooperation at European level to boost innovation and proposes the following new measures:

  • European Industrial Initiatives for wind, solar and bio-energy but also for nuclear fission, CCS and electricity grids. The initiatives will be funded "in different ways", such as public-private partnerships, pooling of resources between member states and other measures proposed in the January SET Plan communication (see EurActiv 20/11/07);
  • European Research Alliance featuring research coordination between universities and specialised institutes;
  • Establishment of a high-level Steering Group on Strategic Energy Technologies;
  • A new Energy Technology Information System, and;
  • Organisation in 2009 of a European Energy Technology Summit.

In 2008, the Commission also intends to "develop its ideas" for planning the transition from a static energy grid characterised by large power-producing facilities towards a more dynamic, pan-European energy grid that can better integrate "more distributed, local generation of power", according to Potočnik.

Footing the bill

The Commission is looking for an endorsement by EU member states of its proposed industrial initiatives during the March 2008 Spring European Council. 

But precisely how and by whom the SET Plan's ambitions will be financed will remain the topic of potentially heated debate over the course of 2008, with the Commission expected to propose a separate communication on SET Plan financing by the end of that year. 

Positions: 

The SET Plan has drawn considerable criticism from renewable energy groups and environmentalists.

EREC, the European Renewable Energy Council, "very much regrets" the lack of emphasis on heating and cooling in the proposed Industrial Initiatives. "This represents a serious flaw if the European Union wants to address the future of the EU energy supply", said EREC Policy Director Oliver Schäfer in a statement. 

EUREC Agency, representing renewable energy research centres, agrees that heating and cooling have been sidelined in the plan. The association also perceives an "inconsistency in the EC's aim to develop a diverse portfolio of clean, efficient and low-carbon energy technologies and the significant bet it is making on hydrogen and fuel cells as the vehicle propulsion technology that will win before 2050". More work on high capacity batteries in transport applications is needed, it said. 

The European Wind Energy Association (EWEA) "regrets that the Plan does not address the continued need to reverse the irrational imbalances in national and EU research budgets. The wind energy sector would have liked to see a more detailed and clear financial strategy and priority-setting that takes into account past allocations of R&D funds between the different energy technologies", EWEA said in a statement.

Green MEP Claude Turmes slammed the SET Plan as "an all and nothing approach". 

"By trying to please a variety of energy lobbies, the plan will inevitably fall short of providing a real incentive for any", he said, expressing the Greens/EFA group's hope that "EU Member States will ignore this plan and instead focus on the efficiency and renewables plan being prepared by the Portuguese Presidency".

Frauke Thies, energy expert at Greenpeace,  called the SET Plan 'unstrategic', and criticised what the group considers an excessive focus on "expensive technologies that either bear an unacceptable environmental cost, like nuclear energy, or that are mere distractions, like carbon capture and storage", Thies said in a statement. 

Thies also argued that the plan focuses too much on "an outdated model of large and centralised power plants" that is "incompatible with an innovative and sustainable energy system based on the efficient use of energy, generation of renewable electricity and heat, and a smart network and operation of electricity grids", she said.

Shell, the international energy group, said "human talent and financial resources" were the two key elements to make the Commission’s SET Plan a success.

"Technology implies much more than research and development. It is the whole sequence from creating scientific ideas, turning those ideas into technological innovations or tools, and then applying them,” said Hans van der Loo, head of Shell’s EU liaison bureau in Brussels. “Governments can either make financial resources available themselves, but if these are not there, it should consider how to attract private funds into the early stages of development."

Timeline: 
  • 3 Dec. 2007: first discussion of SET Plan in Energy Council;
  • 23 Jan. 2008: Commission legislative proposals on renewable energy as part of new climate and energy 'package';
  • March 2008: Spring European Council, possible endorsement of SET Plan and Industrial Initiatives. 
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