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) - 'Towards a low carbon future' {SEC(2007) 1508} {SEC(2007) 1509} {SEC(2007) 1510} {SEC(2007) 1511}
Date: 2007-11-22
Institutions: European Commission
Subjects: energy policy, energy research, energy technology, new technology, renewable energy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.11.2007 
COM(2007) 723 final 

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) 

'Towards a low carbon future' 

{SEC(2007) 1508} 
{SEC(2007) 1509} 
{SEC(2007) 1510} 
{SEC(2007) 1511} 

EN 

   EN 

 
 
 
  
 
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) 

(Text with EEA relevance) 

"We are facing major challenges which do not stop at national borders. The European Union 
is our response to these challenges." 

– Declaration on the occasion of the fiftieth anniversary of the signature of the Treaties of 
Rome, Berlin 2007 

1. 

THE  NEED  FOR  A  EUROPEAN  STRATEGIC  ENERGY  TECHNOLOGY  PLAN  (SET-
PLAN) 

Technology is vital piece of the Energy Policy jigsaw 

Europe needs to act now, together, to deliver sustainable, secure and competitive energy. The 
inter-related challenges of climate change, security of energy supply and competitiveness are 
multifaceted  and  require  a  coordinated  response.  We  are  piecing  together  a  far-reaching 
jigsaw of policies and measures: binding targets for 2020 to reduce greenhouse gas emissions 
by 20% and ensure 20% of renewable energy sources in the EU energy mix; a plan to reduce 
EU  global  primary  energy  use  by  20%  by  2020;  carbon  pricing  through  the  Emissions 
Trading Scheme and energy taxation; a competitive Internal Energy Market; an international 
energy  policy.  And  now,  we  need  a  dedicated  policy  to  accelerate  the  development  and 
deployment of cost-effective low carbon technologies. 

Harnessing technology is vital to achieve the Energy Policy for Europe objectives adopted by 
the European Council on 9 March 20071. To meet the targets, we need to lower the cost of 
clean  energy  and  put  EU  industry  at  the  forefront  of  the  rapidly  growing  low  carbon 
technology sector. In the longer term, new generations of technologies have to be developed 
through  breakthroughs  in  research  if  we  are  to  meet  the  greater  ambition  of  reducing  our 
greenhouse gas emissions by 60-80% by 2050. 

1 

European  Council  conclusions  adopted  on  the  basis  of  the  Commission's  Energy  Package,  e.g.  the 
Communications:  'An  Energy  Policy  for  Europe'  COM(2007)1,  'Limiting  global  climate  change  to  2 
degrees  Celsius'  COM(2007)2  and  'Towards  a  European  Strategic  Energy  Technology  Plan'  COM 
(2006)847 

EN 

2 

   EN 

 
                                                 
Today we are falling short 

Current trends and their projections into the future show that we are not on a pathway to meet 
our  energy  policy  objectives.  Since  the  oil  price  shocks  in  the  70s  and  80s,  Europe  has 
enjoyed  inexpensive  and  plentiful  energy  supplies.  The  easy  availability  of  resources,  no 
carbon  constraints  and  the  commercial  imperatives  of  market  forces  have  not  only  left  us 
dependent on fossil fuels, but have also tempered the interest for innovation and investment in 
new energy technologies. This has been described as the greatest and widest-ranging market 
failure ever seen. 

Public  and  private  energy  research  budgets  in  the  EU  have  declined  substantially  since 
peaking in the 1980s in response to the energy price shocks. This has led to an accumulated 
under-investment in energy research capacities and infrastructures. If EU governments were 
investing  today  at  the  same  rate  as  in  1980,  the  total  EU  public  expenditure  for  the 
development  of  energy  technologies  would  be  four  times  the  current  level  of  investment  of 
around 2.5 billion euros per year. 

Intrinsic weaknesses in energy innovation 

The  energy  innovation  process,  from  initial  conception  to  market  penetration,  also  suffers 
from  unique  structural  weaknesses.  It  is  characterised  by  long  lead  times,  often  decades,  to 
mass market due to the scale of the investments needed and the technological and regulatory 
inertia  inherent  in  existing  energy  systems.  Innovation  faces  entrenched  'locked-in'  carbon-
based  infrastructure  investments,  dominant  actors,  imposed  price  caps,  changing  regulatory 
frameworks and network connection challenges. 

