[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 22.11.2007

SEC(2007) 1511

COMMISSION STAFF WORKING DOCUMENT Accompanying document to the

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A European Strategic Energy Technology Plan (SET-Plan)

CAPACITIES MAP {COM(2007) 723 final}{SEC(2007) 1508}{SEC(2007) 1509}{SEC(2007) 1510}

Table of contents

1. Executive summary and conclusions 3

2. Introduction 10

3. Methodology and Scope 12

3.1. Scope of this study 12

3.2. Sources of data on R&D expenditure and funding 13

3.3. Sources of information on energy and transport R&D infrastructure 15

4. The public system of energy-related R&D 18

4.1. Public energy-related R&D infrastructure 18

4.2. Public spending on energy and transport R&D 42

4.3. Policies for market deployment of energy technologies ("market-pull") 53

4.4. Conclusions 65

5. Private energy and transport R&D 67

5.1. Industrial energy and transport R&D infrastructure 67

5.2. Private sector investments in energy and transport R&D 76

5.3. Conclusions 86

6. Public energy R&D priorities 88

6.1. Overview of thematic priorities 90

7. Recent developments 99

8. Bibliography 102

COMMISSION STAFF WORKING DOCUMENT

Capacities Map

for the European Strategic Energy Technology Plan

EXECUTIVE SUMMARY AND CONCLUSIONS

The present study aims at providing an overview of the energy research capacity in EU Member States. It is composed of a quantitative analysis of funding for energy research from the public and private sectors on the one hand and an assessment of the institutional capacity in energy research policy making and implementation on the other.

The assessment provides input into the Impact Assessment accompanying the forthcoming proposal for a Strategic Energy Technology Plan, which aims at addressing how to improve international collaboration in energy research within the EU.

It must be noted that available information is sketchy and data beyond 2005 were not available at the time of preparation, meaning that important recent developments may be missed out.

Despite these shortcomings, the study comes to the conclusion that public energy research has lost in importance over the last decades with a slight uptake in very recent years. A similar trend can be observed in the private sector, influenced by the liberalisation of energy markets. Particularly in the context of limited budgets, it is important to exploit synergies in energy R&D among Member States, which currently takes place only to a limited extent. One of the reasons hampering international energy collaboration may be the distinct institutional set-ups in energy research among Member States. Furthermore, sketchy data make it difficult to create transparency about countries' activities, which would be a precondition for an improved coordination of efforts.

The main findings of the study are summarised below.

The energy sector faces the challenge of becoming more competitive, less reliant on imported energy carriers and environmentally sustainable. Innovative technologies are important in the sector's transition. R&D investment in the energy sector is therefore crucial.

A competitive energy sector is indispensable for our economic activity. At the same time, concerns about supply security, climate change and air quality have to be addressed. This implies the need for a considerable and continuous restructuring of the sector.

Innovative energy technologies are central for making progress towards these long-term objectives. Despite an increasing energy demand of the consumers, the local air quality in the EU has improved considerably in the last couple of decades. The decoupling of energy consumption from economic growth and the significant reductions in air pollutant emissions are mainly due to past technological improvements such as the introduction of abatement techniques, fuel switch or efficiency gains.

The development and market introduction of new energy technologies face a number of barriers. The sector is prone to market inefficiencies due to its oligopolistic structure, the environmental and network externalities, the long investment horizons, and the risk for a technological lock-in with socially suboptimal technologies.

R&D is needed to accelerate the technological improvement in the energy sector. In general, the government should guarantee an attractive R&D environment for both the private and public sector. In particular, public research initiatives (e.g. R&D funding) become necessary where the actions by the private sector are insufficient.

EU Member States award a relatively low importance to energy research. The public energy R&D spending decreased during the early 1990s with some limited increases in the last couple of years. This results in a low share dedicated to energy R&D compared to overall public research budgets. Also the business sector's R&D expenditure in the energy sector is low. It is questionable whether current public and private R&D efforts are sufficient to meet the new challenges of the energy sector.

Public funding for energy R&D in the EU Member States (but excluding the significant EC funding through Research Framework Programmes and the Intelligent Energy Europe Programme) declined between 1991 and 2005, reaching around 2.2 bn EUR by 2005. However, most of this decrease happened in the early 1990s with limited increases in recent years. This compares to a more or less stable budget in the USA and a net increase in Japan over the same period. The aggregated EU Member States' energy R&D spending is even falling behind Japan's in nominal terms. These trends illustrate the low importance given to energy research in EU Member States.

Such conclusion is supported by the share of government budget appropriations dedicated to 'production, distribution and rational utilisation of energy' in the overall government budget appropriations (GBAORD). While this share would be below 3% on an EU average in 2005 (with individual Member States ranging between almost 0% and 12%), it amounts to around 17% in Japan (in 2004).

The EU trends hide large differences among the EU Member States. By 2005, France, Germany and Italy accounted for almost three quarters of the aggregated EU public energy R&D funding, while the 12 new Member States together accounted for less than 3% of the total. Nevertheless, the importance awarded to public energy R&D remains limited in all Member States with budgets being in the order of 0.01 to 0.05% of GDP. Unfortunately, a similar assessment cannot be done for public R&D efforts in transport-related sectors. However, for those eight Member States that provide data, the public R&D spending in the manufacture of cars is important.

The investment in energy R&D of the private sector shows a somewhat similar pattern as the public energy R&D funding by 2005. The energy R&D expenditure of the business sector also concentrates in few Member States (France, Germany, Sweden and Italy account for three quarters of the EU total) with a limited contribution of the new Member States. Similarly to the trends in the public funding, energy R&D expenditure of utilities and of producers of nuclear fuel and petroleum products decreased during the 1990s, with a slight recovering in recent years.

Private R&D expenditures in the manufacturing of motor vehicles and electrical machinery are relatively strong, compared to energy R&D. Around 63% of the total energy- and transport-related R&D expenditure of the business sector is allocated to the manufacture of motor vehicles. Transport-related R&D has a share of almost 25% in the total R&D expenditure by the business sector on an EU-average, compared to less than 5% for the energy R&D. This difference is even more remarkable when having in mind that the energy sector's gross value added is above that of the transport sector.

Also on a company level this trend is apparent: the R&D intensity [1] in the manufacture of automobiles reaches an average value of 4.5% for the top investing 44 EU companies compared to less than 1% for companies in the energy sectors with the exception of oil equipment and electrical components. In an international comparison, EU-based companies operating in both the energy- and transport-related sectors show a more or less similar R&D intensity compared to non-EU-based companies operating in these sectors (except for oil equipment services).

The divergence in R&D intensity among sectors of activity may be explained by the fact that electrical utilities produce an identical good (electricity) with price competition as a main success criterion. Furthermore, innovation in electricity production often is not carried out at the level of the utility itself but at the level of component suppliers. Whereas the manufacturing of cars is sensitive to a stronger innovation pressure as innovation may be one of the 'selling factors'.

The on-going deregulation of important energy sub-sectors created competition and a more liberalised market structure. On the one hand, the privatisation and liberalisation of many traditional publicly managed electricity and gas monopolistic companies may have meant that former publicly supported research activities have been shifted to the private sector, explaining in part the reduction in the public funds for energy R&D. At the same time, increased competition may have reduced the "monopolistic rents" of utilities, and therefore the company's resources for investment in R&D and returns from R&D investment.

Considering the low level of funding in both public and private energy R&D spending, it is questionable whether the challenges of the energy sector can be met adequately without a significant increase in the Member States energy R&D budget. However, it needs to be noted that in very recent years, the R&D budgets dedicated to energy have increased in some Member States, and a number of countries have already announced plans to increase further their budgets.

Energy R&D priorities vary among Member States, but some shared priorities exist in some technologies and groups of countries. Synergies should be exploited in these areas, which is of particular importance for capital-intensive technologies.

The specific research priorities vary among Member States, adding to the low overall energy R&D spending. These divergent preferences of the Member States bear the risk of insufficient resources being allocated, resulting in projects with little "critical mass", especially as energy R&D often requires an intensive capital investment. However, this diversified and broad approach may prevent the new technologies from an early technological lock-in.

Despite the variety of specific research interests, most Member States share some general priorities. These include renewable energies, energy efficiency and nuclear-related research in some Member States (yet declining in funding). For example, around 40% of the overall energy spending aggregated from the EU Member States listed in the IEA database is dedicated to nuclear energy (dominated by France that has a relatively high nuclear budget), 20% to renewable energies and some 10% to fossil fuels and energy efficiency, respectively. Renewable energy, however, is diverse and, even if generically considered as an absolute priority for almost all Member States, different weights are assigned to specific technologies by individual Member States, according to their strategic interests and potentials. While a number of Member States focus on bioenergy – sometimes with a biofuel focus – and/or wind energy, there are only few countries promoting geothermal and ocean energy.

Recently, an increasing number of Member States mentions CO2 capture and storage as a priority area for energy R&D, even though this is not yet strongly reflected in the R&D expenditure. Similarly, hydrogen and fuel cells are mentioned as being important despite the currently limited budgets in most Member States. As these technologies are characterised by a high capital investment need, they would particularly benefit from a closer European collaboration, as it is already the case for nuclear fusion.

In addition to public R&D funding, almost all EU Member States also support the market introduction of renewable energies and use efficiency standards. Furthermore, other policies, as the European Emission Trading Scheme, give an advantage to low-carbon energy sources. It is expected that the impact of such market based instruments is strengthened by the liberalisation of the energy sectors [European Commission, 2006f]. Dedicated pull instruments (like feed-in tariffs and green certificates) as well as instruments that indirectly support innovative technologies (like the ETS) help to deploy new technologies and subsequently reduce their costs through learning. However, despite the existence of such systems in all Member States, they are very heterogeneous and not always compatible with similar systems within the Member State or across the Member States.

