# EUR-Lex - 52014DC0008 - EN

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# 52014DC0008

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Blue Energy Action needed to deliver on the potential of ocean energy in European seas and oceans by 2020 and beyond /* COM/2014/08 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

Blue Energy

Action needed to deliver on the
potential of ocean energy in European seas and oceans by 2020 and beyond

1.           Contribution to Employment,
Innovation, Climate and Energy Objectives

Our seas and oceans have the potential to
become important sources of clean energy. Marine renewable energy, which
includes both offshore wind and ocean energy[1],
presents the EU with an opportunity to generate economic growth and jobs, enhance
the security of its energy supply and boost competitiveness through
technological innovation. Following the 2008 Communication on offshore wind
energy[2],
this Communication considers the potential of the ocean energy sector to
contribute to the objectives of the Europe 2020 Strategy[3] as well EU's long-term greenhouse
gas emission reduction goals. It also looks over the horizon at this promising
new technology and outlines an action plan to help unlock its potential.

Harnessing the economic potential of our
seas and oceans in a sustainable manner is a key element in the EU's maritime
policy[4].
The ocean energy sector was recently highlighted in the Commission's Blue
Growth Strategy[5]
as one of five developing areas in the ‘blue economy’ that could help drive job
creation in coastal areas. Other Commission initiatives, such as the
Communication on Energy Technologies and Innovation[6] and the Atlantic Action
Plan[7], have recognised the
importance of ocean energy and aim to encourage collaborative research and
development and cross-border cooperation to boost its development.

Research and consultation work conducted as
a part of the impact assessment accompanying this Communication shows that additional
support for this emerging sector could enable the EU to reap significant economic
and environmental benefits. The impact assessment particularly highlights the
following issues:

· 
The ocean energy resource available globally
exceeds our present and projected future energy needs. In the EU, the highest
potential for the development of ocean energy is on the Atlantic seaboard, but
is also present in the Mediterranean and the Baltic basins and in the Outermost
Regions. Exploiting this indigenous resource would help to mitigate EU
dependence on fossil fuels for electricity generation and enhance energy
security. This may be particularly important for island nations and regions,
where ocean energy can contribute to energy self-sufficiency and replace expensive
diesel-generated electricity.

· 
The ocean energy sector can become an important
part of the blue economy, fuelling economic growth in coastal regions, as
well as inland. Pan-European supply chains could develop as the industry
expands involving both innovative SMEs and larger manufacturing companies with
relevant capabilities in, for example, shipbuilding, mechanical, electrical and
maritime engineering but also environmental impact assessment or health and
safety management. Increased demand for specialised ships is also to be
expected, for instance. These are likely to be constructed in European
shipyards.

· 
The position of European industry in the
global ocean energy market is currently strong. This is evidenced by the
fact that most of the technology developers are based in Europe. Growing
competition from China, Canada and other industrialised nations is, however,
expected. The UK's Carbon Trust estimated that the global wave and tidal energy
market could be worth up to €535 billion between 2010 and 2050[8]. Creating the
conditions under which the sector could prosper now would enable the EU to
capture a sizable share of the market in the future. Innovation through research
and development can allow the EU to generate export opportunities for
both technology and expertise. It is critical, therefore, to ensure that the EU
can maintain its global industrial leadership.

· 
Ocean energy has the potential to create new,
high-quality jobs in project development, component manufacturing
and operations. Indicative job estimates from the impact assessment show that 10,500-26,500
permanent jobs and up to 14,000 temporary jobs could be created by 2035. Other,
more optimistic sources estimate 20,000 jobs by 2035 in UK alone[9] and 18,000 in France by 2020[10]. A substantial
proportion of these employment opportunities will arise in the Atlantic coastal
areas, which currently suffer from high unemployment.

· 
Scaling up the deployment of ocean energy could
contribute to Europe's decarbonisation goals. Developing all sources of
low-carbon energy in a cost-effective manner will be important to deliver on
the EU's commitment to reduce its greenhouse gas emissions by 80-95% by 2050.

