EN Official Journal of the European Union C 67/132

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Energy technologies and innovation’

COM(2013) 253 final

2014/C 67/26

Rapporteur: Gerd WOLF

Co-rapporteur: Pierre-Jean COULON

On 2 May 2013 the 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 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Energy technologies and innovation

COM(2013) 253 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 30 September 2013.

At its 493rd plenary session, held on 16 and 17 October 2013 (meeting of 16 October), the European Economic and Social Committee adopted the following opinion by 117 votes to 1 with 4 abstentions:

1. Summary

1.1 The European Economic and Social Committee (EESC) supports the Commission's planned measures.

1.2 The EESC reiterates its commitment to a European energy community and a European energy dialogue.

1.3 The Committee supports the goal of a joint, coordinated, consistent and cooperative approach by energy policy stakeholders.

1.4 The EESC recommends that bureaucratic inflexibility, risk aversion and market distortions, i.e. any kind of barrier to innovation, be avoided at all costs when implementing measures. The driving forces behind new ideas and concepts should be promoted.

1.5 The most important task is the technical and scientific development of energy technologies and innovation. This involves in particular the continuation and further development of the European Strategic Energy Technology Plan (SET-plan) in the 2014-2020 funding period.

1.6 Appropriate instruments should be used to strike a sound balance between carefully planned project development, on the one hand, and openness to various new approaches and competition between them, on the other.

1.7 Only through experience and a combination of a wide range of options and ideas, with a correspondingly broad energy mix, can we ensure long-term success in the massive undertaking which lies ahead.

1.8 The anticipated shortfall in funding in the Commission's Horizon 2020 R&D budget and in Member States' R&D budgets 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 System, and in particular to steer the investment potential of the market economy towards addressing this major challenge.

1.9 Public research and development funds should be used in cases where this is needed for research objectives, but where industry cannot reasonably be expected to make the relevant investment (see 3.20).

2. Gist of the Commission Communication

2.1 In view of the challenges in the run-up to 2020 and beyond, the Commission has set out its strategy for creating new technologies and innovation as an integral part of its energy policy.

2.2 The Commission seeks to: — develop an integrated roadmap as part of the SET-plan by the end of 2013, — draw up an investment action plan together with the Member States, — strengthen the reporting system together with the Member States, — invite the European Technology Platforms to adapt their mandate, structure and composition to the integrated roadmap, — establish a coordination structure under the Steering Group of the SET-plan.

2.3 To this end, the Commission calls on the European Parliament and the Council to: — reaffirm their support for the SET-plan, — endorse the proposed principles and developments, — support the use of EU, national, regional and private resources accordingly.

2.4 The Commission invites the Member States and regions to: — coordinate their energy research and innovation programmes more closely, use resources from the EU Structural Funds and the European Investment Fund and revenue from the EU Emissions Trading System for this purpose, and further integrate individual national and regional programmes through the European Energy Research Alliance, — increase cooperation through joint actions and clusters, — support faster market roll-out of sustainable energy technologies.

3. General comments

3.1 In view of growing energy needs across the world, the critical resource situation and climate issues, numerous Committee opinions have highlighted the enormous task of ensuring sustainable, secure, environmentally-friendly and economically efficient energy supplies for Europe.

3.2 The Committee views the communication as another important step on the long journey towards meeting this goal. It therefore gives full support to the Commission's planned measures.

3.3 Only through a joint, coordinated and cooperative approach involving all stakeholders, in particular — the European Council — the European Parliament — the European Commission and its various policy fields — the Member States and their bodies — regional and local authorities — industry, including SMEs — research organisations and universities — political parties, civil society representatives, the social partners and the public can this goal be reasonably achieved, if at all.

3.4 The Committee believes that the measures announced by the Commission are a step in the right direction and therefore supports them in full. At the same time, the Committee recommends that any steps taken always take account of the international situation and be carried out in conjunction with relevant non-EU country programmes.

3.5 The Committee reaffirms its commitment to a European energy community (1) as the necessary framework for achieving these objectives as efficiently as possible. It also reiterates its commitment to a European energy dialogue (2), with a view to ensuring that the public is involved in policy-making and in various areas of action as an interested party and a civil society stakeholder.

