EN Official Journal of the European Union C 128/23

Opinion of the European Economic and Social Committee on the subject ‘Towards an Eco-efficient Economy — Transforming the economic crisis into an opportunity to pave the way for a new energy era’

(exploratory opinion)

(2010/C 128/05)

Rapporteur: Mr OSBORN

On 3 June 2009, the upcoming Swedish Presidency of the Council of the European Union requested the European Economic and Social Committee to draw up an exploratory opinion on the subject

Towards an Eco-efficient Economy – Transforming the economic crisis into an opportunity to pave the way for a new energy era.

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 12 October 2009.

At its 457th plenary session, held on 4 and 5 November 2009 (meeting of 5 November), the European Economic and Social Committee adopted the following opinion by 164 votes to2 with 8 abstentions.

1. Conclusions and recommendations

1.1. The major developed economies of the world have recognised the need to achieve at least an 80 % reduction of their greenhouse gas emissions by 2050 as part of the global action needed to keep the risks presented by climate change to manageable proportions. Major transformations of the energy base of advanced economies are therefore needed, starting from now.

1.2. The EU has started on this process with the substantial climate and energy programme agreed by the Council and the Parliament this year to reduce emissions by 20-30 % by 2020. This programme still has to be implemented however; and further action is needed soon towards the 2050 goal.

1.3. The present economic crisis presents both a threat and an opportunity. The threat is that coping with the continuing economic problems will absorb all available political attention and all available resources, and that measures will focus on restoring business as usual and the same pattern of growing emissions. The opportunity is that there is significant scope for breaking the mould and adopting a win-win eco-efficiency strategy that will help to revive the economy, improve its competitiveness and create new jobs at the same time as transforming the energy base and reducing emissions substantially.

1.4. The EESC fully supports and encourages all the actions already in hand or in prospect in Europe to promote eco-efficiency including further steps to:

— reinforce action on energy efficiency in a new Energy Efficiency Action Plan,

— reinforce action on renewables in a new Renewables Action Plan,

— entrench eco-efficiency requirements in all public spending programmes,

— promote and encourage green fiscal reform,

— encourage green procurement policies in all public bodies.

1.5. In order to mobilise action and support on a larger scale and to retain competitive leadership for Europe in the world the EESC proposes that the Commission and the Institutions should also focus new efforts on a limited number of specific transformation challenges. The Committee singles out three transformations in particular that could have the capacity to engage public interest and support as major European initiatives and programmes:

— towards solar power and other renewables,

— towards the all electric car,

— towards the zero carbon house.

Clearly widespread use of the electric car must be accompanied by a further move towards generating a greater proportion of electricity from sources that do not themselves produce significant net carbon emissions so as to avoid simply displacing carbon emissions from the car to the power station.

1.6. The EESC makes suggestions for building powerful public private sector partnerships to shape and guide these transformations and engage the widest possible support from business, other relevant institutions and the public. It also proposes the introduction of a new form of green euro bond to provide additional finance to support some of these changes.

1.7. The EESC urges that a new eco-efficiency initiative on the lines set out in this opinion should be at the core of the new Lisbon Strategy to guide progress towards a more sustainable future.

2. Background

2.1. The general reasons for seeking to move rapidly towards a more eco-efficient economy are well known. Climate change caused by greenhouse gas emissions is already causing serious problems in many parts of the world, and these problems are almost certain to get worse in the years ahead.

2.2. At the same time as climate change is becoming more severe the prospect of depletion of the world’s oil and gas resources leading to scarcity of supply in the future with higher and more volatile prices is becoming a more serious risk. Regions such as Europe that rely on imports for much of their supplies need to reduce their vulnerability and increase their security by reducing their total energy demand, and sourcing more of their energy from indigenously available renewable sources.

2.3. Taken together these two long term strategic challenges mean that the world needs to achieve a massive reduction in greenhouse gas emissions, and a major shift towards eco-efficiency. G8 leaders have accepted in principle that advanced economies will need to achieve an 80 % reduction in greenhouse gas emissions by 2050. Some of the changes to the energy base of the economy to achieve this have already begun, but the pace of change needs to be increased substantially if the goal is to be achieved.

2.4. Much of what needs to be done is already understood and could be delivered by proven technologies. The IEA World Energy Outlook 2008 (WEO 2008) estimates that over 50 % of abatement measures to keep the world below 450 parts per million CO2 concentration in 2030 could be reached through the introduction of existing energy efficient technologies. There exist cost-efficient measures ready for implementation both on the demand side (buildings, industry, transport) and the supply side (e.g. cogeneration of electricity and process or district heat). But more action is needed to help market actors to deploy them faster.

