Greening the Economy

The future of ecology-friendly technologies will be at the centre of discussion at this workshop of the European Business Summit on 22 February.
In order to deliver sustainable, secure and competitive energy, the EU needs to accelerate the development and deployment of cost-effective low carbon technologies.
In a carbon constrained world, the mastery of technology will increasingly determine prosperity and competitiveness. EU industry needs to be put at the forefront of the rapidly growing low carbon technology sector.
Public and private energy R&D budgets have declined by almost 50% since peaking in the 1980s in response to the energy price shocks. In 2005, the Japanese and US government are spending more on energy R&D than Europe. Between 1991 and 2005, the trend of public spending on energy R&D was negative in the EU.

Challenges in the short/medium and long run

  • The energy innovation process, from invention to full-scale commercialisation, is characterised by long lead times, often decades, to mass market due to the inertia inherent in existing energy systems, locked-in infrastructure investments, diverse market incentives and network connection challenges.
  • Do not ‘pick winners’. A broad technology portfolio approach is required. This will spread risk and avoid locking-in to technologies that may not provide the best solution in the long run.
  • The EU research base needs to become less fragmented and less overlapping and requires more coordination and cooperation between member states. In the US and Japan, energy R&D is much more focused and coordinated through respectively the Department of Energy (DOE) and the Ministry for Economy, Trade and Industry (METI).
  • Public policy needs to create the adequate framework conditions and incentives for the development and take-up of energy technologies. One needs to focus on both technology push (e.g. public R&D investments) as demand pull (e.g. lead markets, procurement, standards, fiscal incentives,…) instruments.
  • All components of the innovation system need to function well in order to be competitive on the international markets (e.g. the financial sector, education and training, IPR,…).

Main issues at European level

  • Innovation is a crucial part of the Lisbon agenda. As a result of this, several instruments have already been created at the European level: the European Technology Platforms, the Joint Technology Initiatives, the European Research Area, the European Institute of Technology, the Seventh Framework Program, the Risk Sharing Finance Facility of the European Investment Bank,…
  • Energy and climate change are high on the political agenda. Different instruments have been created, which contribute to the development and implementation of low carbon technologies: the Emissions Trading Directive, the Directive on renewable energy sources, the Directive on the Energy Performance on Buildings, the Directive on Energy Taxation, the Directives on Energy Labelling of Appliances,…
  • On 22 November 2007, the European Commission has launched its European Strategic Energy Technology Plan (SET-Plan). The main goal of the SET-Plan is to accelerate the development and implementation of low carbon technologies.
  • The SET-Plan calls for the establishment of a Steering Group on Strategic Energy Technologies by early 2008 to reinforce the coherence between national, European and international efforts, the launch of six new European Industrial Initiatives in 2008 that will target sectors (e.g. wind, solar, bio-energy,…) for which working at Community level will add most value and the presentation of a Communication on financing low carbon technologies at the end of 2008 to examine the opportunity of creating a new European mechanism/fund for the industrial-scale demonstration and market replication of advanced low carbon technologies.

Possible questions

  • What will be the contribution of eco-technologies to a sustainable, secure and competitive energy? How will this evolve over time (e.g. the difference between technologies that are already available today and those that still require a radical breakthrough)?
  • Which framework conditions and incentives does the private sector need for the development and deployment of cost-effective low carbon technologies?
  • Does Europe have what it takes to hold world leadership in a diverse portfolio of clean, efficient and low-carbon energy technologies as a key contributor to growth and jobs?
  • In which eco-technology markets does Europe already have a competitive advantage over other world regions (e.g. US, Japan, India and China,…)?
  • How can the EU research base become less fragmented? What is needed to create sufficient critical mass in Europe?

5. Further reading

• EC DG Environment, 2006. Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU.
• Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Towards a European strategic energy technology plan. COM (2006) 847.
• IEA, 2006. Energy Technology Perspectives – Scenarios and Strategies to 2050.
• Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – A European strategic energy technology plan (SET-Plan): Towards a low carbon future. COM (2007) 723.
• OECD, 2008 forthcoming. Environmental Innovation and Global Markets.

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