EU to invest billions in energy research

Oct 07, 2009 02:00 AM

The European Commission revealed its long-awaited blueprint for tripling Europe's energy research funding within the next decade, in a bid to shift monies towards supporting the transition to a low-carbon economy in the next EU budget.
In November 2007, the European Commission proposed a Strategic Energy Technology Plan (SET Plan) to help the EU reach its targets for renewable energy uptake and CO2 emission reduction. It hopes that a coherent strategy will foster more cooperation and reinvigorate Europe's drive to invest in energy research.

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;
-- a European Research Alliance featuring research coordination between universities and specialised institutes;
-- the establishment of a high-level Steering Group on Strategic Energy Technologies;
-- a new Energy Technology Information System, and;
-- the organisation in October 2009 of a European Energy Technology Summit.

The EU executive calls for the energy research budget to be increased to EUR 50 bn over the next ten years. This would require yearly flows from both the public and private sectors to jump from their current EUR 3 bn to EUR 8 bn, it calculated.
The Communication on Financing the Development of Low-Carbon Technologies sets out how this money should be divided between key low-carbon technologies that can move Europe from 80 % dependence on fossil fuels to 80 % emissions cuts by 2050. The research priorities were identified in the 2007 Strategic Energy Technology Plan (SET-Plan) that intended to reassert Europe's competitiveness by putting declining EU energy research budgets back on track.

The financing plan, which was originally due out last year, was partly delayed due to the financial crisis, which required new thinking on how to reactivate growth, Energy Commissioner Andris Piebalgs told journalists. Furthermore, drawing up roadmaps for the various technologies took time, he added.
The final plan earmarks EUR 6 bn for research into wind energy, which the Commission believes could produce a fifth of the EU's electricity by 2020. The money would help to fund developments offshore, where winds are stronger, by investing in next-generation turbines and new structures.

Solar energy would get EUR 16 bn for developing new photovoltaic concepts and large industrial concentrating solar power (CSP) installations to contribute 15 % of EU electricity in ten years' time. Bioenergy research would also get EUR 9 bn so that it could provide 14 % of EU energy while respecting sustainability criteria.
In order to integrate renewables and implement the internal energy market, electricity grids would get EUR 2 bn so that half of the networks can operate along a "smart grid" principle.

Apart from renewables, carbon capture and storage (CCS) is set to receive EUR 13 bn for up to 12 demonstration projects. Nuclear research would also get EUR 7 bn for putting the fourth generation into operation.
The financing proposal also foresees EUR 11 bn for a "Smart Cities" programme, in order to counter criticism that the SET-Plan disregards energy efficiency. Between 25 and 30 cities are to be upgraded with low-carbon houses and transport so that they emit 40 % less greenhouse gas emissions in 2020 than they did in 1990. In addition, the Commission is calling for more money for future breakthrough technologies, such as motors fuelled directly by sunlight or batteries which store power at ten times their current density.

Public partnering with private money
The Commission believes that public-private partnerships are the most credible way to go about funding energy research.However, it did not spell out how the financial burden should be shared between the two.
Currently, energy research funding is 70 % private and 30 % public, excluding nuclear research. The EU executive argues that a "significant rise" in the public share will be necessary in the short term to give businesses incentives to work towards public climate and energy supply goals at a time of recession.

In projects where the risks are higher, public funding should assume a greater role, the Commission says. To optimise the level of intervention, it advocates the use of European programmes, particularly where there is a clear added value of EU-level action, for example in the case of programmes that are too expensive for a single member state to fund. Currently, 80 % of public investment in non-nuclear energy research is made at national level.
Although the communication does not announce any new EU funds, it argues that "an increase in the proportion of the public investment at Community level may need tobe one of the options explored in the budget review".

Janez Potocnik, EU commissioner for science and research, pointed out that while the Commission had provided the guidelines for investment, it would primarily be up to businesses and member states to deliver the increased sums.
"It would be an overestimation to say that the major answer lies on the budget of the European Union," he said. He added nevertheless that the EU already has many financial instruments that can support low-carbon technologies.

The EUR 300 mm allowances set aside for the "new entrants reserve", part of the EU's emissions trading scheme, will be at the disposal of member states to help commercialise CCS and innovative renewables technologies, the communication points out.
Moreover, Community programmes such as European Energy Programme for Recovery and the 7th Framework Programme (FP7) can be used to offset technological risks, it says, adding that these will nevertheless need to be scaled up.