2.5. Going beyond existing technologies new energy efficiency and low-carbon energy technologies must be ready for wide market deployment in the next decades to achieve the further reductions that will be needed. The analyses of the IEA Energy Technology Perspective 2008 (ETP 2008) emphasise early action to mobilise private R&D and foster learning in the whole chain from technology supplier to technology operator and user in order to bring new technologies down the learning curve, transforming them from promising but too-expensive demonstration projects into reliable and cost-efficient mainstream production. New technologies are needed both to continue improving energy efficiency (e.g. zero-emission buildings, lighting, industrial processes) and to reduce CO2-emissions from energy supply (e.g. solar electricity, carbon capture and storage, non-fossil transport fuels).

2.6. All of these changes are within reach. But the pace of change needs to be accelerated sharply. Europe and its Member States along with other major economies need to make an even larger effort than they have done so far to develop innovation strategies and deploy major transformational programmes in the key sectors involved.

2.7. Deployment programmes are crucial. Deployment programmes can provide the incentives to realise the potential of available energy efficiency measures or to increase the market uptake necessary to stimulate private R&D and put a new technology on the learning curve. They have the largest potential to provide double dividends – that is creating jobs and aiding the transformation to eco-efficient energy systems today and at the same time investing in learning to provide more efficient and cheaper technologies tomorrow. The task is to design deployment programmes that spur competition and stimulate investments in private industry R&D and foster learning in the producer-user chain.

2.8. There are already several examples of successful European efforts to improve efficiency and bring low-carbon technologies to the market. The EU energy labelling scheme moved the market for refrigeration appliances to achieve substantially higher energy efficiency. National programmes for retrofitting existing buildings have improved heating efficiency. National deployment programmes for wind power have dramatically increased deployment of this technology and reduced costs – and created multi-billion euros industries in the countries with the programmes.

2.9. However the future requirements on efficiency and new low-carbon technologies remain enormous. There is a need to collect and transfer the lessons learned from these efforts and use them for a new concerted and aligned effort to roll out and deploy the next generation of low carbon technologies on a Europe-wide basis as soon as possible.

2.10. Some of the changes needed may require fundamental step changes in approach, and these particularly need attention. Three examples seem to offer particular opportunities which could resonate well with the European public and achieve step change improvements in eco-efficiency:

— in the power generation field the move towards renewables still needs to be accelerated. Solar power is still expensive and marginal, but costs are steadily coming down and another big push is now needed to push this forward much more extensively both in small-scale local applications and in larger generating arrays. Wind power is now at last being deployed fairly widely, but costs still need to be driven down further. Geothermal heat pumps are already showing very good results and should be developed swiftly to the point at which they can become a standard requirement in all new dwellings and other buildings. The grid and infrastructure support and energy storage systems need to be reenvisioned and reconfigured to support much greater reliance on renewables using smart design and management principles;

— the zero-carbon car. There are fundamental physical limits to the extent to which the carbon performance of the internal combustion engine can be improved. At a certain point there will be a transformational shift to the all electric or fuel cell car with recharging or fuelling from energy sources with low or no net emissions of greenhouse gases. The Committee believes that now is the time to establish clear targets and timetables for that shift and to put in place the necessary infrastructure and support arrangements;

— in the construction field the zero net emission building is beginning to be a possibility. A major effort is now needed to transform this concept from a few interesting prototypes to large-scale deployment in new and existing housing and in other buildings. To this end model energy-saving houses should be built in all regions of the EU, the design of which should take account of climatic and geographical conditions in the region. These buildings would serve as an example.

2.11. Similar actions might also be desirable for promoting further the development and deployment of carbon capture and storage technologies and for extending the capacity of information technology and intelligent systems to contribute to greater eco-efficiency.

3. The role of Governments and of the EU

3.1. The EU has an especially important role because of the scale and wide range of some of the actions needed. Transformation on the scale and at the pace needed can only be brought about by a concerted effort bringing together public and private sector partners across Europe, and indeed across the globe in some cases. The EU has already undertaken a whole series of programmes and packages to promote energy efficiency, renewable energies and the transition towards a low carbon economy. But these efforts still need to be reinforced and accelerated. The following paragraphs review some of the key areas in which new European interventions are necessary.

3.2. Research and Development. R&D in Europe has stagnated at about 1,84 % of GDP for a number of years, well below the agreed target of 3 %. A major effort is needed to increase this towards the 3 % target and to devote more of the programme to supporting the transition to the low carbon economy. Some of the more radically new low-carbon technologies are among those which need more public R&D funding, e.g. carbon capture and storage, thin film solar PV, deep sea off-shore wind, and second-generation biofuels.