· 
Ocean energy electricity output is different to
that derived from other renewable energy sources. This means that ocean energy
could help to balance out the output of other renewable energy sources
such as wind energy and solar energy to ensure a steady aggregate supply of
renewable energy to the grid. Ocean energy would therefore be a valuable asset
in the EU's energy portfolio.

· 
Ocean energy devices tend to be entirely or
partially submerged and therefore have a low visual impact. As the scope for
expansion of land-based renewable energy generation becomes constrained, the
marine space offers a potential solution to public acceptance issues
related to visual impact, which may hinder renewable energy developments on
land.

2.           Marine Renewables today

Parallels are sometimes
drawn between the ocean energy sector today and early offshore wind power
development in the 1980s and 1990s. Since that time, the wind sector, including
offshore wind, has grown exponentially having benefitted from targeted policy support
at both Member State and EU level. Offshore wind
capacity grew by 33% in 2012, a faster rate of growth than the onshore wind
sector.[11]
At the end of 2012 the offshore wind energy sector
consisted of nearly 5GW of installed capacity in 55 offshore farms in 10
European countries, producing enough electricity to cover 0.5% of the EU’s
total electricity consumption. In the first six months of 2013, 277 new
offshore wind turbines were connected totalling a further 1GW. By 2020 total
installed capacity is projected to reach 43GW, producing approximately 3% of the
EU's total electricity consumption.

With technological improvements and additional
public support for early stage development, the ocean energy sector may be able
to develop to a similar scale as offshore wind over time. Ocean energy currently
is an infant industry, within which wave and tidal stream technologies are
relatively more developed than other technologies. There are currently 10MW[12] of installed wave and
tidal stream capacity in the EU, which is almost a three-fold increase from 3.5MW
four years ago. Located in the UK, Spain, Sweden and Denmark, these projects are
mostly pre-commercial, demonstrating the reliability and survivability of tested
devices. Huge growth is already predicted, however, with some 2GW of projects
in the pipeline (predominantly in the UK, France and Ireland). If all of these
projects are implemented, they could supply electricity to more than 1.5
million households.

A further promising concept is offshore
floating wind power. The deepening offshore coastal areas on the Atlantic seabed
make offshore turbines with fixed foundations too expensive. A floating
platform that is anchored to the seabed could be a more cost-effective solution
in those waters. There are currently two offshore wind floating demonstration
projects in operation, in Portugal and Norway. Ocean Thermal Energy Conversion
(OTEC) technology has a strong potential in the Outermost Regions due to their
location in the tropics, where the temperature difference between surface and
deep waters is the greatest. Local deployment can provide for the islands'
drinking water, cooling and electricity needs. Feasibility studies are
currently underway in Martinique and La Reunion.

Although ocean energy deployment figures
are modest compared to the offshore wind sector, commercial interest in the
sector is increasing, as evidenced by the growing involvement of large
manufacturers and utilities. The recent ocean industry "Vision Paper"
provides an additional signal that the sector is better able to identify its
needs and constraints as well as outlining solutions to address these. Over €600
million have been invested by the private sector over the last seven years and
this is set to increase further, provided that there are favourable conditions
for the development of these devices.

3.           Existing support

The growth of the wind and solar energy
sectors in recent years clearly demonstrates that concerted efforts to put in
place appropriate policy and funding frameworks can provide the incentives
required by industry to deliver results. At national level, Member States have
aimed to encourage investments in renewable energy technologies through revenue
support schemes, capital grants and research funding, but only a few have
dedicated support in place for ocean energy.

At the EU level, there are a number of
provisions to facilitate the development of renewables. The Renewable Energy
Directive and the Emissions Trading Scheme have provided the necessary regulatory
framework. Since 2008 the Strategic Energy Technology (SET) Plan[13] has been instrumental
in accelerating the development and deployment of low carbon energy technologies.
The Regulation on guidelines for trans-European energy infrastructure[14] seeks to tackle the
infrastructural challenge by defining integrated offshore electricity grid
development as a priority. It also establishes a process to identify and
monitor the selected infrastructure projects, which then benefit from
preferential regulatory treatment, such as accelerated permitting procedures,
and financial support. However, currently there are only few projects which are
planning meshed offshore grid solutions.