The market take-up of new energy technologies is additionally hampered by the commodity 
nature  of  energy.  New  technologies  are  generally  more  expensive  than  those  they  replace 
while not providing a better energy service. The immediate benefits tend to accrue to society 
rather  than  the  buyers.  Some  technologies  face  social  acceptance  issues  and  often  require 
additional  up-front  integration  costs  to  fit  into  the  existing  energy  system.  Legal  and 
administrative barriers complete this innovation averse framework. 

In short, there is neither a natural market appetite nor a short-term business benefit for such 
technologies. This market gap between supply and demand is often referred to as the 'valley 
of death' for low carbon energy technologies. Public intervention to support energy innovation 
is thus both necessary and justified. 

Europe should lead the world in energy technologies 

Member  States  working  alone  will  have  difficulty  in  creating  the  conditions  necessary  to 
allow industry to compete in global markets. The main global players, the United States and 
Japan,  but  also  emerging  economies  such  as  China,  India  and  Brazil,  are  facing  the  same 
challenges  and  are  multiplying  their  efforts  to  develop  and  commercialise  new  energy 
technologies. In the past two years, Japan adopted a strategic energy technology roadmap and 
the  US  adopted  climate  change  science  and  technology  programmes.  Their  market  size, 
investment  and  research  capacities  far  exceed  those  of  most  Member  States.  This  is 

EN 

3 

   EN 

 
compounded  by  the  fragmentation,  multiple  non-aligned  research  strategies  and  sub-critical 
capacities that remain a prevailing characteristic of the EU research base. 

The EU is leading the world in responding to climate change by adopting targets and putting a 
price  on  carbon  through  the  Emissions  Trading  Scheme,  as  well  as  creating  a  truly  internal 
energy  market.  We  must  act  with  equal  determination  and  ambition  on  a  policy  for  low 
carbon  technologies.  These  are  the  conditions  to  catalyse  a  new  industrial  revolution.  In  a 
carbon  constrained  world,  the  mastery  of  technology  will  increasingly  determine  prosperity 
and  competitiveness.  If  we  fall  behind  in  the  intensifying  global  race  to  win  low  carbon 
technology  markets,  we  may  need  to  rely  on  imported  technologies  to  meet  our  targets, 
missing out on huge commercial opportunities for EU businesses. 

Time is of the essence 

The  transition  to  a  low  carbon  economy  will  take  decades  and  touch  every  sector  of  the 
economy, but we cannot afford to delay action. Decisions taken over the next 10-15 years will 
have profound consequences for energy security, for climate change, for growth and jobs in 
Europe.  The  cost  of  action  may  be  high,  but  the  price  of  inactivity  much  higher.  As  an 
illustration of the scale of the problem, the Stern report2 estimates that the cost of action could 
be limited to around 1% of global GDP per year, while inaction could result in losing 5-20% 
of global GDP annually. 

2. 

ACHIEVING THE POLITICAL VISION 

The vision is of a Europe with a thriving and sustainable economy, with world leadership in a 
diverse  portfolio  of  clean,  efficient  and  low-carbon  energy  technologies  as  a  motor  for 
prosperity  and  a  key  contributor  to  growth  and  jobs.  A  Europe  that  has  grasped  the 
opportunities  lying  behind  climate  change  and  globalisation  and  that  is  contributing  to 
addressing the global energy challenge, including increasing access to modern energy services 
in the developing world. 

Energy efficiency 

First and foremost, we need a step change in efficiency in energy conversion, supply and end-
use.  In  transport,  buildings  and  industry,  available  technology  opportunities  must  be  turned 
into  business  opportunities.  We  need  to  fully  harness  the  potential  for  information  and 
communication technologies and organisational innovation, as well as use public policy and 
market-based  instruments3  to  manage  demand  and  encourage  new  markets.  Several  policies 
and measures are already in place to drive this process, notably the Energy Efficiency Action 
Plan and the Freight Logistics Action Plan, and the directives on Eco-design and on Energy 
Labelling of Energy Using Products, on Energy Services and on Building Performance. Other 
measures  are  in  the  pipeline,  for  example  on  CO2  emissions  from  cars,  the  Action  Plan  on 
Urban  Mobility,  a  new  phase  of  the  Emissions  Trading  Scheme,  and  the  initiatives  on  lead 
markets, sustainable production and consumption and sustainable industrial policy. 