3.3. Deployment programmes should be designed to exploit niche markets for the new technologies and to stimulate learning investments from the market actors. Synergies with taxation and industry policies should be exploited. The EU should focus particularly on the largest transformations required such as the move to the electric car or the zero carbon house which will require technological development on a broad front, massive investment, extensive infrastructure support, and a wide ranging mobilisation of public and consumer interest and support and incentives. Experience with the Energy Technology Platforms needs to be expanded and developed into proactive deployment programmes for the key transformations required.

3.4. Standard setting. Regulatory standards for minimum energy efficiency requirements for products and services have a crucial part to play in driving progress. The EU has already established standards for minimum energy efficiency for some key products, with timetables laid down for further improvements to be mandated in the future. But these programmes still need to be made more comprehensive and to set more ambitious short and longer term targets.

3.5. Of course there are practical limitations to the pace of advance that must be respected. But it is also essential that pressure is maintained on European industry to be amongst the world leaders on efficiency standards so that they can maintain a strong competitive position as the whole world market moves towards greater eco-efficiency.

3.6. Public procurement. Public procurement programmes can be an enormously powerful tool in driving improvement of standards in key industry sectors if appropriate conditions are included in specifications and contract documents. We believe that the EU should continue to lead the way in mandating much more stringent energy efficiency standards to be standard requirements in all public sector purchasing of goods, services and buildings. Eco-efficiency criteria should be built into all project appraisal processes.

3.7. Some regional and local authorities in Europe are in the forefront of embedding the drive for eco-efficiency in all their activities. But many are not. There could be scope for a twofold European initiative on the one hand to highlight best practice and to incentivise others to follow; and on the other hand to promote systematisation and harmonisation of the requirements placed on such bodies to achieve eco-efficiency standards.

3.8. Incentives for the private sector. Setting a proper price on the emission of carbon is crucial here, and the Committee looks to the Commission to go on developing the carbon trading scheme for appropriate sectors and to encourage the further expansion of carbon-related taxation in other areas. They should also promote further action on more specific incentives such as the use of feed-in tariffs to stimulate investments in renewables. In some case also the public sector may need to work with the private sector to develop appropriate infrastructure support for crucial new technologies, e.g. support for decentralised forms of power generation and a smart grid.

3.9. Consumer behaviour. There is still a lack of sufficient consumer awareness or consumer appetite for greater efficiency either in what they purchase or in their own lifestyle decisions. Conversely there is still too little awareness amongst regulators about the springs of consumer behaviour and how best to promote demand for eco-efficient goods and services. Support for education, awareness raising, and communal action needs to be extended. Labelling of goods and products to display information about energy performance needs to be extended and improved.

3.10. Professional development and training. A much bigger effort is needed to incorporate better understanding of the need and scope for energy efficient production and sustainability in professional and technical education and re-education.

4. Opportunities and threats in the current economic crisis

4.1. There is a risk that the current economic difficulties in the world might make it harder to make rapid progress towards eco-efficiency. Funds for new investment in either the public or the private sector are in short supply, and are tending to be pre-empted by short term priorities.

4.2. As the global economy begins to recover new opportunities could however emerge to move the European economy (and other major economies) in a more sustainable direction. It is crucial for Europe that it should embrace these challenges and respond to them positively if it is to thrive in the global competition for eco-efficiency and sustainability that must lie ahead.

Some particular areas that come mainly within the province of finance, economics and industry departments are especially worth examining closely in the current economic situation:

4.3.1. . The economic crisis has prompted renewed interest in the inadequacies of GDP as a measure of overall progress, and the need for a broader concept of welfare to be preferred that can take account of social and environmental factors as well as the performance of the monetary economy. The Commission’s work in this area needs to be followed up following the recent Stiglitz report for the French Government.

4.3.2. . Several governments and the Commission have been undertaking substantial public spending packages to act as stimuli to their economies and to prevent the situation deteriorating into depression. The European Recovery Plan promoted by the Commission was a good example of how to marry an economic stimulus with the promotion of a shift to a greener economy, but was inevitably limited by the comparatively small sums available to it. The time for further stimulus packages may now have largely passed, but all public spending programmes still need to be reviewed from the eco-efficiency point of view so as to secure double benefits. Systematic sustainability appraisals of public spending programmes should become the norm in the budget processes of the EU and its Member States.

4.3.3. . All public expenditure programmes are going to be under close scrutiny over the next few years as the public authorities seek to find expenditure savings to restore their finances. In examining areas for cutbacks attention should be focused particularly on programmes of expenditure that have high energy consumption or which work against eco-efficiency. Perverse subsidies that support the production or consumption of fossil fuels (e.g. coal production subsidies or subsidised fuel prices for particular groups) and thus secure double disbenefits (crowding out other more useful public investment, and tilting the playing field against the very technologies for renewables etc. that we should be seeking to promote) should be particularly scrutinised in this context. The Commission’s long-awaited communication on subsidies reform could help to get European action moving on this.