Pan-European cooperation is hampered by diverse organizational structures in energy R&D, ranging from the institutional set-up to programmes and public private partnerships. A number of recent initiatives aim at improving both the science-industry link and international cooperation. However, current procedures remain far away from a coherent strategic priority setting at pan-European level that would enable to exploit synergies in energy R&D.

Pan-European cooperation in public energy-related research remains low even in areas of shared priorities. Energy R&D programmes vary significantly in their organisational forms and contents and national priority setting does often not take into account the research policies of other countries. In conclusion, a priority setting at EU level hardly takes place (except for EU funded programmes such as the Research Framework Programme or the Intelligent Energy Europe Programme), making it difficult to exploit synergies.

One possible barrier to the coordination in energy R&D may be the variety in the institutional structures, stemming from differences in the historic development, the energy mix, the general energy policy as well as the government structure. In many Member States the responsibility for energy R&D policy making lies with several ministries, the nature of which varies among countries. This set-up may lead to a lack of focus.

The heterogeneity of actors and responsibilities becomes even more apparent in the implementation of energy R&D policy. This can either fall directly under the responsibility of the ministry, or – more commonly – be carried out by an energy agency, by a broader technology agency, or by a major public research organisation. In some Member States, several approaches are used for different energy niches.

Also the performers of energy research vary among Member States, with precedence given to either universities or public research organisations. In many Member States, the public research organisations are extensively involved in energy research, often having their origins as nuclear research centres. Especially in the new Member States, the academies of science play a role in energy R&D.

The importance of creating a link between science and industry to guarantee the transfer of knowledge has led to public private partnerships in all Member States. The concrete design yet differs significantly among Member States, ranging from project-based industry/business cooperation to more institutionalised forms such as innovation agencies. This has been complemented by a number of innovative concepts such as technology platforms. Furthermore, some research centres that are jointly financed by the public and private sector are established, often with a clear focus on specific energy technologies. Some Member States also introduced forms of PPP with a clearly defined regional focus, such as the French " pôles de competitivité" .

Overall, the institutional infrastructure in energy R&D is scattered and heterogeneous across Member States. Unlike in the USA, where the Department of Energy centralises all aspects of energy policy at federal level, in most EU Member States the responsibilities for energy R&D policy are shared among various ministries and different agencies. Another problem of the energy sector is its fragmentation into several sub-sectors, characterised by different technologies, products and value chains. As a result, private actors are extremely heterogeneous among the different sub-sectors of the energy sector.

However, the discrepancies in national energy R&D infrastructure do not a priori prevent international collaboration. A successful example is the Nordic Energy Research Programme that forms a joint programme among Denmark, Finland, Iceland, Norway and Sweden. Also on the European level some highly integrated initiatives exist in specialised areas, such as ITER and CERN.

There are also some more recent initiatives aiming at better pan-European energy cooperation, often initiated by the European Commission. The ERA-NETs, created under the 6th Framework Programme for Research, contribute to a better coherence in research policies among Member States. The strengthening of knowledge in a specific area is the focus of the Networks of Excellence, bringing together the critical mass of expertise on an EU level. Eventually, the EU Technology Platforms will also facilitate international information exchange, despite their focus on creating a link between industry and science. In general, the role of the EU Research Framework Programmes to connect, reinforce and synergize national capacities is widely recognised as fundamental, though insufficient in some cases.

Beyond the EU-level (but including 17 EU Member States), the International Energy Agency's Implementing Agreements bring together experts in specific technologies in order to collaborate on R&D activities. There are currently about 40 active agreements with varying members, covering various kinds of energy technologies.

Overall, it can be concluded that potential synergies among Member States efforts often remain unexploited, influenced by the heterogeneity in energy research priorities and institutional capacities. This is a shortcoming, particularly affecting those technologies that require joint research efforts due to high costs. The recent initiatives such as the ERA-NETs and Technology Platforms are an important step towards mobilising pan-European cooperation, often realised as a bottom-up approach with a clear technology focus. Nevertheless, these efforts are still far away from a common EU-wide research strategy. Such a strategic planning would need to follow a broad cross-sectoral, coordinated approach, comprising not only energy production but also large energy consumption sectors such as the transport sector.

Systematic and consistent reporting of information on R&D spending, programmes and priorities is a pre-requisite for a better coordination of energy R&D programmes among EU Member States. Currently available information does not allow for a comprehensive and consistent overview of the R&D infrastructure and spending in public and private energy R&D.

Overall, research efforts need to be better synchronized in order to provide the technologies that will allow the energy sector to meet its long term challenges. This requires as first step transparent information on energy and transport R&D efforts among Member States, comprising both quantitative data and information on policies, programmes and responsibilities. Access to such transparent, comprehensive information is of particular importance given the heterogeneous infrastructure of energy R&D among Member States.

The report reveals that information on energy- related R&D is fragmented. This applies both to data on public as well as on private spending, with the latter usually being sketchier. Furthermore, available data sources are not easily comparable due to differences in methodology, coverage etc. In some cases, such as for the trends in energy-related public funding, even contradictory trends emerge between various data sets. Data availability for public energy-related research is much more comprehensive than data on transport-related research.

Compared to quantitative data, information on the institutional structure, programmes and policies is even sketchier. Except for a number of studies that are not regularly updated, there is little regular and structured information available on the institutional energy R&D infrastructure.

On EU level, the exchange of information between the Member States and among different national actors could be facilitated by providing a database containing a standardized set of information regarding energy R&D funding, programmes, priorities, responsibilities and structures. The success of such a measure depends on the completeness of the respective database, which may argue in favour of either a compulsory reporting by Member States or an expert-based scheme yet with secure multi-annual funding.

With respect to quantitative data on energy and transport-related R&D funding and expenditure, the Eurostat GBAORD, GERD and BERD databases may be a good starting point but currently contain too little information on the sector level or on different technologies. As they rely on Member State reporting, one option may be to make detailed reporting to Eurostat compulsory for the Member States in order to capture more comprehensively the funding trends in energy- and transport-related sectors. With regard to investment in the private sector, the EU Industrial R&D Investment Scoreboard provides important information on the R&D investment on a company level, including companies operating in the energy and transport sectors.

The collection of information on research policies, programmes and initiative within EU Member States is done as part of the Research Inventory of the web-based ERAWATCH service. This comprises also some energy- and transport related information on policy priorities and programmes, if relevant from a general research policy perspective. Energy and transport R&D policies and programmes as such, however, are not explicitly addressed.

If a voluntary and expert-based monitoring scheme is favoured, a deepened coverage of energy R&D information within ERAWATCH could be developed through a measure-oriented specific extension of the research inventory.[2] It could cover a broader set of energy-related research programmes, policy documents and organisations with the existing set of specific templates, if appropriately amended by a summary field for each country on energy research policies in the country profile and a specific entry point on the ERAWATCH website. An example of another existing thematic service which follows such a coverage philosophy is the CISTRANA portal on IST research.

Of course also other forms of extension are conceivable. An exploratory study by the ERAWATCH Network during 2006 has conceived and tested an approach which provides more detailed coverage of thematic research policies and its drivers, processes and implementation mechanisms for several fields, among which energy. Such an approach would however require an additional specific thematic field template. It has turned out in the exploration that it is quite costly and requires an additional organisational layer of thematic quality assurance as well as a significant change in the web presentation. This approach is hence not suggested as preferred option. It might be considered in a later step.

INTRODUCTION

Energy production and consumption exerts a number of environmental pressures such as the emission of air pollutants and greenhouse gases. The use and production of energy accounts for more than 80% of the EU greenhouse gas emissions and the vast majority of emissions of acidifying substances, ozone precursors and particulate matter [EEA, 2006].

The EU has set the objective of reducing the level of GHG emissions by 20 % compared to 1990 levels by the year 2020 [Council, 2007]. In the longer run, even more ambitious GHG reductions in the order 60-80% may be necessary [Environment Council, 2005]. At the same time, the EU's energy import dependency is predicted to increase further, while the number of energy exporting countries will decrease, making the EU energy supply vulnerable.

Meeting these challenges requires drastic changes to energy production and consumption sectors. Particularly, domestic energy production, energy savings and low carbon carriers are likely to become more important [IPTS, 2007; IEA, 2006d]. The recently adopted 'Energy Policy for Europe' [European Commission, 2007k] consequently aims at achieving a 20% share of renewable energies in energy consumption and a 20% better energy efficiency than under a business-as-usual scenario by 2020. This target implies an accelerated effort to develop and introduce new energy technologies into the market, requiring initiatives by the government and private sector, and by enhancing international cooperation.

The forthcoming proposal for a Strategic Energy Technology Plan aims at addressing how to improve international collaboration in energy research and development especially for those technologies that need a 'critical mass'. This requires a scanning of energy technologies under development as well as the knowledge about the current national energy research efforts and the underlying infrastructure, i.e. the key players involved.

The objective of this report is to provide an overview of the energy research capacities both in the public and in the private sector in the EU Member States, and in Japan and the USA for comparison.

