Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation setting up the Fuel Cells and Hydrogen Joint Undertaking COM(2007) 571 final — 2007/0211 (CNS)
Date: 2008-03-12
Institutions: European Economic and Social Committee
Subjects: energy policy, fuel cell, hydrogen, joint venture, new technology, research and development

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Official Journal of the European Union

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and serves no useful purpose. It is certainly not an example of
good governance. It can only be hoped that an improved proce-
dure will be in place from 1 June 2009 under Regulation (EC)
No 1907/2006 (REACH).

10.2
The EESC also notes the long time taken to bring these
to fruition. The first priority list was published in May 1994.
Even if this proposal is fast-tracked as desired, there will be little
impact on the market until the end of 2010 (and indeed even
it is difficult to see that any improvements in human
then,
health will be recorded).
It is also difficult to portray these
delays as being entirely due to the manufacturers who were
required to supply the data upon which the RARs are based, as
these have been available for some time. If this is due to lack of
resource within the Commission or its scientific committees or
other bodies or agencies responsible for the safety of the general

public, this must clearly be addressed before a much greater
work load, largely unprioritised, becomes evident from 1 June
2009 onwards.

10.3
The EESC clearly supports the Council's 2004 Declara-
tion on Combating Terrorism and the various actions that have
followed from this, and believes that civil society has a key role
to play in this. It therefore hopes to be considered a valid and
useful
interlocutor and stakeholder in this process and notes
that a number of related Opinions are currently being prepared
on this topic. Agreeing what actions are proportionate and
which legislative routes should be followed to ensure timely and
effective responses from all those affected will be critical to
achieving long term peace and security within and around the
EU.

Brussels, 12 March 2008.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

Opinion of the European Economic and Social Committee on the Proposal for a Council Regulation
setting up the Fuel Cells and Hydrogen Joint Undertaking

COM(2007) 571 final — 2007/0211 (CNS)

(2008/C 204/04)

On 30 November 2007 the Council decided to consult the European Economic and Social Committee,
under Article 95 of the Treaty establishing the European Community, on the

Proposal for a Council Regulation setting up the Fuel Cells and Hydrogen Joint Undertaking

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 27 February 2008. The rapporteur was Mr Dantin.

At its 443rd plenary session, held on 12 and 13 March 2008 (meeting of 12 March), the European
Economic and Social Committee adopted the following opinion by 117 votes, with 7 abstentions.

1. Conclusions and recommendations

concerning,
development.

in particular,

the environment and sustainable

1.1
The Committee welcomes the decision on setting up the
Fuel Cells and Hydrogen Joint Undertaking. It considers that this
approach to relaunching investment in R&D has the potential to
give European businesses a stable frame of reference, making it
possible to overcome the current fragmentation of Community
financing and coordinate research, which is often too widely
dispersed, thereby helping to make it more effective.

In welcoming the decision under discussion, the EESC
1.3
wishes firstly to underline the importance for the EU of the
strategy being proposed for investment and coordination of
research.
In so doing, the Committee feels that the strategy
strongly supports the creation of a European research area.

1.2
It welcomes the choice of this sector, which ties in with
the Lisbon strategy, with the Barcelona objectives on funds
devoted to R&D, and also with other Community policies

However,

1.4
the multiplicity of sources of
funding, the number of stakeholders and the substantial Com-
munity resources involved, the use and ownership of the end

in view of

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products of the research should be better defined, particularly
with regard to intellectual property rights and patents. This
shortcoming had already been pointed out by the Committee in
its opinions on the creation of the IMI and Clean Sky Joint
Undertakings. In this JTI, this shortcoming could prove even
more sensitive,
interest rival
insofar as the end product will
companies on the market, particularly car manufacturers.

Finally, the Committee feels that the following measures

1.5
are necessary:

— a genuine simplification of procedures, not least because of
the negative impact that red tape has had on previous R&D
programmes.
the EESC regrets that no
serious assessment has been carried out in order to pinpoint
the reasons for any difficulties encountered by the European
Technology Platforms (ETPs) and prevent any further diffi-
culties;

In this context,

— an information programme aimed at encouraging the neces-

sary private and public funding to be released;

— the

establishment of

training
programmes to ensure that the skills of workers match the
jobs created by this JTI.

appropriate

vocational

2. Introduction

They offer flexibility to the energy mix as they can be operated
on hydrogen and other fuels such as natural gas, ethanol and
methanol, thus making a decisive contribution to protecting the
environment and combating pollution.