2 
3 

Stern Review on the Economics of Climate Change – UK HM Treasury 
COM(2007)140 of 28.3.2007, Green Paper on market based instruments 

EN 

4 

   EN 

 
                                                 
Achieving the 2020 targets 

For 2020, the technologies that will contribute to achieving the targets are available today or 
in the final stages of development. Low-carbon technologies in general remain expensive and 
face  market  penetration  obstacles.  Energy  efficient  technologies  tend  to  have  high  upfront 
costs  which  deter  market  take-up.  A  twin-track  approach  is  therefore  needed:  reinforced 
research to lower costs and improve performance; and pro-active support measures to create 
business  opportunities,  stimulate  market  development  and  address  the  non-technological 
barriers  that  discourage  innovation  and  the  market  deployment  of  efficient  and  low  carbon 
technologies. 

Key EU technology challenges for the next 10 years to meet the 2020 targets: 

–  Make second generation biofuels competitive alternatives to fossil fuels, while respecting 

the sustainability of their production; 

–  Enable commercial use of technologies for CO2 capture, transport and storage through 
demonstration  at  industrial  scale,  including  whole  system  efficiency  and  advanced 
research; 

–  Double the power generation capacity of the largest wind turbines, with off-shore wind as 

the lead application; 

–  Demonstrate  commercial  readiness  of  large-scale  Photovoltaic  (PV)  and  Concentrated 

Solar Power; 

–  Enable  a  single,  smart  European  electricity  grid  able  to  accommodate  the  massive 

integration of renewable and decentralised energy sources; 

–  Bring to mass market more efficient energy conversion and end-use devices and systems, 

in buildings, transport and industry, such as poly-generation and fuel cells; 

–  Maintain  competitiveness  in  fission  technologies,  together  with  long-term  waste 

management solutions; 

Achieving the 2050 vision 

To  achieve  the  2050  vision,  towards  complete  decarbonisation,  we  need  to  develop  a  new 
generation of technologies through major breakthroughs. Even if some of these technologies 
will have little impact by 2020, it is vital that we reinforce efforts today to ensure that they 
come  on-stream  as  early  as  possible.  We  also  have  to  plan  for  major  organisational  and 
infrastructure changes. 

Key EU technology challenges for the next 10 years to meet the 2050 vision: 

–  Bring the next generation of renewable energy technologies to market competitiveness; 

–  Achieve a breakthrough in the cost-efficiency of energy storage technologies; 

–  Develop the technologies and create the conditions to enable industry to commercialise 

EN 

5 

   EN 

 
hydrogen fuel cell vehicles; 

–  Complete the preparations for the demonstration of a new generation (Gen-IV) of fission 

reactors for increased sustainability; 

–  Complete  the  construction  of  the  ITER  fusion  facility  and  ensure  early  industry 

participation in the preparation of demonstration actions; 

–  Elaborate  alternative  visions  and  transition  strategies  towards  the  development  of  the 
Trans-European energy networks and other systems necessary to support the low carbon 
economy of the future; 

–  Achieve breakthroughs in enabling research for energy efficiency: e.g. materials, nano-
science, information and communication technologies, bio-science and computation.  

A collective endeavour to deliver results 

Meeting  the  targets  in  2020  and  the  vision  for  2050  is  a  significant  challenge  that  can  be 
tackled most effectively as a collective endeavour. 

Some technology challenges require critical mass and large-scale investment and bring with 
them a risk which cannot be met by the market, by Member States acting individually or by 
the current model of European collaborative research. The EU can respond to this challenge 
by evolving towards a new model of focussed cooperation, making use of the full potential of 
the European Research and Innovation Area and the Internal Market. 

Member States, the Community, industry and research organisations all have different roles to 
play  within  a  coherent  overall  effort.  Achieving  our  ambitious  goals  will  require  a 
fundamental  departure  from  current  practice  throughout  the  innovation  system,  striking  the 
right balance between cooperation and competition at national, European and global levels. 

Action by the private sector 

The  private  sector  is  at  the  forefront  of  these  efforts.  The  industrial  revolution  that  will  be 
catalysed  by  the  move  towards  world-wide  low  carbon  growth  represents  a  unique 
opportunity for European industry. A long term and stable policy framework is essential, but 
to take best advantage of this opportunity, industry should be prepared to increase investment 
and take greater risks. 