Following the executive summary (Chapter 1) and a brief description of the methodology in Chapter 3, the public energy research infrastructure in the different Member States is analysed in Chapter 4. The assessment shows that there is a remarkable heterogeneity in the energy R&D infrastructure, which may contribute to the lack of cooperation in European energy research. Firstly, the ministries involved in setting up national energy research priorities vary strongly. Secondly, there are large discrepancies for energy R&D spending across Member States. Thirdly, the implementation of energy R&D is rather heterogeneous, comprising dedicated energy agencies as well as technology agencies, the main national research organisations or directly the ministries themselves.

In addition to promoting energy-related research ('technology push'), governments need to create favourable conditions for deploying new energy technologies ('demand/market pull'). Currently, clean energy technologies are not competitive with the established technologies (with the notorious exception of some niche markets). All governments of EU Member States use a wide number of instruments to promote development and dissemination of new technologies, from subsidising R&D to voluntary agreements, standards, taxes and cap-and-trade systems [IEA, 2003, 2007a]. In Section 4.3., we compare the two prevailing 'demand pull instruments', i.e. the feed-in tariffs and green certificates. Other policies discussed include car scrappage programs and bio-fuel policies.

Chapter 1 has a closer look to the role of the private sector in energy R&D. Depending on the technologies, the type of their output, the production processes and their market maturity, the energy sector breaks down into different sub-sectors, each of which includes actors with specific R&D needs. Therefore, a complete picture of the private energy- and transport-related R&D efforts is difficult to draw. Nevertheless, a closer look at the list of the 1000 top performing companies in R&D investment reveals that the majority of the business sector's investment goes into the car manufacturing industry and related ancillary industrial sectors, while 'traditional' energy enterprises receive limited private investment. Similar conclusions may be drawn concerning the pattern of R&D-related employment.

The research needs and the current thematic R&D priorities are discussed in Chapter 6. Even though there are large differences in Member State's spending, revealing different priorities in energy R&D, a number of shared priorities become apparent between different clusters of countries. Such priorities include research on renewable energies, energy efficiency and nuclear-related research. Furthermore, a number of Member States mention that CO2 capture and storage is a recent priority.

The present study systematically captures developments until 2005, as data for more recent years have not been available at the time of writing. More recent developments are thus not included in a systematic way. However, having in mind the dramatic changes in the energy sector in the last two years (such as the steep rise of the oil price), it is important to provide an indication about more recent developments. This is aimed at in Chapter 7.

Overall, we can conclude that despite the strategic importance of energy- and transport-related R&D, public funding remains limited. A better cooperation of EU Member States R&D programmes and international collaboration among Member States with shared priorities could thus help to achieve the 'critical masses' needed for the introduction of some technologies with high costs, infrastructure requirements, etc. However, the heterogeneity of Member States' institutional R&D infrastructure currently impedes a better alignment of energy- and transport-related R&D. A first step towards a better exploitation of synergies comprises a systematic gathering and exchange of information on energy R&D efforts and the related institutional structure. This could be facilitated by a database containing comparable, standardised sets of information regarding energy and transport R&D funding, programmes, priorities and responsibilities.

METHODOLOGY AND SCOPE

Scope of this study

In early 2007, the European Commission proposed the development of a European Strategic Energy Technology Plan. Its aim is to facilitate the innovation challenges of the energy-related sectors, which arise from concerns about climate change and supply security. The plan is expected to identify those technologies for which EU cooperation is crucial and analyze whether the existing R&D capacities in the EU Member States support such collaboration.

This report is one of the two background documents providing input to the SET-Plan. This document aims at assessing the capacities of the energy- and transport-R&D infrastructure, i.e. the institutions being involved in the policy making, the implementation and the performance of energy research, while the other document focus on a technology assessment.

A broad approach has been followed regarding energy but transport is restricted mainly to its energy-use component. Although, the different classification systems of the various databases hamper the breakdown of the sectors, this report aims to cover the following sectors to the extent possible:

- Energy sectors include the primary energy production (such as mining of coal and nuclear fuels, mineral oil and natural gas prospecting), as well as the transformation and distribution of final energy (power, industrial and domestic heat, refined liquid fuels, etc.) obtained from fossil resources, nuclear energy and renewable energy sources. Often, a distinction is made between nuclear and non-nuclear R&D.

- Other energy-related sectors comprise sectors producing electronic equipment and components. Even though this sector is extremely diverse, it is included in order to reflect R&D in energy-consuming consumer goods and components used for energy production.

- Transport-related sectors such are the developers of transport systems and the manufacturers of motor vehicles (commercial vehicles and cars).

With the focus being on structures, programmes, policies and technological priorities in Member States, initiatives on the EU-level were generally not considered. It therefore needs to be remembered that the important budgets (around €574 Mio on an annual average) of the 6th Framework Programme and the Intelligent Energy Programme (€50 Mio) are excluded from the analysis. Since 2007, these additional funds would even be more important with 7th framework programme amounting to €886 Mio/year from the EC and EURATOM Framework Programmes and €100 Mio/year from the Intelligent Energy Europe Programme [3] [European Commission, 2007e].

This study does not undertake new research, but mainly draws on existing studies and supranational databases. However, Member States were given the opportunity to comment on the report as part of a consultation on the SET-Plan.

As this report evaluates available information, its second purpose is to identify the future need for monitoring and evaluation that will allow a more comprehensive assessment of the energy-related R&D capacities of the public and private sectors in future SET-Plans, as the delivery of the first SET-Plan is not meant to a one-off exercise [European Commission, 2007e].

The preparation of this study has revealed significant gaps both with regard to data on R&D expenditure and funding as well as for information on the R&D infrastructure. In the following, the main sources of information are briefly introduced and some major gaps mentioned.

It must be noted that the assessment on energy research budgets and expenditures and its infrastructure does not necessarily provide a complete picture on the energy innovation capacities in Member States. This would require a more comprehensive analysis, taken into account also output indicators. Nevertheless, a quantifiable relation between R&D intensity and technological development has been shown [Doornbusch and Upton, 2007, including further references]. A strong relation between R&D expenditure and output-based indicators has also been found. On this ground, the narrow approach followed in this study can be justified.

Sources of data on R&D expenditure and funding

A reliable data basis is indispensable for estimating the energy R&D funding and expenditure and direction of energy research in the EU. At the moment, there are four supranational datasets on energy R&D funding covering (most) EU Member States, namely:

- GBAORD: Government Budget Appropriations or Outlays on R&D are all appropriations allocated to R&D in central government or federal budgets. This is collected from government R&D funders and maintained by Eurostat and the OECD[4] and follows the NABS (Nomenclature for the Analysis and Comparison of Scientific Programmes and Budgets) classification, a socio-economic nomenclature.

- GERD (Gross Domestic Expenditure on R&D). Like the GBAORD, this database is created by Eurostat/OECD on the basis of data collected from all R&D performers. It has a sectoral breakdown (BES: business and enterprise, GOV: government, HES: higher education; PNP: private non-profit)

- The BERD (Business enterprise sector's R&D expenditure) database from Eurostat contains figures on the business sector's expenditure in R&D broken down by different sectors and sources of funds. It is basically the part of GERD that is financed by the business sector.

- The IEA R&D statistics. They are collected from government R&D funders and use a scientific/technical nomenclature. The underlying 'questionnaire' and the classification were recently updated (e.g. to account for new technologies) as proposed by an expert group on energy R&D statistic [European Commission, 2005h[5]].

- The EU Industrial R&D Investment Scoreboard [6] provides data on investment in R&D from 2000 companies from around the world reporting major investments in R&D. The set of companies it covers comprises the top 1000 R&D investors whose registered offices are in the EU and the top 1000 registered elsewhere. The companies are broken down by sector of activity, and to give a full picture the data presented include R&D investments, and other economic and financial data (sales, capital expenditures, profits or losses, employees) from the last four financial years.

The scoreboard is prepared from companies' annual audited reports and accounts using rigorous financial reporting practice verification processes. In order to maximize completeness and avoid double counting, the consolidated group accounts of the ultimate parent company are used.

Companies are allocated to the country of their registered office. In some cases, this is different from the operational or R&D headquarters. This means that the results are independent of the actual location of the R&D activity. Examples are EADS (the Netherlands), AstraZeneca (UK) or Royal Dutch Shell (UK).

The main limitations of the Scoreboard are due to different national accounting standards determining the information disclosure practices of companies. For companies listed in stock markets the situation will improve with the adoption of the international financing reporting standards (IFRS).

In summary, the Scoreboard is a useful tool to monitor and analyze R&D developments by business corporations although it does not specify the location and the nature of the R&D investments (place of execution and type of technological development).

Unfortunately, these databases cannot easily be compared one another, mainly due to

- Different coverages: GBAORD, GERD and the scoreboard comprise all R&D, while the IEA is restricted to energy R&D. However, a sub-classification in GBAORD and GERD covering the energy part is also available, yet often data entries are missing. Currently only few countries supply data to EUROSTAT for the sub-categories under the GBAORD category energy.

- Different geographical coverage: While the databases hosted by Eurostat comprises all EU Member States, the IEA database covers IEA Member States. This means that 10 EU Member States are not included in the IEA database, i.e. Bulgaria, Estonia, Cyprus, Latvia, Lithuania, Malta, Poland, Romania, Slovenia, and Slovakia. However, Poland and the Slovak Republic are expected to become IEA members soon.

- Different approaches: While EUROSTAT collects budget data in its GBAORD statistics and expenditure data in GERD, the IEA assembles both budget and expenditure data in its energy R&D questionnaire. The Scoreboard uses data from companies' annual audited reports.