The EU has also made funding available for
actions benefiting ocean energy technologies. For instance, a joint programme
for ocean energy has been set up within the European Energy Research Alliance
(EERA). Member State involvement is being encouraged through a new European
Research Area network (ERA-net) of national and regional research programmes
that has been established specifically on ocean energy. This will support
coordination of research activities, encourage wider cross-border participation
in research, identify priorities and build scale within the EU. Three ocean
energy projects were awarded around €60 million in total under the first round
of the NER300 programme, which will enable the demonstration of arrays from
2016. Some projects have also been supported through structural funds. The
development of ocean energy has been highlighted in the recent Commission Communication
entitled "Action Plan for the Atlantic Ocean area"[15] which encouraged
national and regional governments to consider how they could use EU structural
and investment funds as well as research funds or European Investment Bank
funding to support the development of the sector.

The EU has also funded various projects
under Research Framework Programmes and the Intelligent Energy Europe Programme
for an amount of up to €90 million since the 1980s. Horizon 2020, the EU’s new
research and innovation programme, will aim to address important societal
challenges including clean energy and marine research. As such, it is a
powerful new tool that can be harnessed to drive the ocean energy sector
towards industrialisation, creating new jobs and economic growth.

4.           Challenges Remaining

Some of the challenges
faced by the ocean energy sector are similar to those for offshore wind. This
concerns notably grid connection issues, supply chain developments and
operation and maintenance under harsh weather conditions. However, ocean energy is now at a critical stage. Moving from
prototype demonstration to commercialisation has always been difficult for
emerging technologies. In the current economic climate, it is a particular
challenge. Like other renewable energies, ocean energy will benefit from a clear,
stable and supportive policy framework to attract investment and develop to its
potential. Based on its stakeholder consultation and impact assessment, the
Commission has identified the following issues that require attention over the
short to medium term to help the sector to scale up and become cost-competitive
with other forms of electricity generation.

· 
Technology costs
are currently high and access to finance is difficult. Most of the existing technologies
still need to demonstrate their reliability and survivability in the marine environment.
The cost of generated electricity is therefore currently high but is set to
decrease as the technologies advance along the learning curve. Demonstration of
devices at sea is costly and risky and SMEs are often short of the necessary
resources to deploy their prototypes. The diversity of the technologies currently
being tested means that progress toward capital cost reduction is taking time.

· 
Expanding and strengthening the EU's transmission
grid infrastructure, offshore but also on land and across borders, is
necessary to accommodate future volumes of ocean energy and transport it to
centres of demand. Whilst the recent TEN-E guidelines[16] may yield improvements
in the future, concerns about timely grid connection remain. Other
infrastructural issues including inadequate access to suitable port facilities
and the lack of specialised vessels for installation and maintenance also
need to be addressed.

· 
Complex licensing and consenting procedures can
delay projects and raise costs. Uncertainty about the correct application of
environmental legislation may further prolong consenting processes. Integrating
ocean energy into national maritime spatial plans is therefore important.

· 
Some of the environmental impacts of ocean
energy installations are not fully understood at this stage. More research and
a better exchange of information on the environmental impacts will be
required to understand and mitigate any adverse effects ocean energy
installations may have on marine ecosystems. Cumulative impacts with other
human activities also need to be assessed in the context of achieving good
environmental status under the Marine Strategy Framework Directive and good
ecological status under the Water Framework Directive. The integration of ocean
energy into national maritime spatial plans is also important for addressing
maritime safety concerns.

· 
Due to the current economic climate, several
governments have substantially scaled back grant and revenue support
for renewables, in some cases even introducing retrospective changes. Such
developments can erode investors' confidence and put further development of the
sector at risk. A lack of stable financial support, reflecting the position of
the technologies in the development cycle, can lengthen the time necessary for
projects to move towards profitability.