4.3.4. . Current fiscal imbalances in many countries of Europe are likely to require adjustments in the level and balance of taxation. In making such changes the green dimension should be kept in view. In particular higher taxation on (fossil fuel) energy should be preferred to taxation on labour in the present climate, though with appropriate safeguards to protect the position of the poorest and most vulnerable. The Commission might launch a new study with Member States to encourage concerted action to shift fiscal strategies in this direction.

4.3.5. . The current economic crisis has already led to some significant government interventions to support or restructure key industries. In making such interventions the promotion of resource efficiency should always be a key objective. Some of the specific transformational challenges noted in this opinion (the electric car, the zero emission house, and solar power) may particularly need intervention and support so that they can become part of the core of the new economy around which new investment, new businesses, new jobs are created.

4.3.6. A new Innovation Strategy. We foresee the possibility of a new role for the EU to help foster the emergence of world class European champions in the key sectors of low carbon technology in the context of a new innovation strategy for Europe. The EESC suggests in particular that task forces involving public and private sector actors might be established to shape progress at EU level in relation to the electric car, the zero emission house and solar power. In each case the actions would need to build on the work of existing Energy Technology R&D platforms and take action further into the field of large scale roll-out and deployment.

4.3.7. In each case the task forces should seek to identify the pathways for change, and the different parts that will need to be played by public and private sector R&D and investment. They should explore what infrastructure support may be needed (e.g. a network of charging points to support the widespread introduction of electric cars, or a programme of municipal support for householders to improve the energy efficiency of their homes). They might also explore how such transformations can be made available to the developing world (e.g. solar power for Africa) so that they can be helped to play their part in the transition to the low carbon economy.

4.3.8. New Forms of Finance – A green Eurobond? In present economic circumstances there are likely to be severe constraints on public expenditure (and possibly on private investment levels) throughout the EU for some years to come. The Committee suggests that innovative forms of financing to support the investment needed in rolling out new eco-efficient technologies are needed. We suggest consideration should be given to the creation of a green Eurobond. This could be marketed as giving a modest but safe return, and as providing development and deployment finance for some of the key new technologies such as the zero carbon car and the zero carbon home. It would thus tap into the widespread desire to combine a safe form of saving with some contribution to a better future.

5. A new impetus at European level

5.1. The EU has already made a good start in initiating moves towards a more eco-efficient economy through the targets it has set itself and the measures it has put in place. But it is clear that this can only be regarded as a beginning. The continuing problems of the world economy point up the continuing need for active management to avoid reverting to past inefficient and damaging patterns of growth and development. The advent of a new Parliament and a new Commission provides a good opportunity for the EU to step up the pace and to give a new impetus to eco-efficiency and sustainable development in Europe.

5.2. In the short term the EESC urges the Commission and the Swedish and subsequent Presidencies to seize early opportunities through:

— revision and renewal of the Lisbon and Sustainable Development Strategies,

— shaping the new financial perspectives,

— recasting Directive 2002/91/EC on energy performance of buildings (EPBD),

— pursuing the Commission's communication ‘Overcoming Barriers to Renewable Energy in the EU’,

— promoting a Sustainable Energy Financing Initiative as a joint Commission/European Investment Bank project,

— embracing a new Energy Policy for Europe in 2010, with agendas for 2030 and a vision for 2050.

5.3. The EESC recognises the potential of the National Energy Efficiency Action Plans (NEEAP) and the national action plans for renewable sources. There needs to be a rapid dissemination and feed-back to EU members following analysis of the first round of plans, and vigorous follow-up by the Commission and the institutions.

5.4. Looking ahead the EESC sees a continuing need for the promotion of eco-efficiency to feature strongly and to be expanded or extended in all the following areas of actual or potential European activity that have been reviewed in this opinion:

— support for R&D,

— support for professional development programmes in engineering, construction and other key areas to include mandatory elements on design for eco-efficiency,

— incorporating eco-efficiency requirements in all appropriate accounting standards, regulatory practice and finance department appraisal rules,

— prioritising eco-efficiency in all European and Member State spending programmes and procurement,

— promoting the greening of all public spending programmes at European and Member State level using systematic sustainability appraisals as a key tool,

— establishing new forms of finance for major transformational programmes,

— promoting eco-efficient fiscal reform,

— elimination of harmful subsidies,

— promoting a new innovation strategy with task forces for specific key transformations,

— promotion of good practice in consumer education and in community action.

5.5. We believe that there will be substantial competitive advantage for those economies that manage to move fastest towards eco-efficiency - and serious competitive disadvantages for those that are left behind. We therefore urge that the objective of becoming one of the most eco-efficient economies in the world should be at the core of the renewed Lisbon Strategy for the future of the European economy, and be embedded throughout European policies and programmes on the lines recommended in this opinion.