Five principles for Europe’s clean energy transition

Action needs to be taken in Europe to avoid losing its leadership status in clean energy research and innovation.
Published: Fri 01 Jul 2016

In the wake of the Paris Agreement at COP21 in December 2015, with the commitment to keep global temperature rise to “well below” 2oC, the need to reduce greenhouse gas emissions has gained a new urgency. [Engerati-COP 21 Climate Agreement Sets Scene For Energy Sector] This is so especially in Europe, where the goal has been set to reduce emissions by 80-95% by 2050.

As a major contributor to energy-related research and innovation efforts over the last decades, with 18% of global climate change mitigation technology inventions and 40% of the high value ones, Europe has been very much at the forefront of the emission reduction push. The region is also the largest investor in renewable energies R&D, accounting for $4.3 billion in 2014 (36% of the total), while 1.2 million jobs are associated to the sector.

However, Europe now risks losing this status, according to a new report from i24c (the Industrial Innovation for Competitiveness Initiative) and Capgemini Consulting. Europe is struggling to industrialize promising energy related innovations and lacks a comprehensive operational strategy for research, innovation and competitiveness, bringing together the supply, demand and regulatory aspects.

Research, innovation and competitiveness

The study was initiated by i24c under the leadership of Pascal Lamy, president emeritus at the Jacques Delors Institute, and Sir Philip Lowe, former DG for Energy and Competition at the European Commission, to help frame the contours of an integrated strategy for “research, innovation and competitiveness” for the European Energy Union and support the public debate on this issue.

It was compiled over a 4-month period, with input from high level executives in workshops and online surveys.

11 clean energy innovation areas were reviewed: onshore wind, solar PV, biomass, carbon capture and storage (CCS), hydrogen storage, hydrogen mobility, electro-chemical and mechanical power storage, electric vehicles, smart distribution grids, smart districts and energy efficient buildings. These were assessed in terms of the ability to innovate, support the competitiveness of European industries, and generate value for Europe in terms of jobs, growth and exports.

Six cases were also reviewed to gain a better understanding of key success factors and challenges of these initiatives: wind in Denmark, biomass in Sweden, power storage in the USA, smart distribution grids, smart cities and the ARPA-E approach in the USA.

Among the findings are European leadership in onshore wind and biomass. Conversely, an example of a low carbon technology where market penetration is slow is electric vehicles, which account for less than 1.4% of new car sales in most EU countries.

An example of another area where Europe has lagged is smart grids. While more than 450 projects had been developed in the region by 2014, these projects are often smaller than those developed elsewhere: as of 2012, the average amount invested in a smart grid project in Europe was around €8.5 million, compared with more than €30 million in China and €50 million in the USA.

Clean energy strategy

The report attributes the region’s struggle to successfully deploy clean energy innovations to “an insufficiently cohesive industrial, economic and regulatory strategy.”

Says Pascal Lamy commenting: “The study confirms the need for an integrated and systemic approach to energy research, innovation and competitiveness. Successes to date cannot be taken for granted in the future, as other economies seek to develop their energy-related industries to exploit the massive opportunities from the transition to a new climate economy.”

He adds: “With the right enabling framework, putting the consumer centre-stage and smart strategic choices, Europe can demonstrate leadership through industrial success as well as achieving a clean energy revolution.”

Nicolas Clinckx, vice president Energy and Utilities, Capgemini Consulting, concurs: “Europe’s leadership position in low-carbon technology R&D can provide the foundation for meeting the ambitious climate change goals set out both at COP21 and in its Energy Roadmap 2050, but only if more is done to address the deployment challenges. This isn’t just an energy issue, Europe needs a cohesive strategy for energy innovation and deployment that encompasses all related sectors and works across borders to pull promising developments across the valley of death and into production. The European Union can play a key role by ensuring that regulation not only encourages investment but also deployment too.”

Principles for the clean energy transition

Based on the findings the report offers five key principles that should be at the core of a new approach to help tackle the deployment deficit and spark Europe’s transition to clean energy.

These principles are:

1. Provide clarity on long-term direction. Companies and entities at a local and national level need a vision and framework that they can work to. Only by having an overarching Europe-wide industrial innovation strategy is this possible.

2. Create the right market conditions to better pull energy innovations across the ‘valley of death’ and to scale. Innovation in the energy sector requires mass investment and this is only possible if investors can see clear paths from research to deployment. Europe needs to create the right market conditions and regulation to make this a reality.

3. Accelerate the empowerment of local and regional authorities. The power of data is fuelling the growth of IoT and smart cities in particular. Cities such as Singapore are demonstrating how a holistic view can empower an entire region.

4. Empower customers and citizens yet further: Citizen engagement is key in order to create desire and buy-in for change. Governments need to help private organizations to mobilize individuals at a grass-roots level in order to move Europe forward. [Engerati-‘New deal’ for European energy consumers]

5. Be more results-orientated and selective in nurturing energy innovation: With finite budgets, innovation should not be supported if it does not lead to concrete action. The focus for all R&D projects should be the efficiency of investment.

Further reading

Scaling up Innovation in the Energy Union to Meet New Climate, Competitiveness and Societal Goals

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