- Different sectoral breakdowns: The GERD follows an institutional nomenclature, the NACE (the European statistical classification of economic sectors), while the Scoreboard classifies companies’ economic sectors according to the ICB classification[7]. GBAORD follows a functional classification, which has a first level representing socio-economic objectives (SEO's), and uses varying logical structures on the lower levels. The IEA energy R&D data use a scientific/technological structure.

- Different geographical allocation: The Scoreboard refers to all R&D financed by a particular company from its own funds, regardless of where that R&D activity is performed. BERD refers to all R&D activities performed by businesses within a particular sector and territory, regardless of the location of the business’s headquarters, and regardless of the sources of finances.

- Lack of coordination in data collection: Some countries collect data on budgets, others on expenditure; demonstration projects may be accounted for in different ways; some countries attribute the whole budget of a program or project to the first year, whereas others indicate actual yearly expenditures etc. [see e.g. European Commission, 2005h].

This report takes into account information from all of the above mentioned main data sources. However, as a consequence of the inherent differences between the data sources, the information taken from different sources is kept apart in Sections 4.2. and 5.2. Preliminary conclusions covering the information from the different sources are drawn at the end of those two chapters.

It should be noted that a complete overview of energy- and transport-related R&D funding and expenditure would also need to capture the upstream research and innovation expenditures as the energy sector crucially depends on research in other sectors. For example, oil and gas extraction industries depend on innovation that is carried out by mechanical engineering workshops or engineering consultancy firms [Kaloudis and Petersen, 2006]. Similarly, material research often is a pre-condition for the development of new energy technologies. However, current sectoral breakdowns do not easily allow for such task. A thorough in-depth analysis of the Scoreboard data on a company by company basis might allow for a first approach.

Sources of information on energy and transport R&D infrastructure

Consistent information on the institutions involved in the policy process to the final performance of energy- and transport-related research is sketchy. In 2007 a survey has been conducted by the European Commission among the administrations of all EU Member States in order to monitor the structure of the national R&D systems in the particular field of Energy. To this end, a questionnaire has been sent to the corresponding government departments responsible for the implementation of the energy R&D budget. The 17 replies that were received by DG TREN were a very valuable input for this report.

The issues addressed in this survey were:

- Organisation and structure of Energy R&D and innovation activities in the country

- R&D and Innovation priorities

- R&D and innovation budget and implementation schemes

- Estimates of the private investment in energy R&D and innovation activities

- Foreseen additional measures

Other important sources of information include a number of research studies that were carried out for the European Commission, and that mostly address energy-related research [European Commission, 2005b, f, g; 2006d; 2007a; i]. Information on transport-related research is also relatively patchy; a helpful information source is a report by the ERA-NET transport, which unfortunately comprises only 12 Member States [Kropf et al., 2005]. Also the Industrial R&D Scoreboard (see Section 3.2) is a valuable source of information on the main private actors involved in research in the different sectors.

Eventually, information from ERAWATCH was used. ERAWATCH has been created to provide evidence-based policy intelligence in the research field in Europe. It is a service contributing to the realisation of the European Research Area (ERA). ERAWATCH is a European web-based service that presents information on national and regional research policies, actors, organisations and programmes. ERAWATCH is targeted at those interested and active in research policy making in Europe, for example decision makers, policy analysts, researchers, NGOs.

ERAWATCH is funded through the European Community's Research Framework Programme. It is jointly run by the European Commission's Directorates-General for Research and the Joint Research Centre - Institute for Prospective Technological Studies (IPTS). The online service is provided through CORDIS [8] .

A core element of ERAWATCH is the Research Inventory. Information can be accessed on a country level as well as at an aggregate EU level and through a range of advanced searches. ERAWATCH provides information on the 27 Member States of the European Union, countries associated with the European Community's Research Framework Programme, and for comparative purposes China, Japan and USA. From autumn 2007, coverage will also include India, Republic of Korea, Canada, Australia, New Zealand and Brasil. Information is collected with the support of the ERAWATCH Network of national research and consulting organisations specialised in gathering and analysing information relevant to research policy-making. Quality of information is checked in several steps by ERAWATCH Network senior policy analysts and management and by IPTS country desks.

Box 1 – Current coverage of energy R&D policies in ERAWATCH A core element of the EU-funded ERAWATCH is the Research Inventory. Information can be accessed on a country level as well as at an aggregate EU level and through a range of advanced searches. Currently however, ERAWATCH addresses specific thematic fields, i. e. energy research policies, only to a limited extent. In the base-load inventory, more energy-specific information is or will soon be covered in three ways: Two sections in the country profile which address the "Thematic research policy priorities" and "Thematic priorities and other targeted funds"; Specific templates on relevant research programmes and partly - in countries which do not have a programme-based implementation structure - policy documents and organisations; A thematic search screen bringing together relevant information from country profiles and specific templates according to a classification of thematic fields which basically follows the thematic areas of the FP 7 cooperation programme, containing energy and mobility/transport as separate items. Furthermore, ERAWATCH provide more detailed R&D country profiles, with the current coverage of energy research policies still being mixed. For Denmark and Japan, an extended scope of coverage with regard to thematic fields such as energy in the ERAWATCH research inventory can be expected by autumn 2007. It is expected that by that time one to two energy relevant specific programmes, organisations or policy document templates will be accessible for many of the EU-27 countries. |

THE PUBLIC SYSTEM OF ENERGY-RELATED R&D

- R&D in energy is considered as important and challenging due to the strategic importance of energy, the need for security of supply, its environmental impacts (in particular for climate change) and the time horizons used in this sector. In general, the government should guarantee an attractive environment for the research activities by both the private and public sector. Public research initiatives (e.g. R&D subsidies) are necessary where the actions by the private sector are insufficient (e.g. fundamental research, international cooperation, etc. – for more on the rationale for public research initiatives see Box 2).

The role of the public sector in energy-related research is twofold. A first role of the governments is to stimulate R&D in new energy technologies ("technology push"). This will help in resolving technical problems and reducing the costs that are typically above those of existing technologies. A second role for the governments is to create favourable conditions for deploying the new energy technologies ("demand pull"). Such market pull instruments contribute to the maturing of new technologies through "learning". Further, technologies that may overcome these technical and cost-competitive barriers may still face a wide range of barriers, as e.g. planning and licensing or lack of financing; nevertheless these are largely outside the scope of this study.

The public energy-related R&D infrastructure is presented in Section 4.1. The public spending on energy and transport R&D in the EU is dealt with in Section 4.2. We elaborate on the policies for market deployment of energy technologies in Section 4.3. The conclusions are listed in Section 4.4.

Public energy-related R&D infrastructure

Table 1 provides a tentative and non-exhaustive overview of the different actors involved in energy and transport R&D for all EU Member States. The table is mainly based on the Member State survey for the SET-Plan, and completed using a number of other studies [9] [e.g. European Commission, 2005f; ERAWATCH Network, 2007]. In general, the information on transport R&D capacities is less complete than for energy; and it is mainly based on ERAWATCH and the ERA-NET transport [Kropf et al., 2005]. Due to their large number of actors, universities are not included in the table, even though they include some of the most important R&D performers.

The table indicates large discrepancies in capacities and responsibilities for energy and transport R&D across the EU Member States. These will be assessed further in this chapter, and in some cases be compared with those in the USA and Japan.

Box 2 – Why should governments invest in R&D? The increase in R&D expenditure has become a priority of European governments in the last decade. The Barcelona European Council of March 2002 set the objective to increase the average investment in R&D in Europe from 1.9% to 3.0% by 2010, of which two thirds to be funded by the private sector [European Commission, 2002]. Why should governments (regional, national or EU) invest in R&D? And if they do, how can they contribute? One can distinguish three reasons why governments should step into R&D investment. First, it is demonstrated that the R&D activities of private firms generate widespread benefits enjoyed by consumers and society at large. As a result, the overall economic value to society often exceeds the economic benefits enjoyed by innovating firms as a result of their research efforts. This excess of the social rate of return over the private rate of return enjoyed by innovating firms is defined as a positive externality or spillover. These spillovers imply that private firms will invest less than is socially desirable in R&D, with the result that some desirable research projects will not be undertaken, and others will be undertaken more slowly, later, or on a smaller scale than would be socially desirable. These spillovers flow through a number of distinct channels. First, spillovers occur because the workings of the market for an innovative good create benefits for consumers and non-innovating firms ("market spillovers"). Second, spillovers occur because knowledge created by one firm is typically not contained within that firm, and thereby creates value for other firms and other firms' customers ("knowledge spillovers"). Finally, because the performance of interrelated technologies may depend on each other, each firm improving one of these related technologies creates economic benefits for other firms and their customers ("network spillovers"). Governments should invest in projects that have a high social rate of return, but that would be underfunded, delayed or otherwise inadequately pursued in the absence of government support. This objective can be furthered by pursuing projects for which the gap between the social and private rates of return ("the spillover gap") is large [Jaffe, 1996]. Second, a forward-looking planning is important, which accounts for the expected demand for new capacities in order to match the appropriate 'time window', available technologies and possible developments of the energy prices and environmental legislation. Often, such time horizons exceed the planning of private investors, underlining the need for government action in energy R&D. Third, risk, capital market imperfections and financial factors may also impede socially desirable R&D efforts. Among others, the governments can respond to this by implementing market pull instruments, in particular feed-in tariffs (which are discussed in Section 4.3.) or by giving the right incentives to 'venture capital' (see Box 3). |

Table 1: Institutional framework of energy/transport research in EU Member States (Universities are not listed due to their large number)

Institutional energy and transport R&D framework

The institutional energy and transport R&D framework can be divided into decision making and priority setting, implementing R&D policies and conducting and carrying out of research itself. A clear distinction between these divisions is very often somewhat artificial. For example, public research organisations often act both as a performer of research, but are active also in the policy implementation by allocating funds. Similarly, Research Advisory Councils are sometimes involved both in the policy making and the implementation processes.