Setting  up  strategic  alliances  is  necessary  for  industry  to  share  the  burden  and  benefits  of 
research  and  demonstration.  There  is  room  for  better  exploiting  the  synergies  between 
technologies (e.g. in the automotive sector, between hybrid vehicles, fuel cells, biofuels and 
gas).  Industry should also join forces to take a more pro-active stance on the elaboration of 
global  regulations  and  standards  and  to  overcome  the  often  complex  issues  surrounding  the 
public acceptance of new technologies. 

EN 

6 

   EN 

 
Recent  studies  show  that  there  is  still  room  for  substantial  growth  in  private  capital  being 
invested in European clean energy4. The financial sector, including private equity and venture 
capital, needs to adapt their risk profiles to invest more in potentially high-growth small and 
medium  size  enterprises  and  spin-offs,  to  benefit  from  the  huge  prospects  for  low  carbon 
technologies. 

Action at national level 

Member States have to deliver their contributions to the 20% targets agreed for 2020, and to 
put their energy systems on a pathway toward decarbonisation by 2050. 

A dedicated and substantial effort on energy technology can help achieve the targets in a way 
that maximises the benefits for Member States and limits the costs. 

The  actions  of  the  Member  States  should  aim  at  increasing  investment  and  provide  clear 
market  signals  to  reduce  the  risks  and  stimulate  industry  to  develop  more  sustainable 
technologies.  For  example,  by  designing  smart  incentive  schemes  that  stimulate  innovation 
and create value chains, rather than unduly distorting competition or subsidising technologies 
that have the highest short term potential. 

Tax incentives5 and Community instruments implemented at national level, such as Structural 
Funds,  can  be  used  to  strengthen  the  research  base,  build  innovation  capacity,  promote 
excellence  and  increase  the  human  resources  available  to  the  sector.  Strengthening  the 
implementation,  monitoring  and  review  of  national  programmes  and  measures  and  seeking 
out a better coherence and alignment with other Member States and Community efforts would 
also pay dividends. 

Action at Community level 

A  new  Community  approach  in  the  field  of  energy  technologies  is  crucial  to  achieve  the 
objectives of the SET-Plan. The Community is the vehicle that can: 

–  Enable the pooling of resources and sharing of risks to develop new technologies that offer 
huge potential but are currently far from market competitiveness and are beyond the means 
of individual countries. 

–  Facilitate  strategic  planning  at  both  the  technology  and  energy  system  levels  to  ensure  a 
common  approach  to  problems  that  have  a  cross-border  dimension,  such  as  networks,  as 
well as to optimise the transition towards the energy system of the future. 

–  Permit  a  better  gathering  and  sharing  of  data  and  information  to  support  sound  energy 

technology policy making and guide investment decisions. 

–  Ensure coherence and critical mass in international cooperation efforts. 

4 

5 

e.g. 'Global Trends in Sustainable Energy Investment 2007', United Nations Environment Programme 
and New Energy Finance Ltd. 
COM(2006)728 of 22.11.2006 on the use of tax incentives in favour of R&D 

EN 

7 

   EN 

 
                                                 
–  Address common problems and non-technological barriers, such as public acceptance and 
awareness of new technologies, to arrive at common solutions with wide applicability. 

The  Research  Framework  Programmes  and  the  Competitiveness  and  Innovation  Framework 
Programme are the main tools through which actors across the EU currently work together on 
technological innovation projects. 

These Community programmes should be better used to catalyse the actions of Member States 
and  the  private  sector,  taking  them  to  new  dimension  by  evolving  towards  a  paradigm  of 
steering and co-financing joint programmes rather than projects. This calls for a change in the 
way  these  programmes  are  implemented.  The  proposed  Fuel  Cell  and  Hydrogen  Joint 
Technology  Initiative6  is  a  prime  example  of  such  a  change,  with  Community  Research 
Framework  Programme  funding  being  used  to  co-finance  a  programme  of  research  and 
demonstration with industry in a new, European public-private partnership. 

Action at global level 

In  a  world  in  which  energy  demand  is  still  increasing  and  Europe's  share  of  greenhouse 
emissions is set to fall from 15% to 10% by 2030, a global effort and cooperation are needed 
to address the global challenges. 