2.5
In the fuel cells and hydrogen sector, the purpose of the
Fuel Cells and Hydrogen Joint Undertaking is to help develop
key competences in the sector and thus strengthen Europe's
competitiveness. The proposed regulation sets down the legal
framework needed to set up this kind of joint undertaking.

2.6
The Fuel Cells and Hydrogen Joint Undertaking also
contributes to the implementation of the Environmental Tech-
nologies Action Plan (ETAP) provided for by Communication
COM(2004) 38 final, which included this technological platform
among the priority actions of the ETAP.

3. Context and general considerations

3.1
The scarcity of energy and the constant insecurity of
supply sources compromise people's quality of life and make it
hard for European enterprises to remain competitive. This could
in the future, creating permanent
have a serious
instability and increasing energy prices.

impact

2.1
The purpose of the proposed Council regulation is to
launch one of the very first European public-private partner-
ships in the area of research and development. It is one of the
six Joint Technology Initiatives (JTIs). This partnership, the Fuel
Cells and Hydrogen Joint Undertaking, concerns a strategic
sector for the diversification and future availability of energy.

For these reasons, hydrogen-based fuel cells are an extre-
3.2
mely useful solution for the future: as well as making it possible
to diversify available energy sources,
they are clean energy
converters, as they only emit steam. Other types of fuel cells,
using natural gas or other fossil fuels, also reduce emissions as a
result of their higher efficiency.

The general aim of this Joint Undertaking is to allow
their

2.2
industry, Member States and the Commission to pool
resources in selected research programmes.

3.3
The introduction of hydrogen as a flexible energy carrier
can contribute positively to energy security and stabilise energy
prices, as it can be produced from any primary energy source,
and as such can introduce diversity into the transport mix,
which is currently 98 % dependent on oil.

2.3
Unlike the traditional strategy, which involves providing
public funding for projects on a case-by-case basis, JTIs involve
large-scale research programmes with shared strategic research
goals. This new approach should create a critical mass for Euro-
pean research and innovation, consolidate the scientific com-
munity in key strategic sectors, and harmonise the funding of
projects so that research findings can be put
to use more
quickly. JTIs concern key sectors where the current instruments
have neither the scale nor the speed to keep or place Europe at
the forefront of global competition. These are sectors where
national, European and private funding of research can bring
substantial added value, especially by stimulating an increase in
private R&D expenditure.

2.4
Fuel cells are highly efficient energy converters capable of
delivering substantial greenhouse gas and pollutant reductions.

3.4
The annual world turnover of the fuel cell industry in
2005 amounted to about EUR 300 million, of which Europe
in
accounted for only 12 %; meanwhile, world investment
research was estimated at about EUR 700 million, 78 % of
which was in North America against only 10 % in Europe.

3.5
The present structure of the fuel cell and hydrogen indus-
tries in Europe is therefore unsatisfactory, even though signifi-
cant EU public funds have already been invested, with the topic
already included in the FP7 energy and transport research port-
folio. Europe's research efforts are too far behind those in other
regions of the world; according to an EC study (the ‘HyLights’
project by DG TREN), the EU is five years behind Japan and
North America when it comes to fuel cell vehicles.

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3.6 Without new, specific R&D efforts, the industrial devel-
opment of a key sector such as fuel cells and hydrogen could
fall even further behind the global competitors, and this would
have a negative impact on industrial development and employ-
ment in the sector.

in January 2007, and with the European Strategic Energy Tech-
nology Plan (SET Plan), on which the EESC is currently drawing
up an opinion (1), and which has the aim of guiding the course
of energy technology innovation over the coming decade. It is
also consistent with other fields of Community action, such as
the environment and sustainable development.

3.7
The main problems brought to light by the Commis-
sion's analyses and consultations stem from the complexity of
research needed in the sector, and the lack of a specific Com-
munity agreement for a long-term investment plan.

