Opinion of the European Economic and Social Committee on The definition of an energy policy for Europe (Lisbon strategy)
Date: 2007-07-12
Institutions: European Economic and Social Committee
Subjects: energy policy, energy saving, energy technology, innovation, renewable energy, security of supply, sustainable development

27.10.2007

EN

Official Journal of the European Union

C 256/31

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council on rear-view mirrors for wheeled agricultural or forestry
tractors (Codified version)’

COM(2007) 236 final — 2007/0081 (COD)

(2007/C 256/06)

On 29 May 2007 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

Since the Committee unreservedly endorses the proposal and feels that it requires no comment on its part,
it decided, at its 437th plenary session of 11 and 12 July 2007 (meeting of 11 July), by 145 votes to two
and four abstentions, to issue an opinion endorsing the proposed text.

Brussels, 11 July 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on ‘The definition of an energy policy
for Europe (Lisbon strategy)’

(2007/C 256/07)

On 14 September 2006 (confirmed on 26 October 2006) the European Economic and Social Committee
acting under Rule 31 of its Rules of Procedure decided to draw up an information report on The definition of
an energy policy for Europe.

At the plenary session of 14 and 15 March 2007, it was decided to transform the information report into
an own-initiative opinion (Article 29(2) of the Rules of Procedure).

The Section for Transport, Infrastructure and the Information Society, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 19 June 2007. The rapporteur was
Ms Sirkeinen.

At its 437th plenary session, held on 11 and 12 July 2007 (meeting of 12 July 2007), the European
Economic and Social Committee adopted the following opinion by 126 votes with four abstentions.

1. Recommendations

in external energy relations as well as other potential
measures.

Energy has become a central political issue with strong

1.1
links to the Lisbon strategy for growth and jobs.

— Energy exercises a growing influence on the European
economy. To meet the energy policy challenges of climate
change, security of supply and competitiveness, EU needs to
change into a highly efficient, low carbon energy economy.

— The creation and uptake of innovations, which will make
this shift possible, require certain conditions and some
specific measures at EU, Member State, regional and local
levels.

— To this end, what is needed is a global approach and a
Union-level debate about: how to curb Europe's demand for
energy; ways of securing energy supplies by sources which
are highly diversified,access to networks and a unified voice

1.2 More and better jobs are at the heart of
the Lisbon
strategy. When market conditions change, some jobs are lost in
the energy sector. At the same time new energy solutions can
be strong drivers for creating high quality jobs. Education and
training are key facilitators.

C 256/32

EN

Official Journal of the European Union

27.10.2007

1.2.1
social dimension of energy are central
This includes,
affordable prices. Civil society,
need to be actively involved in energy policy development.

In addition to employment, also other aspects of the
in the Lisbon context.
in particular, a high quality public service at
including the social partners,

The EESC together with national Economic and Social
the following recommendations on energy
‘Energy Policy

1.3
Councils present
policy in the framework of the Lisbon Strategy,
for a Knowledge Society’:

— Scrutinise energy policies and other relevant

framework
conditions against the EU goals of an efficient, low carbon
economy.

— The choice of measures to actively support innovation has
to be made with great care amongst the following, in order
to render results cost-effectively:

— Funding of R&D

— Education and training

— Public awareness

— Price mechanisms, taxation

— Subsidies

— Binding targets and obligations

— Regulation and binding norms

— Provide for a skilled and well motivated labour force by

ensuring a high class system of education.

— Voluntary standards, voluntary agreements

— Provide for sufficient public R&D, comparable with main
competitors, and stimulate growth of private R&D funding.

— Develop international co-operation in the energy technology
field, in particular with other big players. Monitor systemati-
cally energy technology policies and measures by main
competitors and partners.

— Ensure availability of risk financing in the development and
business start up stages of SMEs as well as for investments
in new technologies.

— Ensure open and healthy competition in the energy markets
in order to force enterprises to innovate. In the case of
renewable
to
energy network access may be
successful innovation.

crucial

— Erase obstacles to investments which are needed to take new
technologies into use. Planning and authorisation require-
ments slow down and even hinder investments. To decrease
the risks of investment the regulatory framework needs to
be predictable and stable.

— Ensure access of new technology to EU and global markets.