We  need  to  take  our  international  cooperation  on  energy  technology  to  a  new  level,  in  the 
same way as the Emissions Trading Scheme is  being used to catalyse the development of a 
global cap and trade system for carbon. If we are unable to create a global market appetite for 
low  carbon  technologies  and  ensure  their  widespread  take-up,  then  achieving  our  ambitious 
goals could result in much wasted effort and resources – a high cost strategy for our business 
and society. 

3. 

OBJECTIVES OF THE SET-PLAN 

We need to use the ambition and the targets of the Energy Policy for Europe to create a new 
European policy for energy technology. 

Existing measures taken over recent years have provided a foundation for further EU action. 
The creation of European Technology Platforms has brought together stakeholders to define 
common  research  agendas  and  deployment  strategies.  The  European  Research  Area  (ERA)-
Net instrument has initiated moves towards common research programming between Member 
States. Networks of Excellence have given research centres the opportunity to work together 
in specific fields. 

Building  on  this  momentum,  the  SET-Plan  will  focus,  strengthen  and  give  coherence  to  the 
overall  effort  in  Europe,  with  the  objective  of  accelerating  innovation  in  cutting  edge 
European low carbon technologies. In doing so, it will facilitate the achievement of the 2020 
targets and the 2050 vision of the Energy Policy for Europe. 

6 

COM(2007)571 of 9.10.2007 

EN 

8 

   EN 

 
                                                 
The SET-Plan proposes to deliver the following results: (i) a new joint strategic planning, (ii) 
a more effective implementation, (iii) an increase in resources, and (iv) a new and reinforced 
approach to international cooperation. 

4. 

JOINT STRATEGIC PLANNING 

A new way of working at Community level requires an inclusive, dynamic and flexible means 
of  guiding  this  process,  defining  priorities  and  proposing  actions  –  a  collective  approach  to 
strategic  planning.  Decision-makers  in  the  Member  States,  industry,  and  the  research  and 
financial communities have to start to communicate and take decisions in a more structured 
and mission-oriented way, conceiving and implementing actions together with the EC within 
a cooperative framework. We need a new governance structure. 

European Community Steering Group on Strategic Energy Technologies  

To  steer  the  implementation  of  the  SET-Plan,  reinforcing  the  coherence  between  national, 
European and international  efforts,  the Commission  will, in early 2008,  establish  a Steering 
Group  on  Strategic  Energy  Technologies.  The  Group,  chaired  by  the  Commission,  will  be 
composed of high level government representatives from Member States. The mandate of the 
group will be to conceive joint actions, through coordinating policies and programmes, make 
resources  available  and  monitor  and  review  progress  in  a  systematic  manner,  fully  geared 
towards reaching our common objectives. 

The  Commission  will  organise  a  European  Energy  Technology  Summit  in  the  first  half  of 
2009.  The  objective  would  be  to  bring  together  and  engage  all  stakeholders  in  the  entire 
innovation  system,  from  industry  to  customers,  as  well  as  representatives  of  the  European 
institutions, the financial community and our international partners. This  event would be an 
opportunity  to  review  progress,  disseminate  achievements  and  foster  cross-fertilisation 
between sectors. 

European Energy Technology Information System  

Effective  strategic  planning  in  the  Steering  Group  requires  regular  and  reliable  information 
and  data.  To  support  the  definition  of  energy  technology  objectives,  as  well  as  to  build 
consensus  around  the  SET-Plan  programme,  the  Commission  will  establish  an  open-access 
information  and  knowledge  management  system.  It  will  include  'technology  mapping'  (state 
of  the  art,  barriers  and  potential  of  technologies)  and  'capacities  mapping'  (financial  and 
human  resources)  developed  by  the  Commission's  Joint  Research  Centre7.  The  system  will 
assist the regular reporting of the progress of the SET-Plan and inform energy policy making 
through the Energy Market Observatory and the biennial Strategic Energy Review. 

7 

See  Commission  Staff  Working  Documents  SEC(2007)1510  'Technology  Map'  and  SEC(2007)1511 
'Capacities Map' 

EN 

9 

   EN 

 
                                                 
5. 

EFFECTIVE IMPLEMENTATION - WORKING TOGETHER AT COMMUNITY LEVEL 

To accelerate the development and market introduction processes we need more focussed and 
powerful  mechanisms  that  can  leverage  the  potential  of  public  intervention,  European 
industry and researchers. 