The basic decision making with regard to energy and transport R&D funds is taken by ministries in the majority of Member States (see column 1 of Table 1) The responsible ministries, however, vary across Member States: they include not only ministries of energy and/or transport but also ministries of finance and economy, ministries of science or innovation.

In many Member States, energy R&D is primarily the responsibility of one or two ministerial departments (Education/Science and Industry/Energy, in some cases directly linked to the Ministry of Economy or Finance). In other countries, a large number of Ministries share the responsibility for energy research. In Germany, for example, four ministries manage energy R&D research, namely the Ministry of Economy and Technology BMWi (general energy R&D), environment ministry BMU (renewables), the Ministry on Food, Agriculture and Consumer Protection BMELV (biomass applications), with the research Ministry BMBF coordinating and managing horizontally all institutional energy research priorities and contributing to nuclear R&D.

In many Member States, an inter-ministerial body supervises the adequacy of short-term, mid-term and long-term targets to the overall R&D targets prescribed by the government (e.g. CICYT in Spain). In other countries, the strategy plan is the main responsibility of one single department: for instance, in Sweden the strategy plan depends on the Ministry of Enterprise, Energy and Communications and in Greece on the General Secretariat for Science and Technology (GSRT). In a number of Member States, Councils on Science and Research also play an important role in the decision processes (e.g. Bulgaria, Denmark, Ireland etc.).

The institutional framework for the implementation of energy R&D policies is even more heterogeneous, stemming from differences in the historic development, the energy mix and the subsequent importance of the respective actors, and energy policy objectives (column 2 of Table 1). There are basically four ways in which implementation is organised (analogous to European Commission, 2005f). Yet, often a clear attribution of an institute to one of the categories is difficult to make and in many Member States, several of the options are in place (e.g. for France).

- Directly falling under responsibility of the ministry. This is the case e.g. for Belgium (regional ministries), Italy, Austria and Greece. In some countries, the research activities are directly managed by the central (or federal) governmental departments, whereas in other cases, specific para-governmental agencies for the management of the R&D are created for this purpose such as the General Secretariat for Research and Technology in Greece.

- Through an agency dedicated to the energy field, such as the Czech Energy Agency, the Danish Energy Authority, or the Swedish Energy Agency STEM.

- In some countries, specific agencies exist that are mainly dedicated to the market promotion of new, emerging energy technologies or focus on energy conservation. The role of these agencies is to act in the final R&D and innovation phase, by promoting the first commercial implementation of technologies that are ready for the market. Examples are the Romanian Agency for Energy Conversation, IDAE in Spain and ADEME in France.

- The UK system is an example for a number of specific agencies for the management of the R&D. Depending on the nature of the research project, its management is channelled along a different institution: basic research is generally coordinated by the Energy Research Partnership, Research Councils and the UK Energy Research Centre itself, whereas development and demonstration programmes are managed by the recently created UK Energy Technology Institute, the Technology Strategy Board or the Carbon Trust, and the Environmental Transformation Fund or the Regional Development Agency, respectively, none of which are within a single Ministry.

- The concept of Research Councils taking an active role in the implementation of energy R&D policy can also be observed in Denmark, Latvia, the Czech Republic and Bulgaria.

- By a broader technology agency that is not limited to the energy field. Amongst them we find TEKES in Finland, INETI in Portugal, SenterNovem in the Netherlands, the French Innovation Agency AII, the Estonian Technology Agency, CDTI in Spain etc.

- Through the main national research organisation of a country in the area, which acts de facto as an agency. This approach can be found e.g. with the CEA in France, but in parts also in Spain (CIEMAT). Also in Germany, the 'Projektträger Jülich' acts as a funding organisation for institutional energy research, while it is part of one of the largest energy public research organisations, the Helmholtz society.

Additionally, a large number of other institutions are involved in the implementation of energy R&D policies. Furthermore, regional competences for energy R&D exist in Austria, Belgium, Germany [10] and Spain, which is particular important for the former two.

The performers of energy research in Europe are public research organisations, universities and enterprises in the private sector (column 3 of Table 1). As there are no comprehensive data on energy research by sectors, only a rough indication of the importance of the different players may be derived from a look at the gross expenditure on R&D across all topics. Universities have a high share in total research of 22%, compared to the US (14%) and Japan (14%) (see Table 2). Similarly, EU universities also employ a large number of researchers (33.6% of total researchers, compared to 14.7% in the US and 25.5% in Japan) [European Commission, 2007i].

The public research organisations often (and especially in relatively large Member States) consist of a network of energy research laboratories specifically dedicated to energy technology research according to the priorities identified by the corresponding government. They have often evolved from purely public research organisation, mostly involved in (nuclear) energy research, towards a mixed funding structure, i.e. a combination of grants, competitive funding and paid direct contracts, and a broader range of energy-related topics Usually there are close links to industry and national authorities [European Commission, 2007i].

Reference public or semi-public national energy technology laboratories include the French CEA and IFP, the Dutch ECN, the Finish VTT, the Italian ENEA, the Spanish CIEMAT, the Greek CRES, the British UKERC. Other European excellence research Institutes although devoting significant efforts to the energy-related applications, are not strictly speaking energy research centres (e.g. VITO in Belgium). In Germany, two out of the 15 Helmholtz Research Centres are particularly involved in the energy field: the Jülich Research centre and the Karlsruhe Research centre. The Fraunhofer Gesellschaft network is also very active in energy research, but it is not entirely dedicated to it. This is also the case of the Danish RISOE Lab, and the Portuguese INETI.

Furthermore, in most of the countries, basic research related to energy is funded by bodies, equivalent to the University system or National Academy of Sciences. In many of the Eastern European Member States, the Academy of Sciences has taken over the role of public research organisations, e.g. Hungary, Czech Republic, Bulgaria, the Baltic States. In some cases, the academies of sciences also play a role in the implementation or even decision-making processes of energy R&D.

There is also a network of national/international laboratories, often of smaller size, mainly dedicated to specific research fields within the broad energy topic. Most are dedicated to renewable energy technologies, energy efficiency technologies and also energy system analysis. Amongst others, we find the German Fraunhofer ISE Freiburg, ISFH Hameln, ZSW Baden Württemberg, the Spanish Plataforma Solar de Almería, PV Centre Poland for Solar Energy Research, the European Academy of Wind Energy (a joint venture of CRES, RISOE, Kassel University and ECN), Centre for Renewable Energy Systems Technology Leicester (CREST).

Public private partnerships

Partnerships between the public and private sectors are an important element in transferring knowledge from research institutions to industry and – vice versa – better match research priorities to the needs of the industry. In addition, industrial actors are often involved in energy R&D policy making; this is described in more detail in Section 5.1.2.

While industry-science links exist in most Member States (see column 4 of Table 1), there are differences in its design, reaching from project-based collaboration to institutionalized cooperation including knowledge transfer offices, innovation agencies or technology platforms. On the one hand, public-private partnerships are established for clearly defined technology clusters, sometimes even with a regional focus. On the other hand, there exists the concept of (a more unidirectional) energy-related knowledge transfer, which can take the place in a more general innovation agency. In a number of Member States, these concepts are complementary.

A few examples are provided in the following [ERAWATCH Network, 2007; European Commission, 2007i]:

- Collaboration among public and private sectors in energy R&D is enhanced on a project level. For example, the German "Verbundprojekte" require at least one industrial partner in the consortium. On an EU level, project-based cooperation between industrial and public partners is fostered through e.g innovative concepts of the 6th Framework Programme for Research such as integrated projects.

- There can be a close link between industry and universities for clearly defined technologies. An example is the Danish Research Consortium on Wind Energy, which forms a collaboration between the Technical University of Denmark (DTU), Aalborg University (AAU), Risø National Laboratory, the Danish Hydraulic Institute (DHI) and the University of Copenhagen. The Danish Hydrogen and Fuel Cell Academy at Risoe National Laboratory follows a similar approach.

- Collaboration between universities and industrial partners can also go beyond narrow thematic topics and aim at capturing the broader field of energy research. E.g. in Germany, the Ruhr universities, Bochum, Dortmund, Duisburg-Essen, together with the Initiativkreis Ruhrgebiet founded a Public Private Partnership for energy research.

- On an EU level, the Technology Platforms succeeded in bringing together industry and public sector for strategic energy R&D issues. There are currently 32 technology platforms, out of which 6 directly deal with energy or transport-related topics. The aim of these platforms is to provide a framework for stakeholders, led by industry, to define research and development priorities, timeframes and action plans.

- Following this model, a number of national Technology Platforms have been created or are currently being established, for example in Austria, Belgium, Denmark, Germany, Greece, Italy, Netherlands, Poland, Portugal, Slovenia, Spain and the UK (the latter with the prominent UK Energy Research Partnerships) [European Commission, 2007i].

- In 2004, France introduced the 'pôles de compétitivité' (competitiveness clusters) under the Directorate General of the Ministry of Industry. The logic of Competitiveness Clusters is to create regional poles of excellence in a certain research area in accordance with regional strengths. The objective is to make work together on a small territory three types of partners (enterprises, training centers and research units) on a common innovating project with an international dimension. The concept experienced a fast uptake and there are currently 66 clusters, an important number of which relate to energy- and transport sectors.