— Ensure a global level playing field, for instance a global price
on CO2 all the while ensuring that it does not become a
commodity like any other, since a genuine reduction in CO2
levels will influence the very survival of the planet.

— Ambitious targets can help to develop a strong position for
EU on the global markets in energy efficient and renewable
energy technologies. Targets and their deadlines need,
however, to be carefully set, so that there are realistic possi-
bilities to meet them.

— Public procurements.

1.4
the
In order to achieve the urgent transformation of
energy sector which is needed, the pace of innovation needs to
be accelerated. The Committee urges that particular attention be
given to:

— measures to set a proper global economic price for carbon

emissions,

— expanding public and private R&D to support new forms of

energy and energy efficiency,

— using regulation (or other measures when more cost-effec-
tive) to drive faster progress in improving energy efficiency
of products of all kinds,

— using public procurement much more proactively to drive
higher energy efficiency standards, particularly in building.

2. Introduction

2.1
The EESC in collaboration with national Economic and
Social Councils is to produce ‘a summary report’ in early 2008
on the Lisbon strategy for growth and jobs priorities. This
Opinion on energy policy forms part of this Summary Report.
It has been produced in collaboration with national Economic
and Social Councils, with active contributions in particular from
the French, Italian and Maltese Councils.

This Opinion has bearing on Section B — microeco-
2.2
nomic reforms to raise Europe's growth potential of the Inte-
grated Guidelines for Growth and Jobs 2005-2008. In particular
it relates to guidelines 8 on strengthening competitiveness,
12 on R&D, 13 on innovation and ICT and 14 on sustainable
use of resources (1).

(1) COM(2005) 141 final., Integrated guidelines for growth and jobs.

27.10.2007

EN

Official Journal of the European Union

C 256/33

The European Council in March 2006

2.3
The European Council in the conclusions of its meeting
in Brussels on 23-24 March 2006 welcomed ‘the initiatives
taken up by the European Parliament, the Committee of the
Regions and the European Economic and Social Committee to
increase ownership (of the relaunched Lisbon strategy for jobs
and growth) at Community level. It encourages the European
Economic and Social Committee and the Committee of
the
Regions to continue their work and asks for summary reports
in support of the Partnership for growth and employment in
early 2008’ (Point 12 of the Presidency conclusions).

The European Council notes that

2.4
‘the background in
Europe is characterised by intensified competition from abroad,
an ageing population, higher energy prices and the need to safe-
guard energy security’ (Point 7 of the Presidency conclusions). It
further ‘confirms that the Integrated Guidelines 2005-2008 for
jobs and growth remain valid. Within that framework it agrees
on specific areas for priority actions concerning investment in
knowledge and innovation, business potential, especially of
SMEs, and employment of priority categories; as well as the defi-
nition of an Energy Policy for Europe’ (Point 16).

import dependency

2.5
On the issue of energy the European Council notes that
Europe is facing a number of challenges in the energy field: the
ongoing difficult situation on the oil and gas markets,
the
increasing
and limited diversification
achieved so far, high and volatile energy prices, growing global
energy demand, security risks affecting producing and transit
countries as well as transport routes, the growing threats of
climate change, slow progress in energy efficiency and the use
of renewables, the need for increased transparency on energy
markets and further integration and interconnection of national
energy markets with the energy market liberalisation nearing
completion (July 2007),
the limited coordination between
energy players while large investments are required in energy
infrastructure (Point 43).

2.6
In response to these challenges and on the basis of the
Commission Green Paper ‘A European Strategy for Sustainable,
Competitive and Secure Energy’ the European Council called for
an Energy Policy for Europe, aiming at effective Community
policy, coherence between Member States and consistency
between actions in different policy areas and fulfilling in a
balanced way the three objectives of security of supply, competi-
tiveness and environmental sustainability (Point 44).

policy and particularly transport policy. In addition foreign and
development policy aspects are gaining increasing importance
to promote the energy policy objectives with other countries
(Point 45).

2.8
The Energy Policy for Europe (EPE) should be based on
shared perspectives on long term supply and demand and an
objective, transparent assessment of the advantages and draw-
backs of all energy sources and contribute in a balanced way to
its three main objectives: (Point 46 + 47).

— Increasing security of supply.

— Ensuring the competitiveness of European economies and
the affordability of energy supply to the benefit of both busi-
nesses and consumers, in a stable regulatory framework.