5.           Action plan for Ocean
Energy

Overcoming these challenges will be key to
the future development of the ocean energy sector and its ability to deliver high
volumes of low carbon electricity to Europe. The EERA joint programme, ocean
energy ERA-Net and Horizon 2020 will be instrumental in reaping the benefits of
pan-European cooperation in research and development, helping in particular to
tackle the remaining technical issues. For pre-commercial ocean energy technologies,
however, a stable and low risk framework of support is crucial as it ensures
the bankability of projects and thus allows for the growth of installed
capacity. The Commission has recently issued guidance on best practice for
renewable energy support schemes.[17]
While arguing for a stronger emphasis on the principle of cost-effectiveness,
the guidance also stresses that support scheme design should foster
technological innovation. The guidance therefore allows for projects of first
commercial scale deployment and thereby recognises the need for a targeted
support framework for technologies such as ocean energy.

Nevertheless, additional targeted actions
at EU level are necessary to complement these initiatives and others undertaken
at national level to overcome the bottlenecks to the development of the ocean
energy sector outlined above. This Communication therefore sets out a two-step
action plan that will assist this promising industrial sector in developing its
potential, building to the greatest possible extent on existing work and
projects such as ORECCA, SI OCEAN or SOWFIA. Based on the findings of the
impact assessment, several cost-effective actions have been identified. Some of
these have been designated as an initial 'call for action' that could be
complemented with additional measures at a later stage, should further steps be
required. The benefit of this two-step approach is that it will allow for the
accumulation of a critical mass of actors and development of a shared response
to the issues at stake in a bottom-up manner, thus creating a sense of
ownership among involved stakeholders.

5.1.        First phase of action (2014
– 2016)

i. Ocean Energy Forum

An Ocean Energy Forum will be set up,
bringing together stakeholders in a series of workshops in order to develop a
shared understanding of the problems at hand and to collectively devise
workable solutions. It will be instrumental in building capacity and critical
mass as well as fostering cooperation through the involvement of a wide range
of stakeholders. The forum will also explore the synergies with other marine
industries, particularly offshore wind, in matters relating to supply chains,
grid connection, operations and maintenance, logistics and spatial planning. Representatives
from relevant industries could be invited to participate as appropriate
depending on the issues discussed. The Commission will play a facilitating and
coordinating role in the forum. The forum will be organised into three
workstreams:

a) Technology and Resource Workstream

The commercialisation of the ocean energy
sector will require additional technological advancement as well as further
improvements in grid connections and other offshore supply chain
infrastructure.

Improving the affordability, reliability,
survivability, operability and stability of ocean energy devices[18] is essential. There is
already some consensus on the priority areas of technology research including,
for example, the need for better mooring systems or new materials. Possibilities
for collaborative working could also be identified in order to use resources
more efficiently and to facilitate technological convergence. A clear
timeframe, including key technological milestones will be set out.

This workstream will include a detailed
assessment of ocean energy resources and offshore infrastructures such as ports
and vessels, as improvements in these areas would help to optimise the
management of ocean energy devices and thus trigger corresponding cost
reductions.

This workstream would also seek to trigger
further improvements in the integration of offshore renewables into the energy
system. The industry would have the opportunity to voice its needs on issues
such as the research and development needs related to grid technology, energy
output forecasting and storage technologies could also be explored. The outcomes
will then be transmitted to relevant actors such as regulatory authorities, transmission
system operators and relevant fora such the North Seas Countries’ Offshore Grid
Initiative.

b) Administrative Issues and Finance Workstream

Long lead times caused by lengthy permitting
and licensing procedures and difficulty of access to finance have been
identified as pressing challenges.

The aim of this workstream will be to examine the
administrative procedures relevant to ocean energy installations in Member
States and the effects that ocean energy installations may have on shipping.
These administrative and safety issues need to be reviewed collaboratively between
Member State authorities and industry in this workshop, in order to lead to a
common understanding of the challenges faced on all sides, and how to tackle
them. The information gathered in the discussions will be used to compile a catalogue
of best practice, complemented with case studies.