5.1. 

European Industrial Initiatives 

European Industrial Initiatives aim to strengthen industrial energy research and innovation by 
mobilising  the  necessary  critical  mass  of  activities  and  actors.  Geared  towards  measurable 
objectives in terms of cost reduction or improved performance, they will focus and align the 
efforts of the Community, Member States and industry to achieve common goals. They will 
target sectors for which working at Community level will add most value – technologies for 
which  the  barriers,  the  scale  of  the  investment  and  risk  involved  can  be  better  tackled 
collectively. 

Based  on  the  results  of  the  consultation  process,  the  Commission  proposes  to  launch  the 
following new priority initiatives, starting in 2008: 

•  European  Wind  Initiative:  focus  on  large  turbines  and  large  systems  validation  and 

demonstration (relevant to on and off-shore applications). 

•  Solar  Europe  Initiative:  focus  on  large-scale  demonstration  for  photovoltaics  and 

concentrated solar power. 

•  Bio-energy Europe Initiative: focus on 'next generation' biofuels within the context of an 

overall bio-energy use strategy. 

•  European  CO2  capture,  transport  and  storage  initiative:  focus  on  the  whole  system 
requirements, including efficiency, safety and public acceptance, to prove the viability of 
zero emission fossil fuel power plants at industrial scale. 

•  European  electricity  grid  initiative:  focus  on  the  development  of  the  smart  electricity 
system,  including  storage,  and  on  the  creation  of  a  European  Centre  to  implement  a 
research programme for the European transmission network. 

•  Sustainable  nuclear  fission  initiative:  focus  on  the  development  of  Generation-IV 

technologies. 

The European Industrial Initiatives will be implemented in different ways, depending on the 
nature  and  needs  of  the  sector  and  the  technologies.  For  technologies  with  a  sufficient 
industrial base across Europe they may take the form of public-private partnerships, while for 
other technologies which are prioritised by a few countries, they may take the form of joint 
programming  by  coalitions  of  those  interested  Member  States.  Where  appropriate,  a 
combination  of  'technology  push'  and  'market  pull'  instruments  may  be  used.  The  European 
Technology Platforms will assist in the preparation phase. 

Two on-going energy programmes serve as illustrative examples of SET-Plan initiatives: the 
European  fusion  research  programme  and  its  flagship  'ITER'  and  the  proposed  Joint 
Technology Initiative on 'Fuel Cells and Hydrogen'. Other related industrial initiatives are the 
Single European Sky air traffic management research programme (SESAR) that will improve 

EN 

10 

   EN 

 
the  energy  efficiency  of  the  aviation  system  and  the  proposed  Joint  Technology  Initiative 
'Clean Sky'8 that aims to enhance the energy efficiency of aviation engines. 

5.2. 

Creation of a European Energy Research Alliance 

Europe has strong National Research Institutes for Energy as well as excellent research teams 
working  in  universities  and  specialised  centres.  However,  even  if  they  pursue  similar 
objectives,  they  define  strategies  and  work  plans  individually.  Traditional  instruments  (e.g. 
projects and networks) to coordinate their efforts are no longer sufficient. Greater cooperation 
at Community level will deliver a more effective use of resources. 

The  Commission  proposes  to  create  a  European  Energy  Research  Alliance.  To  launch  the 
process  the  Commission  will,  in  the  first  half  of  2008,  open  a  structured  dialogue  with  the 
CEOs  of  the  National  Research  Institutes  and  bodies  of  a  similar  character  (e.g.  higher 
education establishments) with significant programmes. The mandate will be to bring about a 
move  from  today's  model  of  collaborating  on  projects  towards  a  new  paradigm  of 
implementing  programmes.  The  aims  are  to  align  these  programmes  with  the  SET-Plan 
priorities,  network  existing  but  disperse  capacities  and  build  durable  partnerships  with 
industry. 

Examples of potential joint programmes that could be channelled through the Alliance include 
basic  energy  science,  enabling  and  breakthrough  technologies  and  advanced  energy 
efficiency.  The  European  Institute  of  Technology  could  provide  an  appropriate  vehicle  to 
realise this ambition, through a Knowledge and Innovation Community on energy and climate 
change. 

5.3. 