EUEnergy Commissioner Andris Piebalgs noted that previous industrial revolutions have demonstrated that the right technologies can transform people's lives for the better.
"Today we have a unique opportunity to change an energy model based on polluting, scarce and risky fossil fuels, into a clean, sustainable and less dependent one. All depends on choosing the right technologies," he said.

Science and Research Commissioner Janez Potocnik called for increased investment into researching clean technologies in order to make the road to Copenhagen and beyond cheaper.
"With today's estimates, the Commission wants to make the SET-Plan a springboard to leap into a low-carbon economy, which is only possible if public and private actors pool resources in a coherent way. Increasing smart investment in research today is an opportunity to develop new sources of growth, to green our economy and to ensure the EU's competitiveness when we come out of the crisis," he said.

Economic and Monetary Affairs Commissioner Joaquin Almunia argued that a wide range of financial instruments is needed to meet the investment needs of renewable and clean energy development.
"The Commission and the European Investment Bank have already significantly increased funding for this purpose. But we need to mobilise more public and private sector funds. We propose to reinforce the Risk Sharing Finance Facility, further support venture capital and develop the Marguerite and other funds," he said.

Green MEP Claude Turmes (Luxembourg) called the Commission's plan a "mere public relations exercise".
"Today's announcement is just window dressing to cover up the disastrous so-called recovery plan that was conceived by the Commission and member states. The EUR 4 bn plan represented a real opportunity, but much of it was frittered away on ineffective grid, pipeline and carbon capture and storage (CCS) projects," he said. "It is ludicrous to put high-risk strategies such as CCS and nuclear on the same footing as these. The EU will continue to waste funds as long as it listens to the loudest lobbies instead of focusing on the cleanest and most effective energy strategies," he added.

The European Renewable Energy Council (EREC) said that it was high time for the Commission to outline funding needs for research, but regretted the absence of concrete proposals for allocating EU funds. Moreover, it was concerned about the exclusion of certain renewable electricity technologies.
"Leaving technologies like Geothermal and Solar Thermal or Small Hydropower and Ocean Energy out of the current portfolio is a missed opportunity -- both in terms of security of energy supply and diversification of the energy mix," said Arthouros Zervos, EREC president.

The European Wind Energy Association (EWEA) argued that the proposed funds were essential.
"The sum invested in wind is small compared to the amount given to coal carbon capture and storage," said EWEA CEO Christian Kjaer. "But the wind energy industry acknowledges the very significant and important increase in wind energy research funds, especially compared to the 1 % of EU energy research funds historically allocated to wind until 2002," he added.

The European Photovoltaic Industry Association (EPIA) argued that the budget proposed for solar energy does not sufficiently address the challenges facing the photovoltaic sector.
"A lot of uncertainty remains on their respective contribution and the level of funds which will be made available from the public sector. In the current context of economical crisis and risk aversion, it is essential to stimulate private investment and the sharing risk with large public funding and ensuring an appropriate European industrial policy framework," EPIA said.

Greenpeace criticised the Commission for presenting an inconsistent strategy that promotes energy efficiency and renewables while suggesting subsidies for nuclear and coal-based technologies "designed to operate in centralised and inflexible power grids".
"The Commission has once again fallen between two stools on where to invest in the energy system. It recognises the need for renewables and efficiency, but it is also bowing to pressure to fund outdated technologies like coal and nuclear. It's time for the EU to choose the type of energy system it wants in the future and stop playing the field," said Frauke Thies, Greenpeace EU's energy policy campaigner.

WWF said the paper brought little new to the table.
"Without clear commitments of financial aid to accelerate actions in key sectors, we will not see the rapid progress so urgently needed on low-carbon energy sources," said Jason Anderson, WWF's head of EU climate and energy policy.

The European Renewable Energy Centres Agency (EUREC) regretted that in the final text, the Commission had decided not to ask member states to agree to dedicate additional funding to support the SET Plan in the mid-term review of the EU budget.
"The EC should have challenged the member states on this point. The urgency with which we need to bring new technology to the market requires greater interaction between Europe's R&D centres and between R&D centres and industry, which EU-level funding can help to stimulate," it said.

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