In this context, given the work needed in terms of inno-
3.8
vation, which requires considerable resources, it seems clear that
no enterprise or institution can carry out the necessary research
alone.

As well as being insufficient,

3.9
the resources currently
available are not put to the best use, as evidenced by the gaps in
programmes and/or needless overlaps; these resources are not
enough to fund a large scale, EU-wide programme.

3.10 Moreover, the European fuel cell sector is not suffi-
ciently coordinated between different countries and activity
areas (academia, new industrial companies, high-tech SMEs, etc.)
which restricts the exchange and pooling of knowledge and
experience, and the technical breakthroughs needed to improve
performance and materials and reduce system costs to meet the
expectations of potential customers.

3.11
Bringing a European dimension to research in fuel cells
and hydrogen is an essential option; indeed, it may well be the
only possible solution to the difficult challenges that the sector
must face.

3.12
The choice of a public-private joint undertaking should
make it possible for Community R&D in the sector to move
towards more effective research, as this is currently undergoing
problems in achieving the necessary critical mass. This is vital to
overcome the current fragmentation of research programmes in
the various Member States which are unable to reach the essen-
tial critical mass due to their lack of resources to fund the neces-
sary programmes.

4. Consistency

The starting point

4.1
the
Seventh Framework Programme (FP7). In order to achieve a
competitive, dynamic economy,
to give new
impetus to R&D investment.

research programmes

is essential

for

is

it

The proposed regulation appears to be consistent with
4.2
Community policies
in research, with the Lisbon strategy
(competitiveness), and with the Barcelona objectives (research
spending) under which the EU is to invest 3 % of its GDP by
2010.

4.3
It also appears consistent with the Commission commu-
nication on the initiative for An Energy Policy for Europe, launched

5. The Commission proposal

5.1
The proposed Council Regulation setting up the Fuel
Cells and Hydrogen Joint Undertaking (COM(2007) 571 final)
refers to the provisions of the 7th Framework Programme (FP7)
covered by Decision 1982/2006/EEC, providing for a Com-
long-term
munity contribution towards the establishment of
public-private partnerships at European level
in the area of
research.

5.2
These partnerships take the form of Joint Technology
Initiatives (JTI) and arise from the work of the former European
Technology Platforms (ETP).

The Council,

5.3
in its Decision No 971/2006/EC on the
Specific Programme ‘Cooperation’, emphasised the need to set
up public-private partnerships and identified six areas in which
the creation of joint technology initiatives is appropriate with a
view to relaunching European research:

— hydrogen cells and fuel cells;

— aeronautics and air transport (2);

— innovative medicines (3);

— embedded computing systems (4);

— nanoelectronics (5);

— GMES (global monitoring for environment and security).

In the context of this general strategy, the regulation
5.4
proposed in COM(2007) 571 final provides for the implementa-
tion of the Joint Technology Initiative (JTI) on fuel cells and
hydrogen by means of setting up a Fuel Cells and Hydrogen
Joint Undertaking.

5.5
The Joint Undertaking is to be considered as an interna-
tional body with a legal personality within the meaning of
Article 22 of Directive 2004/17/EC of the European Parliament
and of the Council of 31 March 2004, and Article 15 of Direc-
tive 2004/18/EC. Its seat will be in Brussels and its activities will
cease on 31 December 2017, unless extended by Council deci-
sion amending the regulation under consideration.

The Commission's main objectives in setting up this
5.6
Joint Undertaking are explained in detail in Article 1.2 of the
Statutes of the Joint Undertaking appended to the proposed
regulation:

— to place Europe at the forefront of fuel cell and hydrogen

technologies worldwide;

(1) TEN/332: European Strategic Energy Technology Plan, Rapporteur: Mr

Zboril.

(2) (INT/364) OJ C 44, 16.2.2008, p. 11.
(3) (INT/363) OJ C 44, 16.2.2008, p. 1.
(4) (INT/370) OJ C 44, 16.2.2008, p. 15.
(5) (INT/369) OJ C 44, 16.2.2008, p. 19.

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— to enable the market breakthrough of fuel cell and hydrogen
technologies, enabling commercial market forces to drive
the substantial public benefits;

participating in the activities. Their contribution from private
legal entities should correspond to an amount at least equal to
the Community's contributions.