The issues relating to finance will also be
examined. Given the novelty and the complexity of the technologies, investors
may be unaware of the opportunities that this industry offers. This workstream
should involve national authorities, development banks, private financiers and
project developers to discuss how best to trigger the necessary investment. The
suitability of different risk-sharing mechanisms such as soft-loans,
co-investment and public guarantees will also be assessed. The funding
opportunities available within EU research and innovation programmes such as
Horizon 2020, the NER300 programme and the European Investment Bank's renewable
energy funding programme will be specifically highlighted.

c) Environment Workstream

Environmental Impact Assessments are key to
ensure the sustainable development of this emerging industry. Collecting baseline
environmental data, however, places a major burden on individual project
developers relative to the size of single projects. This workstream will
encourage collaborative working on the monitoring of the environmental impacts
of existing and planned installations and on innovative ways of mitigating the
impact of ocean energy on the marine environment. The data on environmental
impacts and monitoring need to be fed into national authorities as a matter of
routine, under the Water Framework Directive and Marine Strategy Framework Directives
purposes.

A comprehensive framework of EU legislation
covering nature conservation, environmental impact assessment and renewable
energy already exists, complemented by the Commission's proposal for a
Directive on Maritime Spatial Planning (MSP). However, this workstream should assess
the need for sector-specific implementation guidelines, similar to those
already developed for wind energy, to complement the Habitats and Birds
Directives, Article 13 of the Renewable Energy Directive and a possible future
Directive on MSP.

ii. Ocean Energy Strategic
Roadmap

Based on the outcomes of the Ocean Energy
Forum, a Strategic Roadmap will be developed setting out clear targets for the
industrial development of the sector as well as a timeframe for their
achievement. In setting technology priorities, it will take into account the
key principles and developments announced by the Communication on Energy Technologies
and Innovation[19]
and will provide input and become part of the "Integrated Roadmap".[20] This roadmap will be
elaborated jointly by industry, Member States, interested regional authorities,
NGOs and other relevant stakeholders through a structured and participative
process, as outlined above. The roadmap will bring together findings from all
areas relevant to the development of the industry and provide an agreed
blueprint for action in order to help the ocean energy sector move towards
industrialisation.

5.2.        Second phase of action
(2017-2020)

iii. European Industrial Initiative

A European Industrial Initiative could be
developed based on the outcomes of the Ocean Energy Forum. Several European
Industrial Initiatives (EIIs) have already been established under the SET-Plan.
EIIs are public-private partnerships that bring together industry, researchers,
  Member States and the Commission to set out and achieve clear and shared
objectives over a specific timeframe. They can enhance the effectiveness of
innovative research and development and provide a platform for sharing
investment risk. The European Wind Initiative, for example, has already
provided input for the EU's research and development efforts on wind energy and
encouraged better alignment of relevant EU and national public funds on identified
priorities.

In order to establish a viable European
Industrial Initiative, however, the industrial stakeholders must first have a
clear strategy for the development of the sector and they must be well
organised in order to be able to deliver on its objectives. The initiative
would be the result of a shared process, with the participation of the
Commission, Member States, and industry and research organisations. The precise
form of this cooperation will need to be determined at a later stage, however,
as the current arrangement under the SET-Plan may be subject to change as
announced in the Communication on Technologies and Innovation.[21]

Given the early stage of development of
ocean energy technologies, building large-scale public-private partnerships
could be an effective means of sharing risk and leveraging private investment.
As discussed in the impact assessment, the establishment of a European
Industrial Initiative or other appropriate form of public-private partnership
is likely to constitute an important stepping-stone on the path to a full
industrial roll-out. It would help in formalising cooperation between
stakeholders, facilitating access to finance and in implementing the Strategic
Roadmap announced in this Communication.

iv. Sector-specific guidelines for the
implementation of relevant legislation

Based on the experience gathered in the
administrative issues and finance workstream and the environment workstream, guidelines
could be developed to streamline and facilitate the implementation of the
Habitats and Birds Directives and Article 13 of the Renewable Energy Directive as
well as to assist with maritime spatial planning processes. The aim of these
guidelines will be to reduce uncertainty through the provision of clearer and
more specific guidance for the licensing of relevant projects and thus ease the
burden faced by public authorities and project developers.

6.           Taking Stock of progress

Once the above actions are initiated and
firmly in place, it will be important to monitor the progress made by the ocean
energy sector in fulfilling its potential as a strategic energy technology.
This could be done, for example, by measuring the level of installed capacity
and power generation, the number of projects deployed and planned, the scale of
investment, the extent of capital cost reduction or the number of collaborative
undertakings. It will also be important to assess the extent to which the
sector is contributing to the EU’s wider jobs, growth and sustainability
objectives.