Trans-European energy networks and systems of the future 

To achieve a sustainable, interconnected European energy system will require massive energy 
infrastructure  change  as  well  as  organisation  innovation.  It  will  happen  over  decades, 
transforming the energy industry and infrastructures, and represent one of the most important 
investments  of  the  21st  century.  Very  diverse  sectors  will  be  affected,  not  only  energy, 
environment and transport, but also information and communication technologies, agriculture, 
competition, trade and others. This will require a multidisciplinary approach to issues that are 
increasingly interconnected. 

To  plan  and  develop  future  infrastructures  and  policies,  it  is  essential  to  have  a  good 
understanding of the full implications and logistics of new energy technology options. 

The  Commission  proposes  to  initiate  in  2008  an  action  on  European  energy  infrastructure 
networks  and  systems  transition  planning.  It  will  contribute  to  optimise  and  harmonise  the 
development  of  low  carbon  integrated  energy  systems  across  the  EU  and  its  neighbouring 
countries.  It  will  help  the  development  of  tools  and  models  for  European  level  foresight  in 
areas such as smart, bi-directional electricity grids, CO2 transport and storage and hydrogen 
distribution. 

8 

SESAR  COM(2005)602  of  25.11.2005,  Fuel  Cell  and  Hydrogen  Joint  Technology  Initiative 
COM(2007)571 9.10.2007, and 'Clean Sky' Joint Technology Initiative COM(2007)315 of 13.06.2007 

EN 

11 

   EN 

 
                                                 
6. 

RESOURCES 

It is essential to address the mismatch between the sheer magnitude of the energy and climate 
change challenge and the current levels of research and innovation effort. 

Implementation  of  the  SET-Plan  will  help  overcome  the  fragmentation  of  the  European 
research  and  innovation  base,  leading  to  a  better  overall  balance  between  cooperation  and 
competition.  Encouraging  more  focus  and  coordination  between  different  funding  schemes 
and  sources  will  help  to  optimise  investment,  build  capacity  and  ensure  a  continuity  of 
funding for technologies in different phases of development. 

Two challenges need to be addressed: mobilising additional financial resources, for research 
and related infrastructures, industrial-scale demonstration and market replication projects; and 
education and training to deliver the quantity and quality of human resources required to take 
full advantage of the technology opportunities that the European energy policy will create. 

Increasing investment 

Recent studies (e.g. the Stern Report, the Intergovernmental Panel on Climate Change reports 
and the International Energy Agency) confirm that increased energy research and innovation 
investment, to at least double the current levels, will deliver substantial benefits. Deployment 
incentives may also need to increase by two to five times. 

The increased budgets of the Seventh Framework Programmes of the European Communities, 
as well as the Intelligent Energy-Europe Programme, are a step in the right direction. In the 
former,  the  average  annual  budget  dedicated  to  energy  research  (EC  and  Euratom)  will  be 
€886m,  as  compared  to  the  €574m  of  the  previous  programme.  The  Community's 
commitment  to  the  ITER  fusion  programme  has  been  instrumental  in  securing  this  budget 
increase. Further resources increases are similarly required to finance the proposed European 
Industrial Initiatives and the European Energy Research Alliance. 

The European Investment Bank is also dedicating more resources to energy projects (5-7 b€ 
in the coming years). First results from the new Risk Sharing Finance Facility confirm that it 
is  opening  up  wider  financing  opportunities  for  research  and  demonstration  projects  in  the 
renewables and energy efficiency sectors. 

Some Member States are already progressively increasing national energy research funding. 
Others should follow suit, with the aim of doubling the overall effort in the EU within three 
years. The Commission will monitor progress towards this objective within the context of the 
Lisbon process. 

The Commission intends to present a Communication on financing low carbon technologies 
at the end of 2008. The Communication will address resource needs and sources, examining 
all  potential  avenues  to  leverage  private  investment,  including  private  equity  and  venture 
capital,  enhance  coordination  between  funding  sources  and  raise  additional  funds.  In 
particular, it will examine the opportunity of creating a new European mechanism/fund for the 
industrial-scale  demonstration  and  market  replication  of  advanced  low  carbon  technologies 
and will consider the costs and benefits of tax incentives for innovation. 

EN 

12 

   EN 

 
In preparing this Communication, the Commission will draw on the expertise of governments, 
industry and the research, energy and financial communities. 