- Technology excellence clusters may sometimes have a regional focus, making participation easier for smaller enterprises. Germany, for example, established a number of competency networks ('Kompetenznetze') aiming at regional networking, four of which are in the energy field. France has a number of regional clusters in the field of energy and transport (e.g. EnRRDIS in Rhone-Alpes focusing on energy in buildings, Normandy motor valley, electrical energy sciences in Region Centre).

- Eventually, there exist some research centers that are funded jointly by universities and industry. The RWTH Aachen and the E.ON AG, for example, are currently founding together a new energy research institute in Aachen. Also the Austrian Christian Doppler Laboratories strongly involves industrial partners.

- In some Member States, energy is one of several areas covered by innovation agencies, such as the Portuguese Innovation Agency ADI, the French Agency of Industrial Innovation AII and OSEO Innovation. The role of these agencies is to foster R&D activities within the entrepreneurial fabric, often putting particular emphasis on small and medium enterprises, by providing assistance to innovation, budgetary support and in some cases also guaranteeing external financing provided by banks and credit institutions.

- Knowledge transfer often also forms a task of the public research organization. This is the case for the French CEA that has set up 93 new high-technology companies since 1984 [European Commission, 2007i]. In Germany, the Fraunhofer-Gesellschaft cooperates closely with industrial partners; the French 'Institut Carnot' works in a similar way.

Energy R&D programmes within EU Member States

Dedicated energy R&D programmes are one important factor in coordinating energy research. By the end of 2003, all EU-15 Member States (except Luxembourg) had such a programme, while they were lacking in the new Member States [European Commission, 2005f]. However, this has changed in some Member States such as the Slovak Republic, and others are working on plans for the future (e.g. Lithuania).

Nevertheless, the organizational form of the programmes (separate energy R&D programme; part of a broader research strategy; linked to national energy policy strategy; broad or sectoral/technological approach) varies strongly among different Member States [European Commission, 2005f]. For example, Sweden and Denmark as well as the UK and Germany have multiannual energy R&D programmes with well-defined running times, budgets and clear objectives. In a number of other Member States, energy R&D plays a role in national research programmes with a broader scope (e.g. Poland, Austria, Spain). Thirdly, most Member States have programmes that address a specific energy/transport sector, sometimes including a regional focus.

Even more important differences can be observed among the technological priorities of national energy R&D programmes. Based on the IEA R&D database and the survey of the European Commission accompanying the Strategic Energy Technology plan, an overview of energy research priorities in different EU Member States has been produced in Chapter 6. It clearly shows the large differences among national energy R&D priorities. This is certainly influenced by the historic and current energy mix of the country, its domestic resources and/or public perception of e.g. nuclear power, as well as the specific problems the energy sector faces (e.g. environmental pollution; high import dependency).

On the other hand, a number of shared priorities among a significant number of Member States can be observed. This is the case particularly for R&D in renewable energies, yet with differences in the importance awarded to the various renewable technologies. Such areas would form a good starting basis for a better alignment of national energy-related research programmes. However, there is still little coordination among national energy research programmes and national programmes are opening up only slowly for international participation [European Commission, 2005f; 2005i].

Recently, there are some initiatives that strive for a better coordination of research (policies) among EU Member States:

- The ERA-NETs, which were created under the 6th Framework Programme for Research, aim to improve coordination of national and regional research programmes. In the long run, this will help to contribute to a greater coherence in research policies among Member States. An important element of the ERA-NETs thus includes the networking activities. There are a number of ERA-NETs in the energy and transport areas. The ERA-NET transport, for example, currently consists of 13 EU Member States and associated counties and aims at the whole land-based transport sector.

- The 6th Framework Programme for Research also introduced the Networks of Excellence (NoE) and the Integrated Projects, both of which require participants from at least three different Member States. The objective of the former is to strengthen scientific and technological excellence on a particular research topic by integrating at European level the critical mass of resources and expertise. A number of energy-related NoEs have been created. Integrated projects focus more on integration of industrial and public partners but also contain an element of international collaboration.

- The International Energy Agency's Implementing Agreements bring together experts in specific technologies in order to collaborate on R&D activities. There are currently about 40 active agreements with varying members, covering all kind of energy technologies such as clean coal, different renewable energy technologies and advanced motor fuels. However, 10 EU Member States do not belong to IEA and IEA also comprises very important non-EU countries for energy R&D [11] . Regardless this mismatch, IEA’s Implementing Agreements constitute important R&D clusters that generate very interesting R&D spillovers for the EU energy R&D system.

- The Nordic Energy Research is an institution which operates under the auspices of the Nordic Council of Ministers since 1999. It comprises Denmark, Finland, Iceland, Norway and Sweden. The Nordic Energy Research Programme is aimed primarily at supporting research and development activities through grants, mobility support, network and project funding and supporting seminar and course activities.

- Even though the primary objective of the European Commission Technology Platforms is the better alignment of public research efforts to the needs of the industry, they bring together stakeholders from many Member States in a specific research area. This naturally entails information exchanges and the identification of competitive advantages amongst the members of the platform, and can therefore have a role in European coordination of research efforts.

- Some pan-European research organisations also exist for a number of specialised energy technologies, such as CERN and ITER.

- The European Academy for Wind Energy is another example of international collaboration of research institutes and universities in a specific field. It consists of four partners from Denmark, Germany, Greece and the Netherlands.

Energy R&D infrastructure in Japan and the USA

The US Public system of Energy R&D and Innovation

The first noticeable characteristic of the US public system of Energy R&D and Innovation is the existence of a dedicated Energy Ministry (DoE). This means that, from the administrative point of view, a single governmental department centralises all the aspects of energy policy at federal level. This is obviously a remarkable difference, since independent, energy-dedicated ministerial departments are not at all common within EU Member States. The DoE in the US was created in 1977 as a response to the first oil crises and since then it has consolidated its role within the governmental structure of the US. The DoE is responsible for energy policy and nuclear safety. Its portfolio includes programmes on energy conservation, energy-related research, radioactive waste disposal, and domestic energy production and the associated regulatory and normative bodies for electricity, gas and other energy carriers. It supervises also all nuclear-related policies, including the military ones and the provision of the nuclear reactors for the US navy.

The DoE sponsors more basic and applied scientific research than any other US federal agency, most of this is funded through its system of United States Department of Energy National Laboratories. The DoE Office of Science is the steward of 10 national laboratories that support the missions of its science programs. The national laboratory system, created 50 years ago, perform research and development that is not well suited to university or private sector research facilities because of its scope, infrastructure, or multidisciplinary nature, but for which there is a strong public and national interest.

The Office of Science coordinates the activities of the following 10 national laboratories, whose activity portfolio goes well beyond strictly speaking energy issues:

- Ames Laboratory (materials science, solid state physics and computing sciences)

- Argonne National Laboratory (nuclear engineering, transportation R&D, energy systems)

- Brookhaven National Laboratory (high energy physiscs, computational biology)

- Fermi National Accelerator Laboratory (fundamental physics, astrophysics)

- Thomas Jefferson National Accelerator Facility (fundamental physics, astrophysics)

- Lawrence Berkeley National Laboratory (genomics, geology, engineering, computing)

- Oak Ridge National Laboratory (nuclear engineering, biology, advanced materials,

- Pacific Northwest National Laboratory (microbiology, environmental sciences, sensing & metrology)

- Princeton Plasma Physics Laboratory (fundamental physics)

- Stanford Linear Accelerator Center (fundamental physics)

In addition, the Office of Science funds research and development projects conducted at these additional national laboratories, which are overseen by other DoE offices:

- Idaho National Laboratory – for the Nuclear Energy office (nuclear generation IV, security, environment, etc)

- Lawrence Livermore National Laboratory – for the Nuclear Energy office (primarily security)

- Los Alamos National Laboratory – for the Nuclear Energy Security Agency office (primarily security)

- National Energy Technology Laboratory – for the Fossil Energy office (fossil fuel-related technologies)

- National Renewable Energy Laboratory – for the Energy Efficiency and Renewables office (renewable energy technologies)

- Sandia National Laboratories – for the Nuclear Energy Security Agency office (primarily security)

Despite stable or even mildly shrinking during the last years, the total R&D funding of the DoE is very high, amounting about 8 000 million $, notwithstanding the fact that this budget also includes a large share devoted to security and military applications.

The Energy R&D & Innovation System in Japan

The Council for Science and Technology Policy (CSTP) is the high-level political body that set up the overall R&D strategy for Japan. The Prime Minister himself coordinates it, and it includes the Ministers of Education, Culture, Sports, Science and Technology, and the Ministry of Economy, Trade and Industry; as well as other experts from academia, including the Science Council of Japan (SCJ) and selected experts from industry. The sectoral priorities prescribed at CSTP are then implemented by the various governmental departments and Agencies.

The Japanese Third Science and Technology Basic Plan (2006-2010) points out four primary and four secondary prioritised R&D areas[ ERAWATCH, 2007]. The four primary areas are:

- Life Sciences (7 strategic priorities)

- Information and Communications (10 priorities)

- Environment (11 priorities)

- Nanotechnology and Materials (10 priorities)

Whereas the four secondary areas are:

- Energy (14 priorities)

- Manufacturing Technologies (2 priorities)

- Social Infrastructure (4 priorities)

- Frontier Science (4 priorities)

Although the CSTP plays the role of a central coordination office of R&D efforts, the public or semi-public agencies that implement the R&D programs (the so-called Independent Administrative Institutions, IAIs) benefit from a good level of autonomy, several of which are of specific relevance for the energy R&D and Innovation system:

The Institute for Chemical and Physical Research (RIKEN) conducts comprehensive research in science and technology and disseminates the results of its scientific research and technological developments. RIKEN carries out high level experimental and research work in a wide range of fields, including physics, chemistry, medical science, biology, and engineering, covering the entire range from basic research to practical application. RIKEN was first organized in 1917 as a private research foundation, and reorganized in 2003 as an independent administrative institution under the Ministry of Education, Culture, Sports, Science and Technology. The role of RIKEN in specific energy R&D is not clearly defined, since it is primarily a basic R&D institution. The budget is 600 M€, and the research staff is about 2400 (in 2005).

