EN Official Journal of the European Union C 133/25

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission — Towards an integrated Strategic Energy Technology (SET) Plan: accelerating the European energy system transformation’

(C(2015) 6317 final)

(2016/C 133/06)

Rapporteur: Mihai MANOLIU

On 15 July 2015, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission — Towards an integrated Strategic Energy Technology (SET) Plan: accelerating the European energy system transformation

(C(2015) 6317 final).

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 2 February 2016.

At its 514th plenary session, held on 17 and 18 February 2016 (meeting of 17 February), the European Economic and Social Committee adopted the following opinion by 172 votes to 6 with 9 abstentions.

1. Conclusions and recommendations

1.1 The EESC reiterates its firm commitment to an Energy Union (the solidarity clause, energy flows as if it were a fifth freedom, energy efficiency first, the transition to a low-carbon society that is built to last) and a European energy dialogue. It supports optimal implementation of the SET Plan.

1.2 This goal can be achieved through a joint, consistent approach involving the cooperation of energy policy stakeholders and the coordination of energy research and innovation programmes, and calls for swift market roll-out of environmentally-friendly sustainable energy technologies.

1.3 In the EESC’s view, the most important task is the technical and scientific development of technologies and innovation, and the promotion of factors that encourage new ideas and concepts, such as those contained in the European Strategic Energy Technology Plan — the SET Plan, which is necessary for speeding up the transformation of Europe’s energy system .

1.4 These should be accompanied by a mandate, discussed with stakeholders, arrangements for participation in an integrated roadmap flanked by an investment action plan making use of EU, national, regional and private resources as appropriate through the European Energy Research Alliance (EERA) and the European Industry Initiatives (EIIs) in order to help achieve the objectives.

1.5 In the EESC’s view, speeding up the transformation of Europe’s energy system will be crucial for Europe over the next few years with regard to combating climate change, Europe’s competitiveness and economic attractiveness, and ensuring security of supply for (big and small) consumers at an affordable price (set in a transparent manner).

1.6 The EESC believes that the new energy policy should be based on developing key sectors (established through dialogue and cooperation) for research and innovation, as well as the area of training for the staff that will operate the new technologies.

1.7 The EESC believes that in order to respond to the expectations of Europeans, a consistent and holistic approach needs to be taken to the issue of energy, involving cooperation between States and an efficient internal energy market. Massive investments are needed in both technological research and infrastructure; investors need a stable, sound policy framework, shaped by an accurate analysis of development priorities, feasible and available funding opportunities, Europe’s industrial competitiveness and, last but not least, the wishes of the public.

1.8 The SET Plan must be specific and rooted in the real-life situation of Europe. Should new energy technologies give rise to increases in final energy prices, and where such increases are due to political action, the EESC feels that correction can rightfully be expected. There should be stable, practical involvement of consumers; energy poverty should also be combated through social policy measures, education and training.

1.9 The European experience has shown that the imposition of technologies that produce low-carbon energy, without taking into account the costs and maturity of the technologies, does not produce convincing results; on the contrary, it puts the internal energy market at risk of collapse.

1.10 The EESC believes that renewable power generation technologies have considerable potential, and can provide solutions that should be supported by means of demonstration projects and the dissemination of success stories. Other low-carbon technologies should also be considered: clean coal technologies, energy storage (including electricity), demand response, carbon and hydrogen use, co-generation, city cooling, and nuclear fission and fusion.

1.11 The EESC reiterates its call for a Europe-wide public dialogue on energy (the European Energy Dialogue) to allow the general public and civil society as a whole to take ownership of the energy transition, the costs of the various technologies, and the costs generated by the policy options selected on the basis of research. This dialogue has to take place at all levels of governance. Over the last 10 years, the European level has focused increasingly on the EU objectives of cutting greenhouse gas emissions, with responsibility for implementing this policy lying with the Member States. This has led to inconsistent national policies.

1.12 The EESC believes that we must continue on the path to internal market integration by developing a European approach to energy supply and creating genuine solidarity. An intermediate step is the emergence of the regional level, necessary in order to strengthen cooperation in this area, and which should be flexible and able to promote innovative solutions as regards optimising electricity generation from renewable sources coordinated in real time.

1.13 The EESC considers that measures should be taken to integrate the different ways of generating energy (including those established through technological research) into the energy markets, including with regard to grid connection, balancing and charges.

1.14 The EESC advocates stepping up investment and R & D in the area of storage. In addition, it calls for better European synergies in this area in order to reduce energy transition costs, guarantee security of supply (European grid interconnection) and make the European economy more competitive.

1.15 In this regard, the EESC highlights the importance of gas in the energy mix and its significance in terms of energy security for Europeans. The EESC calls for storage to be encouraged, so that Member States have joint reserves. The vast potential for improving energy efficiency in buildings and transport should also be tapped.