Expanding the human resource base 

To increase the quality and the number of engineers and researchers capable of facing the new 
energy innovation challenges, the Commission will use, in particular, the Marie Curie Actions 
of  the  Research  Framework  Programme,  to  boost  the  training  of  researchers  in  the  energy 
field.  The  actions  of  the  SET-Plan,  such  as  the  European  Industrial  Initiatives  and  the 
European  Energy  Research  Alliance  will  further  generate  education  and 
training 
opportunities,  with  the  aim  that  they  create  an  attractive  working  environment  for  the  best 
researchers in Europe and world-wide. 

Member States' own actions to increase the human resource base should be better coordinated 
to maximise synergies and increase mobility in a sector already under severe pressure due to 
the  lack  of  young  people  entering  the  field.  The  co-funding  of  joint  programmes  should  be 
prioritised. 

7. 

INTERNATIONAL COOPERATION 

International cooperation, for example on research or the setting of international standards, is 
vital to stimulate the global development, commercialisation, deployment and access to low 
carbon technologies. 

With  developed  countries,  where  competition  is  a  key  element,  it  is  crucial  to  ensure  more 
cooperation on 'public good' research, such as on safety and public acceptance, as well as on 
longer-term frontier research. 

For developing and emerging economies, the Community interest lies more in helping those 
countries  develop  and  grow  in  a  more  sustainable  manner,  while  building  new  market 
opportunities  for  EU  industry  and  ensuring  effective  collaboration  in  accessing  and 
developing  resources.  Options  for  further  engaging  and  cooperating  with  such  countries 
include: networking energy technology centres; setting up large-scale demonstration projects 
on technologies with the highest potential in those countries; increasing the use of innovative 
financing  mechanisms,  such  as  the  Global  Energy  Efficiency  and  Renewable  Energy  Fund; 
reinforcing  the  use  of  the  Kyoto  Protocol  mechanisms,  notably  the  Clean  Development 
Mechanism  for  investments  in  emissions  reduction  projects,  if  the  post-2012  international 
agreement on further CO2 reductions is reached. 

The  measures  proposed  in  the  SET-Plan  (e.g.  the  Steering  Group,  European  Industrial 
Initiatives  and  the  European  Energy  Research  Alliance)  should  bring  about  a  reinforced 
international  cooperation  strategy.  We  also  need  to  ensure  that  the  EU  increasingly  speaks 
with  one  voice  in  international  fora,  where  appropriate,  to  achieve  a  more  coherent  and 
stronger partnership effect. 

EN 

13 

   EN 

 
8. 

TAKING THE WORK FORWARD 

Today,  the  energy  technology  innovation  process  is  based  on  national  programmes  and 
incentives, using national resources to meet national objectives and targets. This model fits a 
bygone era of cheap energy and no carbon constraints. To bring about the dramatic changes in 
the  macroscopic  energy  landscape  that  will  be  necessary  in  the  21st  Century,  a  new  policy 
needs to be pursued. 

The Commission therefore calls on the Council and Parliament to: 

•  Reaffirm  that  energy  technology  forms  a  fundamental  pillar  of  Europe’s  Energy  and 

Climate Change policies, and is vital to achieve our decarbonisation targets. 

•  Endorse  a  Community  objective  to  jointly  and  strategically  plan  energy  research  and 
innovation efforts in alignment with EU energy policy goals. A governance structure will 
be set up in 2008. 

•  Confirm  that  a  better  and  more  effective  implementation  of  current  energy  research  and 

innovation efforts is fundamental and specifically: 

–  Commit to set up a series of key European Industrial Initiatives, starting in 2008; 

–  Endorse  the  need  to  strengthen  European  energy  research  capacities  by  better 
integrating EU energy research centres in a European Energy Research Alliance. 
A structured dialogue will commence in 2008 to achieve this goal; 

–  Endorse  the  Commission's  proposal  to  initiate  an  action  to  strategically  plan  the 

transition to low carbon energy networks and systems in Europe. 

•  Confirm that a better use of and overall increase in resources, both financial and human, 
are  needed  to  accelerate  the  development  and  deployment  of  low-carbon  technologies  of 
the future. 

•  Welcome the Commission's intentions to prepare in 2008 a Communication on financing 

low carbon technologies. 

•  Agree  on  the  need  to  reinforce  international  cooperation  –  to  implement  a  coherent  and 

differentiated strategy in relation to developed, developing and emerging economies. 

EN 

14 

   EN