Clean energy: industrial competitiveness and innovation

clean energy

Director-General of DG Energy, Dominique Ristori, discusses the importance of industrial competitiveness and innovation action to ensure clean energy for the future.

Strengthening Europe’s industrial competitiveness is of key importance for the future of Europe’s economy. It is also a clear political priority supported at the highest level by President Jean-Claude Juncker who called for a stronger and more competitive European industry. Last September, the European Commission adopted a new Industrial Policy Strategy to help European industries stay, or become, the world leader in innovation, digitisation and decarbonisation. In this context, the clean energy transition is playing a key role in boosting Europe’s competitiveness and in building a strong industrial basis in Europe.

Clean energy is a clear economic opportunity. For that purpose, renewable energies are an important driver. It was therefore particularly encouraging to start 2018 with a high-level meeting on renewable energy in January, within the framework of the new Clean Energy Industrial Forum, hosted by Energy and Climate Action Commissioner Miguel Arias Cañete. This meeting was yet another sign that the clean energy transition is high on the Commission’s agenda.

Europe is at the forefront of the global push for a low-carbon economy

Europe has managed to successfully decouple its greenhouse gas emissions from its economic growth. Between 1990 and 2016 greenhouse gas emissions in the European Union were reduced by 23% while the economy grew by 53% over the same period, showing that growth and decarbonisation can go hand in hand.

Impressive progress has been made in the deployment of renewable energies, demonstrating European leadership in this sector and in the implementation of the Paris Agreement. Indeed, the renewable energy sector accounts for more than 1.1 million jobs in Europe and represents a turnover of over €150bn per year, while EU companies have a share of 30% of all patents for renewable technologies.

At the same time, the share of renewable energies in the final energy consumption accounts for 16.7% and continues to rise, putting the EU on track to meet its 2020 energy objectives. Renewables are also playing a growing role in the electricity sector and are now representing 30% of the electricity produced in Europe. These positive trends have been supported by the EU regulatory framework, as well as by rapidly decreasing costs of renewable energy technologies.

But if Europe wants to remain at the forefront of the clean energy transition and maintain its leadership, further efforts are needed as other important economies are now embracing at full-speed the development of renewable energy technologies.

The EU is facing global competition towards the clean energy transition

The EU clean energy transition cannot be separated from the global energy transition in line with the Paris Agreement. Global competition is higher than before, and we need to ensure that European industry can compete globally and maintain its leadership in the global energy transition.

Back in 2009, the EU was the first major player to have established a renewables target. However today, around 174 countries have established their own renewables target, and EU investment in renewable energy technologies represents only 18% of the global market for renewables compared to 45% in 2011. The number of patents in renewable energy technologies is also increasing outside Europe.

Pushed by the challenges of decarbonisation, decentralisation and digitalisation, energy markets are changing very fast. By 2030, the global market for renewables is expected to be between 5000-6000 GW.

Energy transition is progressing and has become a concrete priority at the level of investors. In 2016, €1.5 trillion were invested in energy at global level, with a very significant share of 43% invested in clean energy such as renewables, energy efficiency, smart grids and storage.

With the energy transition happening globally, the EU industry is facing increased competition. At the same time, a growing global market for renewable energies also means new business and market share opportunities for EU industries. Therefore, it is key to ensure that EU companies benefits from these global developments.

Setting the right regulatory framework to support renewable energies in Europe

Cost-effective options to deploy more renewables are available in all member states of the EU. This should be further encouraged by the European regulatory framework. It is important to ensure that renewable energies are integrated in the energy system in a secure and cost-competitive way.

For this purpose, the Commission presented in November 2016 the Clean Energy for All Europeans package, which is now being negotiated by the co-legislators. As agreed at the highest political level – by the Presidents of the European Parliament, the Council and the Commission – the aim is to conclude the negotiations as swiftly as possible, in the course of this year. This is important as we need to set the way forward and send proper signals to investors and industries in Europe.

The Clean Energy for All Europeans package aims at putting in place the most advanced regulatory framework to ensure Europe’s leadership in the clean energy transition and modernise the EU economy. It sets the conditions to support the development of the renewable energy sector and ensure that it becomes a clear and profitable source of growth, competitiveness and jobs in Europe.