1.16 The EESC believes that consolidating research and innovation funding could generate economic growth and create new jobs in the EU. A new system of energy governance (based on national plans) could ensure consistency in the energy market, with European dialogue an absolute prerequisite.

1.17 The EESC considers that the added value of the SET Plan will derive from better coordination of and a new system of governance for the European energy system; the plan must avoid the earlier duplications and be based on real, transparent data. This plan will consolidate the fundamental cornerstones of Europe: the Community method, European democracy in action, competition, cooperation and solidarity, Europe and global governance.

1.18 The EESC highlights the consequences of the SET Plan in terms of its impact on the public, particularly as regards jobs and the skills required. In this regard, consideration should be given to the issue of copyright.

2. Background to the opinion

2.1 Energy resources and infrastructure vary across the EU Member States; however, the common goal is to decarbonise the energy sector. Discussions arising from the energy transition should cover: new players and new business models in the fields of oil, gas and electricity; the dynamics of the political environment and the implications for investment; energy market regulation; the impact of technological innovation on energy systems; dismantling the old traditional energy silos; and the challenges and opportunities arising from a new model of governance for the energy industry.

2.2 This is a matter of considerable urgency. The EU is undergoing massive transformations in the field of energy; the European economy and vulnerable consumers face both an increasing risk of unreliable supply and high energy prices.

2.3 The EESC envisages supporting a common European energy policy, capable of providing security of supply; a technological pioneer in the market integration of renewable energy, energy efficiency, reduction of consumption and infrastructure development, with costs accurately converted into end-consumer prices, and consideration given to the overall costs of the energy mix and the availability of (public or private) funding to cover these costs.

2.4 The EESC envisages the funds being provided by: the EIB, the TEN-E programme, the European Economic Recovery Plan, the 2020 European Fund for Energy, Climate Change and Infrastructure (the Marguerite Fund) and by the instruments for pre-accession, the European Neighbourhood and Partnership Instrument and the Framework programme for research and technological development.

2.5 The SET Plan is a vital and ambitious means of achieving energy security. A broad public debate can help to achieve this goal, and the EESC can act as a catalyst in this dialogue. The EESC believes that public involvement (see EESC proposal on the European paper on energy savings) in energy transition issues is essential; specifically, this could involve a European (organised) civil society forum, which would promote a European energy dialogue.

2.6 The EESC believes that, in matters regarding the energy transition, consideration should be given to evaluating competitiveness, and the implications for employment and social security. Regional markets have the potential to overcome the lack of confidence; a specific energy policy cannot be implemented without confidence and education.

2.7 The EESC thinks that the funding from the R & D budgets of the Commission and the Member States is insufficient for the SET Plan. This makes it all the more important to make use of the EU Structural Funds, the European Investment Fund and revenue from the EU emissions trading scheme. The investment potential of the market economy should be channelled, using innovative schemes and incentives. Success can only be ensured by testing and applying a wide range of innovative economic and financial options and ideas.

3. General comments

3.1 The EESC considers that the Energy Union means making energy more secure, sustainable and affordable for the end user. It will allow a free flow of energy across borders and a secure supply in every EU country, for every European.

3.2 To meet the ambitious objectives of the SET Plan, the EESC considers that the EU has to innovate in terms of how energy is produced and transported, how it is delivered and serviced to customers. Consumers will be centre-staged and supported in a very competitive market industry with considerable technical expertise.

3.3 New technologies and innovations will be the key to transforming the EU energy system and changing the energy value chain in order to become more flexible, with consumers as active players (‘prosumers’), including small producers, with new networks of energy producers, operators and regulators capable of interacting in a complex market. Small producers may have a role to play in the development and deployment of new energy technologies.

3.4 New ideas and new technologies have to be transferred between sectors, to reach the critical mass needed to engage in collective R & I approaches, by transcending processes and sector boundaries.

3.5 The EESC finds that new business models, schemes to guarantee fair reward of services, and adequate functioning of the energy system will be based on general technology progress in EU Member States. Deeper understanding of consumers’ behaviour will be completed by exchange of information in a transparent, safe and user-friendly manner.

3.6 The EESC considers that economic stability depends on the resilience of energy systems, which have to be prepared for significant levels of change, as set out in the SET Plan. Security of supply and high quality of services for customers in Member States shall be supported by the development of smarter, more integrated EU energy networks.

3.7 The EESC considers that the value chain optimisation should lead to new business models (Reusing, Recycling, Reprocessing). There is a need to support the market deployment of R & I efficient practices and solutions in the field of energy conservation technologies in order to improve the integration process for the global efficiency of the system.