— Promoting environmental sustainability.

2.9

In fulfilling these main objectives the EPE should:

— ensure transparency and non-discrimination on markets;

— be consistent with competition rules;

— be consistent with public service obligations;

— fully respect Member States' sovereignty over primary energy

sources and choice of energy mix.

The ‘Energy Package’ 2007

The Commission is

2.10
to present a Strategic Energy
Review on a regular basis, starting in 2007. On 10 January
2007 the Commission published its first Review and a commu-
nication to the European Council and the European Parliament
‘An Energy Policy for Europe’ — the ‘energy package’.

The point of departure of

2.11
the Commission for a
European energy policy is threefold: combating climate change,
promoting jobs and growth, and limiting the EU's external
vulnerability to gas and oil imports.

2.7
The European Council underlined that, to achieve this
consistency both in internal and external EU policies, energy
policy has to satisfy the demands of many policy areas. As part
of a growth strategy and through open and competitive
markets,
technological development,
domestic and foreign trade. It is strongly linked with environ-
ment policy and is closely connected with employment, regional

it prompts investment,

2.12
The Commission presents as the core energy objective
for Europe that the EU should reduce greenhouse gas emissions
by 20 % by 2020. The EU target needs to be seen in the context
of the need for international action of industrial nations on
climate change. When such a commitment exists, the EU will
need to do more. The aim should therefore be to increase the
target to a 30 % reduction by 2020 and 60-80 % by 2050.

C 256/34

EN

Official Journal of the European Union

27.10.2007

2.13
The concern is not only about climate change, it is also
about Europe's security of energy supply, economy and the well-
being of its citizens. The Commission sees that achieving the
objective also can limit the EU's growing exposure to increased
volatility and prices for oil and gas, bring about a more compe-
titive EU energy market, and stimulate technology and jobs.

2.14
In energy specific terms, meeting this overall green-
house gas target will require the EU to reduce the amount of
CO2 from its energy use by at least 20 %, and probably more,
within the next 13 years. It will mean the EU taking global
leadership in catalysing a new industrial revolution.

2.15
To achieve this objective, the Commission also proposes
to focus on a number of energy related measures: improving
energy efficiency; raising the share of renewable energy in the
energy mix, as well as new measures to ensure that the benefits
of the internal energy market reach everyone; reinforcing soli-
darity among Member States, with a more long term vision for
energy technology development, a renewed focus on nuclear
safety and security, and determined efforts for the EU to ‘speak
with one voice’ with its international partners, including energy
producers, energy importers and developing countries.

The Review includes a ten-point energy Action Plan
2.16
with a timetable of measures. A first package of concrete
measures is presented with the Action Plan. This includes:

— a report on the implementation by the Member States of the
internal market of gas and electricity as well as the results of
an enquiry of the state of competition in these two sectors;

— a Plan for Priority Interconnections in the electricity and gas
networks of the Member States so that a European grid
becomes a reality;

— proposals to promote sustainable power generation from

fossil fuels;

— a roadmap and other initiatives to promote renewables,

notably biofuels for transport;

— an analysis of the situation of nuclear energy in Europe;

— a work sheet for a future European Energy Strategic Tech-

nology Plan.

The Energy Efficiency Action Plan which the Commis-
2.17
sion adopted on 19 October 2006 also forms part of
the
Action Plan. The Commission's Communication ‘Limiting
Climate Change to 2° — Policy Options for the EU and the world for

2020 and beyond’ and the Strategic Review complement and
reinforce each other.

The European Council endorsed fully the Commission's
2.18
proposals at
its Spring Summit on 8-9 March 2007. The
Commission proceeds to draft detailed legislative and other rele-
vant proposals in line with the Summit conclusions. A second
Strategic Energy Review in two years'
time will report on
progress as Heads of State and Government have committed
themselves to regularly discuss energy matters.

Previous Opinions on energy policy of the European Economic and
Social Committee

2.19
The EESC prepared during its mandate 2002-2006
several Opinions on energy policy issues, in particular on the
features and role of different energy sources and technologies.
its Plenary session in September 2006 the EESC finally
At
adopted an Exploratory Opinion, based largely on these
previous Opinions, on ‘The energy supply of the EU: a strategy for
an optimal energy mix’ (2). This Opinion covered many of the
issues brought up be the European Council in March 2006. The
main conclusions of the Opinion were:

2.20
The EESC found that Europe needs to set a strategic
goal of a diversified energy mix, meeting optimally economic,
security of supply and climate policy objectives. All energy
sources and technologies have, in relation to these objectives,
benefits and drawbacks, which have to be taken into account in
an open and balanced way.