The Commission will undertake an initial
evaluation of progress in 2017 and a more comprehensive
evaluation of the state of development of ocean energy at the latest by 2020.
The review process will have to take into account the evaluation and further
development of the EU's general policy towards renewable energy development and
energy technology policy.

7.           Conclusion

As the EU contemplates its energy and
climate change policy beyond 2020, it is timely to explore all possible options
in a sustained and collective effort to mitigate the effects of climate change
and to diversify Europe’s portfolio of renewable energy sources. Supporting
innovation in low-carbon energy technologies can help to tackle these
challenges. No stone should be left unturned. For ocean energy to deliver on
its potential, the time is ripe to bring Member States, the industry and the
Commission together to work in a collaborative manner to accelerate its
development. This Communication therefore sets out an action plan to guide
further development of the ocean energy sector. Completion of this action plan
in the period 2014-2017 should help the industrialisation of the sector, so
that it can provide cost-effective, low-carbon electricity as well as new jobs
and economic growth for the EU economy.

Common goals
are best served through a coordinated and inclusive approach. Although today the
ocean energy sector is relatively small, it could scale up in order to be in a
position to contribute to economic growth and job creation in the EU. The
sector could also contribute to the EU's 2050 greenhouse gas reduction ambitions
if the right conditions are put in place now. By providing the necessary
political impetus to this emerging sector, through the measures outlined above,
ocean energy should, in the medium to long term, be able to achieve the
necessary critical mass for its commercialisation and become another European industrial
success story.

8.           Annex 1: Summary of
measures proposed

Deliverables || Timeline

Phase 1

Setting up of an Ocean Energy Forum, involving the industry and other stakeholders · Technology and Resource Workstream · Administrative Issues and Finance Workstream · Environment Workstream || 2014 - 2016

2014 - 2016

2014 - 2016

Drafting of a Strategic Roadmap || 2016

Phase 2

Possible setting up of European Industrial Initiative || 2017 - 2020

Possible drafting of guidelines to facilitate the implementation of relevant legislation and to assist with maritime spatial planning || 2017 - 2020

[1]               Ocean energy can be harvested in many forms. Wave energy
depends on wave height, speed, length, and the density of the water. Tidal
stream energy is generated from the flow of water in narrow channels whereas tidal
range technologies (or 'tidal barrages') exploit the difference in surface
height in a dammed estuary or bay. Ocean energy can also be generated from
temperature differences between surface and sub-surface water while salinity
gradient power relies on the difference in salinity between salt and fresh
water.

[2]               COM(2008), 13.11.2008

[3]               COM(2010) 2020, 3.3.2010

[4]               COM(2007) 575, 10.10.2007

[5]               COM(2012) 494, 13.9.2012

[6]               COM(2013) 253, 2.5.2013

[7]               COM(2013) 279, 13.5.2013

[8]               Carbon Trust (2011), Marine Renewables Green Growth
Paper

[9]               Renewable
 UK (2013), Wave and Tidal Energy in the UK at: http://www.renewableuk.com/en/publications/reports.cfm/wave-and-tidal-energy-in-the-uk-2013

[10]             French Senate (2012), Report on Maritime Affairs at: http://www.senat.fr/rap/r11-674/r11-6741.pdf

[11]             European Wind Energy Association (2013), Wind in power:
2012 European statistics

[12]             The current installed capacity rises to 250MW if the La
Rance tidal range system, in operation since 1966, is included. Tidal range
systems are a mature technology but the scope for increasing their deployment
is limited due to a lack of suitable locations and high environmental impact.

[13]             COM(2009) 519, 7.10.2009

[14]             Regulation 347/2013, 25.4.2013

[15]             COM(2013) 279, 13.5.2013

[16]             Regulation 347/2013, 25.4.2013

[17]             SWD (2013) 439 final, 5.11.2013

[18]             Selection from ORECCA Roadmap (2012)

[19]             COM (2013) 253

[20]             The implementing measure proposed by the COM (2013) 253

[21]             COM (2013) 253, 2.5.2013