4. Specific comments

4.1 The EESC endorses the plan’s objectives. It agrees with the Commission’s approach to making the SET Plan fit for new challenges, through a more targeted focus, a more integrated approach and a new management and governance structure. The changes suggested in order to achieve these objectives should be well thought out and feasible.

4.2 The EESC points out that the SET Plan needs to be reinforced to better consolidate R & I’s new challenges of having new capacities and new resources across the EU. The EESC agrees that to maximise the effectiveness and impact of the SET Plan there is a need to, inter alia: — strengthen the financial commitment from Member States and the private sector, and — broaden the participation of stakeholders along the R & I chain.

4.3 The EESC considers that there is legitimate interest in the 10 actions — framed primarily by the stakeholders in this area — aimed at accelerating the energy system transformation and creating new jobs and growth.

4.4 The EU needs to do more to bring new, high performance low-cost, low-carbon sustainable energy technologies to market, following a transparent assessment of their environmental impact.

4.5 The EESC considers that R & D activities under the SET Plan should focus on the following specific elements, as pillars of European energy policy: — competitiveness: infrastructure and energy networks, the internal market and competitiveness, research and innovation in the energy sector, — security of supply: external energy policy, oil, gas, — climate: energy efficiency, renewable energy, carbon capture and storage (CCS), the EU emissions trading system (ETS).

4.6 In the EESC’s view, the increasing use of intermittent renewable energy technologies may lead to a significant rise in costs, which, if passed on to consumers, would result in significant price hikes over the next few years, until such systems move to the stage of being manufactured industrially. Moreover, it is inevitable that costs will increase — for a long time and to an ever greater extent — with the inclusion of external costs and the ending of subsidies for fossil fuel-fired power generation.

4.7 In the EESC’s view, industrial competitiveness, energy technology and innovation policy need to deliver rapidly on reducing costs, speeding up the introduction of sustainable technologies to market; not doing so will have direct consequences on private investments and national budgets and result in an economic downturn.

4.8 The balance between supply, conversion, transport and final use of energy will require the optimisation of the system, the development of new technologies (as set out in the SET Plan) to ensure efficient interaction from various actors and components with a holistic approach and potential synergies between energy networks (electricity, oil, gas, heat and mobility) with a view to completing the internal energy market.

4.9 System flexibility will need a wide range of other energy storage solutions suitable for a variety of power ranges. There is potential for further developments. The development of storage will become essential to a balanced energy system, allowing active RES management, a higher share of renewables and reducing the need for curtailment and minimising and balancing infrastructure investments, increasing flexibility of the energy system.

4.10 Innovative management tools combined at end-user level with new (stationary and mobile) electricity storage capabilities will provide more options to optimise consumers’ consumption combined with lower costs in a flexible energy market. Hydrogen can provide a versatile storage solution to underpin distributed electricity generation and to compensate the variability of renewables.

4.11 R & I actions should aim to develop modelling, metering and control of the operation and maintenance of heating and cooling systems with low distributed GHG emissions, accelerating the market penetration of new efficient energy products and systems, optimising the three pillars of energy efficiency: measurement, optimisation of energy consumption, sustainable performance for lasting results.

4.12 The role of cities will be more important in decarbonising EU’s economy since urbanisation will continue to rise in the EU. To tackle in an integrated way the common challenges and to improve sustainability it is necessary to foster various stakeholders at local levels, bringing together local authorities, industry and citizens.

4.13 In the EESC’s opinion the challenge in Li-ion recycling is mainly economic, as the processes have been developed allowing close-loop recycling, but these processes have to be adapted for recycling of the electric vehicle battery.

4.14 In the EESC’s opinion the EU battery industry needs to adapt to the recycling industry and face significant development of the E-mobility market and the growing market of portable equipment. The industry relies on the willingness of the EU to adopt the European battery technology.

4.15 To improve the EU security of energy supply a portfolio of sustainable technologies has to be mixed (advanced biofuels, hydrogen and alternative liquids and gaseous fuels, including LNG).

4.16 The EESC highlights that the EU is home to world leading companies capable of developing low-carbon technologies, including nuclear fission. The EU’s energy supply must be competitive and its investments in R & I must encompass the whole technology supply chain from materials to manufacturing.

4.17 Despite the growing deployment of renewable energy generation fossil fuels, coal is still used extensively around the world for electricity generation. Despite its low efficiency, coal will continue to be used in the EU’s power generation. This will require the deployment of more efficient coal technologies.

4.18 The EESC notes that the EU is divided on nuclear power. When it comes to nuclear energy, the EU’s policy is anything but unified. Advanced new reactors under construction can lead to a nuclear renaissance, so the nuclear revival seems to be a fact despite brief hesitation. Time will tell as to whether or not the EU can cut back on the share of nuclear power in its energy mix, but so far the wheels are turning. Feedback on operating and compliance costs of the oldest systems would be useful for future policy decisions on nuclear energy.