2.21
Increased use of renewable energy sources has a poten-
tial that needs to be tapped. But even when the target for 2020
of 20 % renewables would be met, it was not seen likely that
renewables can substitute fully the traditional energy sources in
the foreseeable future.

2.22
All options have to be kept open. The scenarios for
EU-25 referred to in the Opinion clearly support this conclu-
sion. Even a scenario based on assumptions of the strongest
developments of energy efficiency and increase of renewables
did not render any energy technology obsolete without negative
impacts on either environment or economy.

2.23
The present mix should be developed by political strate-
gies towards less external dependence and more non-emitting
sources available in Europe, bearing in mind that market actors
make decisions on investments in various technologies.

(2) OJ C 318 of 23.12.2006, p. 185.

27.10.2007

EN

Official Journal of the European Union

C 256/35

2.24
The EESC recommended developing a strategy for an
optimal energy mix. In this context it is important to clarify the
roles of the EU, Member States,
independent authorities and
market actors.

The strategy for an optimal energy mix was proposed to consist
of the following elements:

— energy efficiency,

including combined heat and power

production;

— renewable energy sources including the use of biofuels for

transport;

— energy efficiency in transports;

— even better nuclear safety and a solution to the question of

spent fuel;

— clean coal technologies and preparing for re-increased use of

domestic EU coal reserves;

— encouragement of investments in liquefied natural gas term-

inals;

— the right framework for sufficient investments in energy

production and transmission;

— EU to speak with one voice as one of the strongest actors

on the international scene;

— assessment of the impact of present and future climate and
environmental policy measures on the other energy policy
objectives;

— a global solution to post Kyoto climate policies, involving at

least all major emitters;

— increased R&D efforts and EU support to energy R&D, both

short and long term.

3. EESC comments on an energy policy for Europe in the

context of the Lisbon Strategy

lighting,

food, heating in cold climate,

Energy is a necessity in a modern society. To meet our
3.1
needs of
transport,
commodities and consumer goods as well as — increasingly
nowadays — telecommunications and information processing
— we need a secured supply of energy. But the way in which
we fulfil these needs can and has to be changed. In face of the
present challenges, in particular that of climate change, we need
a paradigm change as a matter of urgency towards a highly effi-
cient, low carbon energy economy.

3.2
Energy has a strong link to the Lisbon strategy for
growth and jobs. To achieve the Lisbon goals we need sufficient
energy at affordable and competitive prices. At the same time
new energy solutions can, in particular if they are successful on
global markets, be strong drivers for European competitiveness
and creation of high quality jobs.

3.3
The general objectives of energy policy — competitive-
ness, security of supply and sustainability are and remain valid.
The serious challenge of climate change requires curbing the
growth of energy demand by much better energy efficiency and
strongly increased shares of renewable and other low carbon
energy technologies, like potentially in the future carbon capture
and storage. Security of energy supply is also served by better
energy efficiency as well as by diversification of sources and a
unified EU voice in external relations. Competitiveness needs to
be enhanced by an open market with well functioning and fair
competition, including access to networks, while guaranteeing
high quality public service.

3.4
Creating more and better jobs is central to the Lisbon
strategy. As competition in the markets in general require better
productivity, also enterprises in the energy market need to be
more efficient. When jobs are lost in the energy sector workers
concerned need to be duly supported. At the same time jobs in
energy using sectors may be prevailed and increased. In particu-
lar, the thrust towards better energy efficiency and renewable
energy and other developing technologies will create numerous,
mainly high quality jobs.

3.4.1
The social dimension of energy policy needs due atten-
tion in the Lisbon framework. It covers the questions of employ-
ment and jobs as well as the availability of energy for everyone
at affordable prices, i.e. high quality public service. Civil society,
including the social partners, need to be actively involved in
energy policy development.

The EESC has presented its detailed views on the above
3.5
mentioned key energy policy issues in recent Opinions and will
in due course produce Opinions on the legislative and other
detailed proposals to be presented by the Commission based on
the European Council's conclusions concerning the Energy
Package.