3.6 However, there is also a need for the best possible information and transparency about the respective options available, the current state of their development, the opportunities they provide, the risks and costs involved, and their impact (3).

3.7 While the measures and conditions proposed by the Commission and supported by the Committee are necessary, there is also scope for problems and conflict in their implementation, which should be avoided at all costs.

3.8 This involves, among other things, a tendency to adopt a centralised, cumbersome and planned economy approach, typically characterised by over-regulation and formal bureaucracy.

3.9 In warning about the danger of cumbersome administrative procedures, inefficiency and red tape, the Committee refers, among other things, to its opinion on Simplifying the implementation of the research framework programmes (4). The Committee welcomes the Commission's efforts in this connection and therefore strongly recommends that this approach also be adopted when dealing with the subject under consideration.

3.10 However, another potential downside might be a tendency to avoid risks among bodies providing and receiving support and their stakeholders. This can lead to a preference for promoting technologies which are already well-known. Moreover, the fact that there is often a lack of experienced and recognised experts (from the respective relevant fields) in decision-making bodies is also a contributing factor here.

3.11 An approach that has been carefully planned in advance is, however, at best appropriate where there is already an adequate knowledge and technical basis, where future measures can therefore be clearly defined and where the way ahead is entirely straightforward, meaning that further changes or innovations are not needed and are even undesirable.

3.12 However, in the Commission's view, which the Committee fully endorses, this is specifically not the case in the area of energy technologies: we need a strong and dynamic technology and innovation strategy . Such a strategy should also actively promote technologies entailing a high level of development risk, providing they show potential.

3.13 This will therefore indeed involve EU-wide implementation of the cooperative approaches and policies outlined in point 3.3, with a view to unlocking and consolidating common potential, but a broad spectrum of approaches and system concepts will also be needed, as well as an openness to innovative ideas and regional circumstances; in other words, stimulating ideas through a trial and error-based approach, and allowing and promoting competition.

3.14 This requirement must therefore supplement alignment and coordination measures. To this end, appropriate instruments must explicitly ensure a sound balance between carefully planned project development and openness to various new approaches. The Committee therefore agrees with the Commission that a suitable framework should be created for this purpose, allowing flexibility, innovation and a willingness to take risks, as well as providing for new research fields. Specific instruments and governance structures are needed here.

3.15 This particularly concerns the promotion of innovation-oriented projects in industry. There are plenty of examples of especially important innovation which have not come from predominant branches of industry in the market, but rather from outsiders, such as SMEs. Pursuing a state innovation policy which is geared primarily to promoting "national champions" runs the risk of wrongly assessing technical developments and underestimating their importance. The aeroplane was not invented by the railway industry or the shipping industry. As already pointed out by other authors, the electric light did not come about as a result of the on-going development of the candle. In other words, it is not the candle industry which should be promoted. Rather, the driving forces behind completely new ideas and concepts should be sought out, in order to promote these especially.

3.16 However, there is further scope for conflict in the Commission's proposals: between innovation and market roll-out. Innovation is only successful if it proves its worth in the market and can get through the barren period which is often common at the beginning. Although financial support for market roll-out (see also 3.26) or even enforced tariffs (e.g. feed-in laws) can be very effective here, they also lead to long-term market distortions to the detriment of better solutions. The experience of feed-in systems shows how difficult it is to correct shortcomings in a timely manner once they have appeared. In this way, better solutions or more important measures are held back. In principle therefore, financial assistance for market roll-out of new technologies should at most be maintained until these technologies have achieved an appropriate market share.

3.17 The Committee therefore recommends that these issues be analysed carefully. Although the possible market roll-out development instruments should definitely provide a predictable and reliable framework for investment, at the same time they should ensure – e.g. with adequate degression firmly built in from the outset – that the above-mentioned disadvantages, which are anti-market and go against innovation, are avoided (see also 3.25 and 3.26).