National Institution of Advanced Industrial Science and Technology (AIST) conducts research programmes focusing on environmental protection, strengthening the industrial competitiveness of the Japanese economy, with a focus on the exploitation of local technological resources and to support the industrial policy priorities prescribed by the government. Energy and environment is one of the 7 R&D priority lines of AIST, but some other like nanotechnologies, material sciences and manufacturing, geological sciences and life sciences have also an energy R&D component. Its total budget is around 838 M€, and the research staff is about 2300 people (in 2005).

The New Energy and Industrial Technology Development Corporation (NEDO) is a specific energy-focused research institute, originally established to develop alternative oil technologies. Since then, NEDO has diversified its activity portfolio and now conducts energy-oriented R&D in several strategic fields: in 2005 about 19% of the budget was dedicated to biofuels (mainly bioalcohol), 7% to hydrogen and fuel cells, 14% to energy-saving machinery and electronics, 8% to environmental protection technologies and 6% to new energy developments and superconductors. NEDO mainly plays the role of pure technology developer, promoting research and development for next generation technologies that are difficult for the private sector to perform due to the risk and uncertainty over outcomes and the need for multidisciplinarity. It does not carry out deployment financing projects.

The Japan Atomic Energy Research Institute (JAERI) is the public R&D institute centralising the nuclear R&D activities in Japan. Its 2000 researchers mobilise a year budget of about 700 M€, mainly dedicated to R&D in neutronics, photonics, nuclear reactor physics' & safety as well as new, advanced nuclear energy concepts. The role of fusion research in JAERI is particularly relevant.

Beyond public R&D institutes, the energy R&D and innovation system in Japan is largely based on R&D agencies financed by industrial corporations, which are described in Box 4.

Public spending on energy and transport R&D

As this report focuses on the energy R&D capacity in Member States, the funding from the EU though the 6th and 7th framework programme and the Intelligent Energy Europe Programme is not included. Prior to 2007, these programmes would add around €600 Mio to the EU figure for energy research. With FP7 and the new Intelligent Energy Programme, additional fundings will amount to €986 Mio on an annual average after 2007 [European Commission, 2007e].

The following comparison of public R&D spending is based on a number of different sources, namely GERD and GBOARD from Eurostat and the Energy R&D database from the International Energy Agency. Private sector spending is dealt with in Section 5.2, based on the Industrial Scoreboard and BERD. Unfortunately, as described in Section 3.2, the databases are not (easily) comparable.

Total spending (public and private) on overall R&D

Research spending largely varies among the EU Member States and the 6 biggest spenders account for 80% of total R&D spending in the EU. Furthermore, the EU as a total lags behind the US and Japan in terms of research spending relative to GDP and the number of researchers.

Total research funding in the EU (Gross Expenditure on R&D, GERD, based on Eurostat) focuses to a large extent on a limited number of Member States. In 2004, Germany accounted for 28.5% of EU funding, followed by France (18.3%), the UK (15.4%), Italy (7.9%), Sweden (5.7%), Spain (4.6%) and the Netherlands (4.5%). This contrasts with the cumulated funding from the 12 new Member States amounting to 2.2%.

The R&D intensity (measured as GERD relative to GDP) in the EU remained below 2% by 2005, which is 0.6 % – 0.85% less than in the US and between 1.0%-1.3% less than in Japan. So far, not much progress has been made towards the EU R&D investment target of 3% of GDP (two thirds of which to come from private sources) since this objective was set in 2002 [European Commission, 2007i]. Furthermore, the gap in R&D expenditure between the EU-25 and the USA does not seem to be narrowing.

There are also significant differences in R&D intensity among Member States. Sweden and Finland are taking the lead with an average higher than 3% of GDP. Austria Belgium, Denmark, Germany, France, the Netherlands, Luxemburg and the UK form the second group with an R&D intensity of 1.5-2.5%. The 12 new Member States have a significantly lower level of investment, which is on the whole far below 1% of their GDP, with Slovenia and the Czech Republic being the exceptions. In some Member States R&D intensity has decreased during the past couple of years, namely France, Sweden and the UK. In the Netherlands the R&D intensity decreased until 2002, but increased thereafter.

This heterogeneity in R&D intensity among EU Member States also holds true for the R&D expenditure relative to population. Here, Denmark also joins Finland and Sweden as a leading country. Similarly, the EU as a total falls well behind the US and Japan.

Figure 1: Total Gross Expenditure for R&D relative to GDP in 2004

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Note: 2004 data were used as they were more complete than 2005 data; data for Japan refer to 2003.

As illustrated in Sections 4.1 and 5.1, many institutions and organisations are involved in research funding and performance. The most important actor both in the funding and performance of research is the private sector. Table 2 and Table 3 show the relative importance of the "business enterprise sector (BES)", "government (GOV)", "higher education sector (HES)" and "private non-profit sector (PNP)" for the sources of funds and the performance of research. The outstanding role of the business and enterprise sector becomes obvious in the EU with the sector funding more than half of the overall research expenditures and performing almost two thirds. However, compared to Japan and the USA, the business sectors in the EU contribute relatively less in research funding and performance.

Table 2: Gross Expenditure on R&D by sector of performance

USA (2004) | 70% | 12% | 14% | 4% |

Japan (2003) | 75% | 9% | 14% | 2% |

Table 3: Gross Expenditure on R&D by sources in different regions, 2003

USA | 61% | 30% | 3% | 4% | - |

Japan | 75% | 18% | 6% | 1% | 0% |

Source: Eurostat GERD

Unfortunately a detailed analysis of the overall (public and private) R&D spending in the energy sector is not possible, as the category "production, distribution and rational utilization of energy" of Eurostat's GERD database contains too many gaps, including the large spenders Germany and France. The fragmented data available indicate that the share of energy R&D in total GERD is in the order of 1-4% for the countries included, with more important contributions in Slovenia (8.6%) and Romania (6.1%).

Public spending for energy and transport R&D

Eurostat: Government budget appropriations or outlays for energy R&D (GBAORD)

The GBAORD data concentrate on the government budget, which means that it complements the before presented GERD data by offering more detailed information on government funding on R&D. However, it is difficult to compare and analyze the GERD and GBAORD data in a comprehensive way, due to a lack of harmonised information and irregularity of reporting by the Member States (see Section 3.2).

Unfortunately, an (almost) complete dataset is available only for the energy sector (i.e. distribution and rational utilisation of energy). Data on public R&D budget in energy-related sectors (electronic and related industry) and transport-related sectors (manufacture of motor vehicle and other means of transport) remains patchy. The following section thus focuses on the energy sector and provides some limited information on the other sectors at the end.

The government budgets for the energy sector are shown in Figure 2. The absolute spending for energy research by 2005 was dominated by France, Germany and Italy, accounting for 73% of the cumulated EU Member State spending. On the other hand, the new Member States account for less than 3% of the total EU spending [12] .

Figure 2: Absolute government budget appropriations for production, distribution and rational utilisation of energy, 2005

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Note: Funding from the EU through the research framework programmes and the Intelligent Energy Europe Programme are not included in the EU-figure (see chapter 3); data for Poland relate to 2004; no data for Bulgaria, Cyprus and Luxembourg

Source: Eurostat GBAORD

The aggregated R&D budget of the EU-15 Member States allocated to distribution and rational utilisation of energy experienced a drastic decrease in the early 1990s, followed a more stable, yet fluctuating trend (see Figure 3). By 2005, government budget appropriations dedicated to energy R&D amounted to €2139 Mio in the EU-15 and €2194 Mio in the EU-27. The decline in public energy R&D budgets between 1991 and 2005 was very pronounced in the UK, Germany and Italy [Doornbusch and Upton, 2006], yet with some budgets rising again in recent years. One reason may have been the privatisation of a number of formerly nationalised energy industries during this time period.

Figure 3: EU-15 aggregated public budget appropriations for production, distribution and rational utilisation of energy between 1991 and 2005

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Note: GDP deflators have been used to adjust for inflation. Funding from the EU through the research framework programmes and the Intelligent Energy Europe Programme are not included in the EU-figure

Source: Eurostat GBAORD

The relative budget appropriations for energy R&D compared to the total government R&D budget provides an even clearer indication for the importance of energy research in a specific country (see Figure 4). It becomes obvious that this share was by far highest in a non-EU country, Japan (17% by 2004), followed closest by Hungary only. Among the EU Member States (figures for 2005), Hungary allocates the largest share of its R&D budget to energy (12%) followed by Finland, France and Italy (4-5%). Compared to the year 1980, the share of public energy R&D in overall public R&D budget has decreased in the broad majority of Member States.

The EU average was 2.7% in 2005, while this share remains even smaller for many other Member States. This compares to a relative share of around 10% in the early 1980s, and 3.5-4% in the early 1990s (in the EU-15). However, it should be noted that the contribution of the Gross Value Added of the energy sector to GDP is of a similar order.