First, it provides proper incentives to investors, ensuring certainty and visibility. Indeed, it sets rules that will ensure reaching an increasing level of renewables in the final energy consumption at EU-level by 2030. With this objective, it moves away from national targets and contributes to the progressive Europeanisation of renewable energy policy, thus setting the conditions for sustained investments and opportunities in bigger markets going beyond national borders. This is also further facilitated by the proposed measures to adapt support to renewable energy, ensuring its progressive cross-border opening and putting an end to retroactive changes.

Second, the proposals will facilitate the development and integration of renewable energies in the energy system. They include measures to adapt and modernise the electricity system so that it is able to integrate the growing share of variable and decentralised renewable energies. Indeed, already today more than 90% of new installed capacity of renewable electricity is connected to distribution grids in Europe. Therefore, the electricity system needs to become more flexible and to react more quickly while ensuring stability and security. Digital technology will also increase the intelligence of the energy system.

Consumers and local actors will also play a significant role in the deployment of renewable energy. For those reasons, the new rules enable consumers and renewable energy communities to produce, sell or store their own renewable electricity, allowing them to play a central role in the energy transition.

This package also seizes the new economic opportunities for renewable energies and ensures their deployment in sectors such as transport and heating and cooling, where important potential remains untapped.

Beyond the regulatory framework, the Commission is supporting the development of renewable energies through specific instruments and initiatives. For instance, the Clean EU Energy Islands Initiative will allow islands to explore innovative renewable energy technologies in order to become pioneers of the energy transition. This will contribute to clean, secure and affordable energy in islands, while boosting their economic activity and benefitting their local population.

Building a strong industrial basis for renewable energies in Europe

Our industry is facing fiercer competition from renewable energy companies from outside the EU. To remain competitive, we need to develop a strong industrial basis for renewable energy and energy transition in general. We have to make sure that the EU renewables industry becomes a strong engine for the EU economy.

Beyond the regulatory framework, the future of Europe’s industry will depend on its ability to continuously adapt and innovate. Research and innovation is, as always, key for the EU to remain the global technology leader. In the latest EU work programme for research and innovation, €2.2 billion have been assigned to clean energy technologies over the period from 2018 to 2020.

Although the EU is still doing well in terms of funding, the number of patents is increasing in non-EU members. EU industries should therefore develop innovative technologies – in the electricity, heating and cooling and transport sectors – and ensure that they are of the highest standard and quality. Developing and spreading EU energy standards will ensure a strong advantage to EU industry and will contribute to its competitiveness.

Focus should also be put on skills and training as it will contribute to maintain EU leadership in innovative solutions and it represents an opportunity for high-value growth and jobs.

As regards trade, Europe is open for business, but we must ensure reciprocity and fairness as proposed last September by the Commission’s initiatives for a balanced and progressive trade policy. This is important to ensure that EU industry and project developers can compete on an equal footing at the global level.

All this will ensure that the EU industry is strong enough to meet the challenges ahead and seize the opportunities that represent a growing global market for renewables.

This is why the Commission first outlined the concept of a Clean Energy Industry Forum as part of the accompanying measures foreseen for the Clean Energy for All Europeans Package. This forum focuses on how to reinforce the competitiveness of the EU’s renewable energy industry value chain and looks at research and innovation areas as well as trade policies.

The first meeting of the clean energy industrial forum on renewables took place in January. In addition, a clean energy industrial forum meeting on batteries took place in October with Vice-President Maroš Šefcˇovicˇ, and Industry Commissioner Elz˙bieta Bien´kowska held a meeting with the construction industry in January. The Commission is keen to ensure complementarity of these sectors and provided an outline of the results at the EU Industry Days at the end of February.

Further meetings will take place on a regular basis to ensure that we get direct feedback on the latest developments in the renewable energy industry in order to address potential barriers and seize new opportunities. This will contribute to the consolidation of a strong industrial basis for renewables in Europe.

In addition, the 9th Clean Energy Ministerial meeting in Malmö and Copenhagen in May will serve as a springboard for EU industry. It will contribute to assess EU industrial leadership in low carbon technologies in the global context.

Building a strong industrial basis in Europe in the context of a successful energy transition will contribute to the positive agenda of the European Union: boosting investment, growth and jobs in Europe.

Dominique Ristori
Director-General
DG ENERGY
European Commission

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