3.18 According to the Commission and the Committee, however, the most important task in the field of energy is the technical and scientific development of technologies and innovation. This task involves cooperation and interplay between basic research, development, demonstration activities and innovation for the successful market roll-out of those technologies, processes and organisational approaches needed for the reorganisation of our current energy supplies in line with the energy roadmap for 2050 and beyond, but which in most cases cannot yet be predicted.

3.19 This involves in particular the relevant continuation and further development of the hitherto very successful SET-plan (5) in the 2014-2020 funding period.

3.20 In this connection, the main question is: for what support objectives public funds, i.e. revenues from taxes (or compulsory levies) on individuals and businesses - are supposed to or have to be used, and which funds are supposed to be raised by the private sector. The Committee will not go into the legal side of this matter here; it is concerned with the substantive and thematic aspects. It believes that any support from the Commission (which comes from public funds) should focus on those tasks which are less likely to be supported using private funds. Typical reasons for this may be as follows: — There is a significant development risk involved, which contrasts with the considerable potential benefits should the initiative succeed. — The ensuing costs are very high and can only be met by pooling multiple public sources. — The period of time until practical benefits emerge is too long. — It involves cross-cutting or key technologies (e.g. new materials). — The result cannot readily be marketed, but there is a general social or environmental requirement.

3.21 Subject to its comments above, the Committee therefore supports the statement in the Commission's proposal to the effect that "the SET Plan needs increased focus on energy system integration, integration of activities along the innovation chain, and increased coordination of the EIIs [European Industry Initiatives] and EERA [European Energy Research Alliance] to support this" (6).

3.22 The Committee views further appropriate development of the EERA as an important organisational means of achieving, in all energy areas, the European common ground and effectiveness that has, for example, been key to the success of European nuclear fusion research under EURATOM programmes to date. It is therefore important to give the EERA a governance structure geared to R&D, where, for instance, the respective sets of questions relevant to R&D are dealt with together and European expertise pooled. To this end, the Committee reiterates the need to provide for expert, informed and substantial involvement of the Commission in decision-making and the distribution of the respective development resources.

3.23 As regards the actual costs and the budget made available by the Commission, the Committee reiterates the disappointment it has expressed on several occasions that the funds earmarked for Horizon 2020 under the 2014-2020 financial framework in no way correspond to the scope of the relevant tasks and the importance of the issues involved.

3.23.1 It is therefore all the more important to use the scarce R&D resources available under Horizon 2020 as effectively as possible (award criteria) in such a way that they can act as leverage, and provide an incentive to encourage Member States and also the private sector to significantly increase investment in R&D.

3.24 It is equally important, as proposed by the Commission, to acquire further sources of financing, i.e. to use EU Structural Funds and the European Investment Fund and revenues from the EU Emissions Trading System (which in the meantime have become very limited), and in particular to unlock the investment potential of the market economy and its industries and gear it to addressing this huge challenge.

3.25 The Committee has likewise already pointed out on numerous occasions that it is, however, necessary to finally end the confusion of nationally-oriented anti-competitive market intervention and instead to create valid and reliable Europe-wide rules (7), in order to give investors planning certainty and the necessary incentives.

3.26 The above-mentioned effects of so-called feed-in laws in some Member States which involve excessive subsidisation of intermittent energy sources constitute one particularly extreme example of regulation which hampers innovation. Whereas at the beginning these were an extremely effective tool for start-up support and market roll-out, following initial success they have since resulted in inappropriate excessive subsidisation, which has at times led to such a significant drop-off in prices in the electricity market that it is not worthwhile for companies to provide reserve capacities and further develop them technologically, or to develop and invest in urgently needed storage technologies.

3.26.1 What is more, this gives rise to a paradoxical and grotesque situation where end-consumers of electricity have to cover the considerable cost difference between low (possibly even negative) market prices and the feed-in tariff which is far higher than average market prices.

3.26.2 The resulting excessively high consumer prices for energy pose not only a general problem for the European economy but also constitute one of the causes of energy poverty – the subject of a current Committee opinion (TEN/516).