Relative to GDP (see Figure 21 in Annex), the budget for production and utilisation of energy amount to in-between 0.01% to 0.03% in most Member States, with only Hungary, Finland and France reaching 0.04-0.05%.

Overall, the small and decreasing share of energy-related R&D funding in overall R&D fundings shows the low importance that is given to public energy research by most Member States. However, the stabilisation and even small increase in absolute energy R&D budgets in the past decade – following the steep decrease in the decade before – may signify a change in trends.

Figure 4: Government budget appropriations for production, distribution and rational utilisation of energy relative to overall GBAORD, 2005

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Note: Funding from the EU through the research framework programmes and the Intelligent Energy Europe Programme are not included in the EU-figure; data for Japan and Poland relate to 2004; no data for Bulgaria, Cyprus and Luxembourg

Source: Eurostat GBAORD

As mentioned before, data on transport- and energy-related sectors are sketchier. Among the Member States for which data is available (yet not all for 2005), Germany and Spain had the by far largest overall R&D spending for the total of energy and transport sectors by 2005, followed by the Netherlands and the UK (see Figure 5). This ranking is the result of a converging trend with German funds being reduced by more than 40% since 1995 while Greece doubled its spending and Spain experienced five-fold increase; smaller increases could also be seen in the Dutch and UK funds.

Even though the limited database does not allow for an assessment, it is interesting to observe that research funding into the transport sector constituted the most important part of the overall fund of the 8 Member States included. Research in the area of transport accounted for around half of the aggregated energy- and transport budget of the eight Member States. It was particularly important for Spain and the Czech Republic, where it amounts to 6.6% and 2.5% of total GBAORD, respectively. Also research support to energy-related sector (the manufacture of electrical machinery and electronic industries) was strongly pronounced in Spain (5.7% of total GBAORD), followed by Greece (4%).

A more detailed breakdown of the energy sector (i.e. production, distribution and rational utilisation of energy) reveals the importance of public spending reveals the direction of large part of funds towards nuclear, renewable energies and the rational utilization of energy. These trends are in line with the IEA data that are presented in the following.

Figure 5: Public spending in energy and transport related research fields in 2005

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Note: There are only a limited number of Member States providing detailed data on a three-digit level; some data were taken from 2003 and 2004.

Source: Eurostat GBAORD

Database of the International Energy Agency

The International Energy Agency collects data on government R&D spending for energy and provides a detailed breakdown by energy sources. Unfortunately, only 17 out of 27 EU Member States are IEA members and thus included in the database (see Chapter 3 and Footnote 11). Moreover, the IEA data set does not contain any data on transport R&D spending. The database also contains gaps especially for spending in detailed subcategories in more recent years.

According to the IEA database, the aggregated spending for energy R&D in the EU Member States included decreased by about 40 % between 1991 and 2005. [13] Much of this trend happened in nuclear research (-53%), following increasing concerns in public perception on nuclear and a number of phase-out policies, and technologies related to fossil fuel extraction and transformation. In general, non-nuclear energy research budgets were increasing again after 2000 after a sharp decline in the 1990s. The Member States with the most significant decline in energy R&D spending were Portugal, Spain, the UK and Italy.

While funds for energy R&D also declined in the USA since 1991, yet less significantly than in Europe, Japanese spending experienced an increase of more than 20%. This meant that by 2005, public spending for energy R&D in Japan was 60% above the aggregated spending of 17 EU Member States (excluding the European Commission funding). Using GBAORD data, this gap would be even more pronounced with Japanese funds reaching twice the EU level.

Figure 6: Development of public spending on energy R&D in selected EU Member States, the USA and Japan

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Note: The IEA database considers only 17 EU Member States. Furthermore, 2005 data were not available for a number of Member States. In the cases of Finland and the Netherlands, the 2003 data were thus used; similarly, 2004 values were used for Austria. For the years 1992 and 1999, data for Italy were missing but due the importance of Italy in the overall budget, these gaps were filled, taking into account the data for the previous and coming years. Belgium, Czech Republic, Luxembourg and Greece are not included due to data gaps for more recent years. The effect of the changes in the French methodology was not taken into account.

Source: IEA database; modified as explained above

The largest spending in absolute figures occurs in France [14], followed by Germany and Italy. It needs to be emphasized that France is a very particular case with around 62% of overall energy R&D spending dedicated to nuclear energy research, while it accounts for in-between 0% and one third in most other Member States (see Figure 22 in annexes). Considering non-nuclear energy research only, the largest absolute spenders remain France, Germany, Italy and the Netherlands, yet with different priority spending areas (see below and Chapter 6; a detailed analysis of non-nuclear energy research is also provided in [European Commission, 2005f]).

The total public spending of the EU Member States for which data is available in the IEA database amounts to around €1953 Mio [15] by 2005. About 40% of this is dedicated to nuclear energy research. The respective figures in the USA and Japan are €2429 Mio (nuclear 15%) and €3144 Mio (nuclear 64%).

Figure 7: Public spending on nuclear and non-nuclear energy R&D in 2005

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Note: Nuclear contains nuclear fission and fusion. For most countries, 2005 figures were used. However, there are a number of countries for which another year had to be used due to data shortcomings in more recent years: for Austria, 2004 figures are applied. In the case of Finland and the Netherlands, figures for 2003 were used. Belgium, Czech Republic, Luxembourg and Greece are excluded due to data gaps for more recent years.

Source: IEA database; France: Ministry of Industry

A different ranking occurs when energy-related (nuclear and non-nuclear) public R&D funds are reported in relation to GDP. In that case, especially France and the Nordic Member States Finland and Denmark as well as the Netherlands have the highest relative spending (0.03% - 0.055 % of GDP). This corresponds to 0.086% and 0.024% of GDP for Japan and USA in 2005, respectively.

Figure 8: Energy public spending relative to GDP (2005)

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Note: See note to Figure 7.

Source: IEA database; France: Ministry of Industry

Large differences among Member States occur not only in the absolute or relative spending for energy R&D, but also in the priority setting. This is dealt with in more detail in Chapter 6. Instead of a wide spread of funds among a large number of energy technologies, as usual in most Member States, some countries are rather specialised spenders. For example, Austria and the Netherlands spend about 60% of their budget on energy efficiency and renewables compared to some 30% on an EU average. Denmark and Spain spend 16% and 15% of their total budget on wind energy, respectively; research in solar heating accounts for 52% of the Portuguese funds; and 75% of the Hungarian funds are dedicated to research in bioenergy. Denmark also focuses on research spending in hydrogen and fuel cells; due to this specialisation, the total Danish spending for research in hydrogen is the second largest in the EU after Germany, despite the overall budget ranking only on rank six. The specialisation of some smaller countries in the European Research Area (ERA) is important for the construction of an ERA in non-nuclear energy R&D [European Commission, 2005f].

On an overall EU level, most of the funds are dedicated to nuclear research, followed by renewable energies, fossil fuels and energy efficiency. Compared to the USA, a much larger share is thus spent on nuclear energy but also on renewable energies at the expense of research on fossil fuels. Also in comparison with Japan, the EU Member States (listed in the IEA database) give a much higher priority to spending on renewable energies both in absolute and relative terms.

Box 3 – On Venture Capital and R&D Venture capital is a form of financial intermediation particularly well suited to support the creation and growth of innovative, entrepreneurial companies. It specializes in financing and nurturing companies at an early stage of development (start-ups) that operate in high-tech industries. For these companies the expertise of the venture capitalist, its knowledge of markets and of the entrepreneurial process, and its network of contacts are most useful to help unfold their growth potential. By contrast, when venture capital is applied to companies at a later stage of their growth, or in companies which operate in technologically mature industries, it has less of an opportunity to 'make a difference' [Da Rin et al., 2006]. The European Commission made the increase of the supply of risk capital one priority of its policy towards innovation and capital markets [European Commission, 1998, 2003], and in 2001 it transformed the European Investment Fund (EIF) into Europe’s largest venture investor with an injection of more than €2 billion [EIF, 2002]. The Risk Capital Action Plan adopted by the European Commission in 1998, subscribed to this view and greatly influenced national policies in the late 1990s [European Commission, 1998]. This approach is shared by many national programmes, from Germany’s federal and regional schemes for innovative companies [German Federal Ministry for Economics and Technology, 1999], to the French 'Plan Innovation' [French Ministry of Industry, 2003], to the transformation of the Danish Growth Fund into a public venture fund in 2001 [Danish Growth Fund, 2003], and to the creation of the UK High Technology Fund [HM Treausury, 2003]. Other policies have also been tried out in Europe. Several forms of taxation have undergone a broad trend towards reduction [EVCA, 2003]. For example, investment vehicles with a favourable taxation have been introduced in 1995 in the UK ('Venture Capital Trust') and in 1997 in France ('Fonds Communs de Placement dans l'Innovation-FCPI). Reductions in effective taxation have also been enacted in Germany (1998 and 2000), the Netherlands (1996), Spain (1996 and 2001). Corporate and personal income taxes have also been reduced [European Commission, 2002]. Policies aimed at improving regulatory design have been part of a broad trend towards deregulation in Europe over the 1990s, as documented in a series of OECD studies reviewed in [Nicoletti and Scarpetta, 2003]. In particular, several countries have made an attempt to reduce regulatory barriers to entrepreneurship, with results which have been favorably assessed by recent empirical analyses [Alesina et al., 2005; Klapper et al., 2004]. |

Policies for market deployment of energy technologies ("market-pull")

Policies aiming at technological innovation include, on the one hand, technology push instruments, such as R&D policies, and, on the other hand, marke