— to reach the critical mass of research effort to give confi-
dence to industry, public and private investors, decision-
makers and other stakeholders to embark on a long-term
programme;

— to leverage further industrial, national and regional RTD&D

investment;

— to build the European Research Area;

— to stimulate innovation and the emergence of new value

chains including SMEs;

— to facilitate the interaction between industry, universities and

research centres on basic research;

— to encourage the participation of the new Member States

and candidate countries;

— to support the development of new regulations and stan-
dards to eliminate artificial barriers to hydrogen trading;

— to provide reliable information to the general public on
hydrogen safety, and the benefits of the new technologies
for the environment, security of supply, energy costs, and
employment.

6. Legal basis

6.1
The proposal consists of a Council Regulation with the
statutes of the joint undertaking in an annex. It is based on
Article 171 of the Treaty. The Joint Undertaking is to be a Com-
munity body, and its balance sheet will fall under Article 185 of
Council Regulation 1605/2002/EC, Euratom. It will therefore
have to take account of the fact that, through its very nature,
this initiative involves public-private partnerships with a large
private-sector contribution at least equal to that of the public
sector.

7. Membership

7.1

The founding members of the Joint Undertaking are:

a) the European Community represented by the Commission;

b) the European Fuel Cell and Hydrogen Joint Technology

Initiative Industry Grouping.

7.2
A research grouping, representing non-profit research
organisations, may become a member, after the establishment of
the
the Joint Undertaking, provided an entity to represent
research community has been established.

8. Funding

8.1
The running costs of the Joint Undertaking, explained in
detail in Article 5 of the regulation, will be covered in equal
parts by the founding members.

The operational costs for RTD&D will be jointly funded
8.2
through the financial contribution of
the Community and
through in-kind contributions from the private legal entities

8.3
The maximum Community contribution to the running
costs and operational costs of the Joint Undertaking will be
EUR 470 million. The EESC considers that this sum could have
been higher given the significance of the research to which this
JTI is devoted. Moreover, the running costs are estimated not to
exceed EUR 20 million. The contributions will come from the
‘Cooperation’ Specific Programme implementing the Seventh
Framework Programme for research, technological development
and demonstration, according to the provisions of Article 54(2)
(b) of Regulation (EC, Euratom) No 1605/2002.

If a research grouping is established (see point 7.2),

8.4
it
will contribute one twelfth of the running costs, in which case
the Commission contribution will decrease correspondingly.

8.5
Unless funding is provided after 2013 (when FP7 ends),
only projects for which a grant agreement has been signed at
the latest by 31 December 2013 will continue in the years
2014-2017.

9. General comments

9.1
The EESC supports the decision to create the Fuel Cells
and Hydrogen Joint Undertaking and endorses the related
proposal for a regulation COM(2007) 572 final. The EESC parti-
cularly highlights the importance for the EU of the strategy
proposed with regard to investment and research coordination
which, with regard to this JTI, can lead to greater diversity in the
energy mix, especially when it comes to the transport sector (6).

9.2
As the Committee has already stated in opinions on
other regulations arising from Council Decision 971/2006/EC
it believes
concerning the Specific Programme ‘Cooperation’,
that relaunching investment in R&D is an appropriate way of
giving businesses a stable frame of reference that makes it
possible to overcome the current fragmentation of Community
financing and prevents programmes from being too widely scat-
tered.

9.3
Since the outset, and as evidenced in numerous opinions,
the EESC has been strongly in favour of an ever-greater commit-
ment from the EU towards R&D. Although it is not possible to
cite every reference, it is worth mentioning the two most recent
opinions on this subject, adopted by a large majority at the
EESC's plenary session of 24 and 25 October, relating to the
Clean Sky and ENIAC Joint Undertakings.

In general terms: in its opinion (7) on the Green Paper on
9.4
The European Research Area: New Perspectives, the EESC states that
it ‘supports the objective of creating world-class science and technology
infrastructure, but
reliable
funding,’ noting that‘the success and purpose of this investment is
contingent on the involvement of the relevant institutes and university
groups in the Member States being involved, and on committed parti-
cipation of industry in technology projects.’

this must be backed up by long-term,

(6) TEN/297: The energy mix in transport, Rapporteur: Mr Iozia.
(7) (INT/358) OJ C 44, 16.2.2008, p. 1.