3.27 This example should once again illustrate the complex relationship between innovation and market conditions. The Committee therefore reiterates its recommendation that remedial action be taken as quickly as possible in order to give adequate incentives and a chance of economic success to urgently needed investment in the development of innovative technologies and processes by the private sector. Otherwise such investment will cease, because even the most innovative business will make losses, inevitably go bankrupt and disappear from the market if there is competition from state-backed, highly subsidised technologies.

4. Specific comments of the Committee

4.1 With due consideration for its previous remarks, the Committee also supports the key principles outlined by the Commission, in particular: — adding value at the EU level, — looking at the whole energy system (generation, infrastructure, services, etc.) when setting priorities, — pooling resources and using a portfolio of financial instruments, — keeping options open, while concentrating on the most promising technologies for post 2020. Only through experience of a wide range of options and ideas and by combining them, as part of a correspondingly broad energy mix, can we ensure long-term success in the massive undertaking which lies ahead. This requires pragmatism, realism and staying power.

4.2 With due consideration for its previous remarks, the Committee likewise supports the objectives for development outlined in the communication, in particular: — unlocking the full potential of energy efficiency, — delivering competitive solutions, — fostering innovation in real market-driven conditions.

4.3 Particularly in view of the weaknesses of intermittent renewable energies explained in its latest exploratory opinion (8) on the subject, the Committee supports the Commission's plan to give greater weight to developing environmentally-friendly systems for baseload capacity, and to energy supplies geared to consumer needs, which includes nuclear fusion energy with ITER and the supplementary research programme, alongside renewable energies such as geothermal energy.

4.4 Similarly, the Committee fully supports the research and development work on the use of nuclear fission, but will make no further comments here since it has already actively participated in a conference on the subject (Symposium on Benefits and limitations of nuclear fission for a low-carbon economy, Brussels, February 2013).

4.5 This also includes of course the development of suitable technologies and processes for CCS – even if limited fossil resources are consumed even more quickly as a result – with a view to ensuring first of all that CO2 emissions can be lowered as quickly as possible.

4.6 Furthermore, the Committee reiterates its recommendation that, in efforts to expand intermittent renewable energies, priority and greater emphasis be given to developments targeting those elements of the overall system that are still missing, necessary for enabling the development of a more customer-oriented, viable energy supply.

4.7 This concerns first and foremost developing storage facilities with sufficient capacity which are as efficient as possible and offer the best possible value. In this regard, the Committee sees a particular need to make up ground in the appropriate further development and large-scale application of electrochemistry and electrolysis technology, together with the relevant materials. Like the ideas for battery-driven electro-mobility, a systemic link to intermittent renewables could thus be developed in (gas or liquid) fuel-powered mobility too (combustion or fuel cell).

4.8 In this connection, the Committee would refer to its opinion, requested by the Irish presidency (9), where it raised concerns about rising energy prices and their impact on the public and on competitiveness. In order to facilitate more market-driven competition, the Committee recommended that an appropriate price for carbon be introduced (appropriate emissions trading, tax or similar) as the only measure to support renewables in the market. Although this would make fossil energy more expensive and thus also electricity from coal, oil or gas-fired power stations, it would also make it possible to dispense with the various other costly, market-distorting subsidies and compulsory measures for renewables. Revenue from the allocation of emissions rights should therefore under no circumstances be included in the general funds of the Member States as a source of additional general revenue, but should be used exclusively to develop and introduce efficient future energy systems. The Commission's proposal on this is therefore a step in the right direction and should be supported in full.

Brussels, 16 October 2013. The President of the European Economic and Social Committee Henri MALOSSE

(1) OJ C 68, 6.3.2012, p. 15.

(2) OJ C 161, 6.6.2013, p. 1.

(3) OJ C 198, 10.7.2013, p. 1.

(4) OJ C 48, 15.2.2011, p. 129.

(5) OJ C 21, 21.1.2011, pp. 49-55.

(6) COM(2013) 253 final, point 2.8.

(7) OJ C 198, 10.7.2013, p. 1.

(8) Ibid.

(9) OJ C 198, 10.7.2013, p. 1.