In order to avoid duplicated work and to offer optimal
3.6
added value to the energy debate, the EESC focuses in this
Opinion on the relationship between energy policy and the
underpinning vision of
the Lisbon strategy of Europe as a
knowledge society. In this Opinion we comment on the issues
contained in the Energy package in relation to innovations.

The role of technology and innovation in meeting the energy challenges
of this century

Politically set targets and measures set the framework,
3.7
but technology and other innovation, including change in beha-
viour, are key to real progress. This is true for better energy effi-
ciency, both in conversion and use.
Innovation can play an
important role in reducing dependence on external energy
sources by enabling diversification of the energy mix. Innova-
tion is definitely needed to decrease emissions of greenhouse
gases by development and use of renewable energy sources,
clean coal and other fossil fuels as well as safe nuclear power.

C 256/36

EN

Official Journal of the European Union

27.10.2007

3.8
Innovation means renewal in a broad sense. It is about
developing and taking new ideas into wide use, turning them
into economic value. It covers technological innovation as well
as new management and other organisational solutions. It takes
place in industry, but also in services and the public sector.
Research is often the source innovation, but certainly not
always. Here the Committee would also refer to its Opinion on
Research needs for a safe and sustainable energy supply (3).

Energy technologies,

3.8.1
like more efficient combustion,
windmills, solar collectors, or future fuel cells, hydrogen tech-
nology and fusion, are in the centre of attention. Equally impor-
tant are flanking technologies,
like materials development or
meteorology, providing for efficient optimisation by better fore-
casts.

to this end, official
energy use and savings should be promoted.

information campaigns urging efficiency

3.9
There is a need to come up with radically new solutions
to problems, and change is needed urgently. Radical change
takes time, and therefore it is important to start and allocate
resources immediately. Meanwhile, existing best
technologies
should be taken broadly into use,
for example to decrease
energy use in households.

3.10
In order to lead innovation and investments in a cost--
effective direction, the cost efficiency of upstream technologies
should be quantitatively evaluated. One important example is
the cost of different technologies for avoiding 1 ton of CO2 —
for
than isolation of
houses.

instance windmills are much costlier

is

better

almost

For more efficient energy use the range of relevant
3.8.2
technologies
less
limitless;
consuming electrical appliances, lighter materials, better indus-
trial product and process planning, more efficient machinery. In
this context the role energy intensive industries are important
— if they don't provide for demand by investments and exper-
tise, innovation in large parts of energy efficient technology for
industry will stifle in EU.

insulation,

3.8.3
Information and communication technologies offer a
big potential. Applied in production, conversion and distribu-
tion of energy ITC can, as in any processes, provide for more
efficiency and higher productivity. The same is true for safe and
secure operations,
transmission
networks. ITC-technologies help users and consumers master
their energy use. One example with multiple benefits could be
cutting peak loads by facilitating users' immediate reactions to
price signals. In a wider context, use of ITC-technologies could
substitute transport needs by,
teleworking and
conferencing.

including in particular of

for instance,

3.8.4 We also need new ways — innovations — in operation
and management of energy and energy related systems. The goal
here is to ensure high quality services to an affordable price.
Examples are management of safe operation of production and
transmission systems and maintenance as well as operating the
market (exchanges), peak management and daylight adjustment.
And last but not least — efficient logistics can add much to
both energy demand and better fuel management.

3.8.5
Innovation in behaviour is also needed. The consumer
is the key player — a more intelligent energy use is up to each
one of us, and this requires new ideas and more knowledge.
There is a big challenge of better awareness and adequate
consumer information to guide choices. Regional and urban
planning as well as architectural solutions and building require-
ments can do much to support citizens' choices vis-à-vis energy;

(3) OJ C 241 of 7.10.2002, p. 13.

Conditions and political measures to enhance innovation

The creation and uptake of innovations require certain
3.11
conditions and some specific political measures, both at local,
regional, national and EU levels. As EU has the ambition to
become world leader in energy efficiency and low carbon tech-
nologies, it is of crucial importance to scrutinise energy policies
and other relevant framework conditions against this goal.