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promote a return on European investment or, at least, for this
concern to be reflected in the document under consideration.

As stated under point 5.2, JTIs arise out of the former
10.2
European Technology Platforms (ETPs). However, the latter did
not always achieve their stated aim of strategically relaunching
research in Europe. The creation of JTIs is based in particular on
any difficulties encountered by the ETPs, whose role was essen-
tially to make a key contribution to industry in the area of
competitiveness.

10.2.1
In the light of this, the EESC regrets the absence from
the Commission proposal of a more detailed outline of the
work previously carried out by the European Technology Plat-
the results are not
forms (ETPs);
mentioned, and there are no bibliographical
references. A
serious assessment with the aim of pinpointing the reasons for
any difficulties encountered by the ETPs would have helped to
prevent difficulties in the new initiative.

there is no assessment,

10.3
To achieve the aims of the Fuel Cells and Hydrogen JTI
and maximise the potential that this new instrument offers, the
EESC considers the following to be necessary:

— a genuine simplification of procedures, not least because of
the negative impact that red tape has had on previous R&D
programmes. Moreover, the EESC highlights the need for all
and
parties
analysing the final results;

in selecting the objectives

to participate

— a wide-ranging information programme on the opportu-
nities provided by the ITC, inter alia on its ability to mobilise
the necessary economic resources in the light of the new
forms of financing;

— the

vocational

appropriate

establishment of

training
programmes to create a highly-skilled workforce with the
knowledge needed for the R&D supported by this Joint
Undertaking; this knowledge being highly strategic for the
EU's industrial
future. These high-level qualifications will
provide the technical skills needed for the R&D jobs that
will be created, will serve to slow the brain drain, and will
provide one of the necessary conditions for ensuring leader-
ship in these sectors, which are of strategic importance from
both an industrial and an environmental perspective.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

In specific terms: in its opinion (8) on the Communica-
9.5
tion from the Commission to the Council and the European Parliament
— Biofuels Progress Report — Report on the progress made in the
the EESC strongly
renewable
use of biofuels and other
supported the development of research programmes relating to
the subject covered by the present regulation.

fuels,

9.5.1
In the opinion, the EESC stated that it ‘believes that par-
ticular attention should focus on research in the biofuels sector, espe-
cially for second-generation fuels, without sacrificing other possibilities
such as those produced by the development of solar hydrogen or
biomass processing.’

The EESC went on to point out that ‘In spite of the
9.5.2
recent development of research geared to producing hydrogen from
biomass, sometimes with the use of biotechnologies or
renewable
sources, the potential widespread use and marketing of hydrogen-fuelled
cars is also determined by the high cost of the fuel cells’, and declared
that‘For hydrogen to become an economically practicable alternative
energy
source, production costs must be brought down .’The
Committee then stated that it ‘believes support should be given to
research into biofuel cell technologies, i.e. biofuel cells that use biocata-
lysts to convert chemical energy into electricity’.

10. Specific comments

10.1
In the light of the multiple, composite financing system
that has been set up and of the significant volume of Com-
munity resources involved, the EESC believes that it would be
appropriate to better define the use and allocation of the end
products of the research in question. To this end, the issue of
patents and intellectual property — as defined in Article 17 of
the proposed regulation and Article 1.24 of the Statutes of the
Joint Undertaking appended thereto, which limit themselves to
setting out principles — ought to be more precise and more
explicit, lest it become a sticking point in the implementation
and running of the Fuel Cells and Hydrogen JTI. This short-
coming had already been pointed out by the EESC in its
opinions on the creation of the IMI and Clean Sky Joint Under-
takings. In this JTI, this shortcoming could prove even more
sensitive, insofar as the end product resulting from the research
will
interest rival companies on the market, particularly car
manufacturers, many of which will be part of the joint under-
taking. In this regard, because of the significant Community
funding, it would be appropriate to consider mechanisms that

Brussels, 12 March 2008.

(8) (TEN/286) OJ C 44, 16.2.2008, p. 34.