The first prerequisite for successful

innovation is a
3.12
skilled and well motivated labour force, supported by a high
class system of education. Development of new technologies
requires sufficient R&D as well as risk financing in the develop-
ment and business start up stages of SMEs. Healthy and open
to innovate. Market access,
competition forces enterprises
including globally, is necessary. In the case of renewable energy
network access may be crucial to successful
innovation. The
regulatory framework has to be designed to enhance innovation,
for instance by rewarding innovators specifically (example: the
ETS does not reward those who have taken early action to
decrease emissions). Overregulation stifles innovation.

3.12.1
Investments are needed to take new technologies into
use. Companies need to be profitable in order to be able to
invest. This is the case also for investments in better energy effi-
ciency, even if the pay back period may be short. The energy
business has been very profitable during the last few years, but
still investments are low. It is known that planning and authori-
sation requirements and permits slow down and even hinder
investments. To decrease the risks of investment the regulatory
framework needs to be predictable and stable. As investments in
energy infrastructure often have long pay back periods, the
possibility to use some forms of long term contracts would be
beneficial.

27.10.2007

EN

Official Journal of the European Union

C 256/37

from sufficiently big markets.

3.12.2
For a company to invest in development or use of
new technology, it needs to be able to get return on the invest-
ment
In most cases national
markets are not big enough for this — increasingly access to
global markets is a prerequisite for making the investment. Like-
wise important
is global demand and a level playing field.
Unilateral EU measures do not create demand elsewhere,
although it may happen over time. For instance, a price on CO2
can be an important incentive, but it would need to be global.

3.12.3
EU's strong position on the global markets in energy
efficient and renewable energy technologies should be further
developed and strengthened. EU's ambitions to be a frontrunner
in climate policies by setting ambitious targets as well as in
energy efficiency and renewable energy use can support this
goal. This does, however, not work automatically. Targets and
their deadlines need to be carefully set, so that there are realistic
possibilities to meet them, otherwise the result may only be
extra costs and possibly loss of jobs. For instance, relevant tech-
nologies need to be in the development pipeline close enough
to be ready in time for target deadlines. Also investment cycles
in different sectors need to be taken into account.

incentive, as well as special support to ensure a fast growth
of demand and thereby big production volumes.

3) A good product on the market, but low demand (examples
are to be found in energy efficient technologies): The key
issue is to raise awareness, which can be supported by
energy auditing schemes and the like.

3.14
A broad choice in measures and instruments are avail-
able at EU, national and regional levels. The choice of measures
for given objectives has to be made with great care in order to
render results cost-effectively. The speed of action should be
critically evaluated in order to avoid waste of resources and
unintended implications. Measures that clearly serve both direct
and indirect goals — no regrets-measures — should be imple-
mented as soon as possible. More complicated, often new kinds
of measures, like ways to set a market price for CO2, should first
be carefully studied. To avoid complication, unexpected side
effects and sub-optimal solutions multiple measures for one
objective should be avoided. When choosing measures to be
used, it is also important to take into account the efficient func-
tioning of the internal market — this has so far not always been
the case.

The EU seems to put emphasis on interference in the
3.12.4
market as a means to enhance innovation, which may not be
sufficiently effective. The US and some other countries rely
more on public financing of R&D. Europe needs to increase
public as well as private financing of energy R&D. Technology
co-operation with the other big players should be developed,
and their policies and measures should be systematically moni-
tored. We also need much more cooperation between Member
States and national and EU efforts need to be better coordinated,
without eliminating competition. Closer cooperation between
public research and enterprises needs to be fostered, both in
planning and executing research agendas, in order to assure that
research efforts lead to innovation. The proposed EIT could play
a role here.

3.14.1
Funding of R&D: Here the Committee would refer
in particular to its Opinion on Investment in Knowledge and
Innovation (Lisbon Strategy) INT/325. The EU, as a whole, lags
clearly behind the US and some other major competitors. The
7th Framework Programme for R&D allocates altogether some
EUR 4 billion over seven years to energy (except the construc-
tion of ITER), while the US Energy Bill proposes in the Federal
budget $4.4 billion for 2007 only, and increasing later. In addi-
tion to increasing public money to energy R&D, there should
also be incentives for allocating more private funding to energy
R&D, while fostering cooperation between EU-countries.

To actively support

innovation, a combination of
3.13
instruments is usually needed. Different phases of development
and different market situations require different measures in
order for them to be effective. In relation to measures needed to
turn them into successful innovations on the market, technolo-
gies can be grouped into, for instance, three categories:

3.14.2
Education and training: In addition to efforts to
upgrade the quality of education and training in Europe, energy
needs to be made attractive as a career choice with positive
perspectives for young people. As technologies change ever
faster, lifelong learning is essential.

1) Far from the market,

In these cases
targeted support to R&D and demonstration is needed. Price
signals, like a price on CO2, are not sufficient.

in the R&D phase:

2) Close to the market, a functioning technology but still too
expensive for the markets: a price on CO2 may be the right

Public awareness: It is a big challenge to change
3.14.3
the behaviour of each and every one of us towards smarter
energy use. Schools and campaigns have their role to play. The
education of our ‘citizens of the future’ on this topic could
begin at primary school, since children are very receptive at this
age to questions about the future of the planet and are eager to
act.
In professional spheres and companies, energy auditing
based on, for instance, voluntary agreements have given good
results.

C 256/38

EN

Official Journal of the European Union

27.10.2007

3.14.4
Pr ice mechanisms, taxation: Price signals can, if
well designed, effectively support innovation by directing users'
choices. As an instrument to decrease energy use in general,
higher prices are not very effective — it is well known that
price elasticity in energy is generally weak.

3.14.5
Subsidies: Well designed subsidies can effectively
direct choices. In the early part of learning curves subsidies are
often needed to counteract otherwise too high risks. In order
not to distort competition, they can be used only in the frame-
work of existing EU rules that is to address market failures.
Subsidies need to be limited in time and gradually phased out.
To boost energy efficiency, appropriate incentives need to be
developed to help overcome the initial, up-front extra cost of
energy efficient appliances with often short pay-back periods.

in mind that usually some parts of

3.14.6
Politically set targets and obligations: These
give a signal of a desired direction of development. As impor-
tant for investment decisions are the actual political instruments
implemented in order to reach the targets. When setting targets
it has to be kept
the
economy gain while other loose, and overly ambitious targets
may cause more harm than benefit. Presently there seems to be
a tendency to set overall and in addition subtargets related to
the same goal, for example targets on reducing CO2 emissions
and, in order to reach those, targets on increasing the use of
renewable energy. This may lead to suboptimal solutions in
reaching the overall goal. Both targets and especially chosen
instruments need thorough impact assessments, like agreements
with industry in Germany and Finland.

Emissions trading, green/white cer tifi cates:
3.14.7
leading to the set targets if
These are effective instruments,
correctly designed. The costs are, however, difficult to estimate
on beforehand and may vary very much. The larger the market
and the number of market players for trading rights or certifi-
cates, the better. If applied to enterprises competing on a global
in order not to
market, the system would need to be global
distort competition.

Brussels, 12 July 2007.

3.14.8
Regulation or binding nor ms: Carefully planned
regulation may enhance innovation. In particular, regulation can
be an effective way to get rid of outdated technologies. It can
also stimulate innovation to impose energy efficiency in
products by setting ambitious medium targets for raising effi-
ciency standards. The risk of stifling innovation is, however,
always present. In any case, it must be assured that regulation
does not create market barriers.

3.14.9
Voluntar y standards, voluntar y agreements,
cer tification: These are innovation-friendly policy instru-
ments. They may not always lead to meeting their exact targets
or objectives, but they facilitate big steps forward in innovation,
practically without risk of negative side-effects.

3.14.10
Public procurement: Procurement can play a big
role in enhancing energy innovation. Methods for this purpose
should be developed and spread widely. Normally ‘greener’
procurement requires the use of life cycle analysis, and for this
and other new methods the authorities often need further
education. The EU rules for public procurement, which have to
be respected, provide for ‘greening’ of procurement, by requiring
state of the art solutions.

3.14.11
In order to achieve the urgent transformation of the
energy sector which is needed, the pace of innovation needs to
be accelerated. The Committee urges that particular attention be
given to:

— measures to set a proper global economic price for carbon

emissions,

— expanding public and private R&D to support new forms of

energy and energy efficiency,

— using regulation (or other measures when more cost-effec-
tive) to drive faster progress in improving energy efficiency
of products of all kinds,

— using public procurement much more proactively to drive
higher energy efficiency standards, particularly in building.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS