COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Blue Energy Action needed to deliver on the potential of ocean energy in European seas and oceans by 2020 and beyond
Date: 2014-01-20
Institutions: European Commission
Subjects: climate change policy, economic growth, innovation, job creation, renewable energy, security of supply, tidal energy, wave energy













EUR-Lex - 52014SC0012 - EN











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52014SC0012

COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Blue Energy Action needed to deliver on the potential of ocean energy in European seas and oceans by 2020 and beyond /* SWD/2014/012 final */









COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Accompanying the document
Communication from the Commission
to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions
Blue Energy
Action needed to deliver on the potential of ocean energy in European seas and
oceans by 2020 and beyond
1.           Introduction 
The energy potential of our seas and oceans
well exceeds our present energy needs. A variety of different technologies are
currently under development to harness this energy in all its forms including
waves, tides, salinity gradients and thermal gradients. Deployment is currently
limited but the sector has the potential to grow, fuelling economic growth and
creating jobs not only along the coasts but also inland along its supply chains.

As the EU steps up its effort to reach the
objectives of the Europe 2020 Strategy[1]
and contemplates its energy and climate policy beyond 2020, it is opportune to
explore all possible avenues to stimulate innovation, create economic growth
and new jobs as well as to reduce our carbon footprint. Given the long-term
investments required, action needs to be taken now in order to ensure that the
ocean energy sector can play a meaningful part in achieving our objectives up
to 2020 and beyond. This impact assessment looks over the horizon at a
promising new technology and considers the various options available at the EU level
to support its development.
2.           Problem definition 
The development of this promising sector is
currently hampered by several technological and non-technological barriers.
These will have to be addressed if the sector is to reach its full potential.
Cost reduction, financial and
profitability issues
The cost of exploiting ocean energy is
currently high compared to conventional but also other renewable energy sources,
which have long benefitted from strong public support. Most of the existing
ocean energy technologies are still in the demonstration phase and the progress
towards capital cost reduction remains obstructed by residual technical
challenges. The relative novelty of these technologies and perceptions of high
risk can deter investors. Moreover, the complexity of the technological
landscape leads to a diffusion of research and development efforts, which makes
for a slower progress along the learning curve. 
Infrastructure issues 
The lack of certainty in the grid planning
process, long connection lead times and prohibitive transmission costs can
deter investment into ocean energy. Network reinforcements offshore but also on
land and across borders are a fundamental condition for ocean energy development.
The availability of access to suitable port facilities and specialised vessels also
needs to be addressed. 
Administrative & regulatory issues
Lengthy and excessively complicated
licensing and consenting procedures have been flagged up as a major barrier to
the development of ocean energy projects. The deployment of ocean energy is hampered
by uncertainty about the proper application of environmental legislation which
may further prolong the consenting procedures and place an additional
administrative and financial burden on project developers. 
Environmental issues 
At present, data on the environmental
impacts of ocean energy is limited. Research is often too costly for project
developers to undertake individually. More research and development along with
a better exchange of information will be required to understand and mitigate
the adverse environmental impacts of ocean energy installations. 
3.           Analysis of subsidiarity
and EU added value
The EU’s competence in the area of ocean
renewable energy is set out in the objectives of the Treaty on the Functioning
of European Union relating to energy, the internal market and the environment. When
compared to separate Member State initiatives and budgets, coordination of activities
related to research but also other non-technological issues at European level
would accelerate the development of the sector.
4.           Policy objectives 
The general objective of the policy
intervention is to enable the ocean energy sector to make a meaningful
contribution to Europe’s employment, innovation, climate and environmental
objectives in the medium term, alongside more established renewable energy
technologies. More specifically, the aim is to tackle the aforementioned
barriers by encouraging collaboration between the technology developers, policy
makers, investors and other stakeholders so as to bridge the gap between
research and the market.
5.           Policy options
Option 1 (current
policy framework) entails a continuation of current policy
initiatives at EU level which affect ocean energy either directly or
indirectly. An ERA-Net on ocean energy will contribute to the strengthening of
research coordination amongst Member States. The Commission and stakeholders
will continue to explore ways to reinforce ocean energy funding under the new
Horizon 2020 programme. Offshore grid developments will continue to be
discussed in existing initiatives such as the North Seas Countries' Offshore
Grid Initiative (NSCOGI). Discussions will continue on the proposal for a
Directive on Maritime Spatial Planning (MSP) and on the proposal amending the Environmental
Impact Assessment Directive, which is intended to simplify procedures so as to
reduce unnecessary administrative burdens. 
Option 2 (enhanced
political and industry coordination) involves the setting up of a forum bringing together all relevant stakeholders. Its
objective would be to devise viable solutions to the challenges outlined above
and develop a strategic roadmap, which would set out industrial
development milestones within a clear timeframe as well as an indicative
implementation plan. Active engagement by Member States and the European Commission in this process would send a clear political
signal of support. 
The infrastructure bottleneck would be
tackled by fostering a more pro-active dialogue between the industry and the
parties responsible for grid planning. It is also foreseen that other
infrastructural needs (port services and supply chain) would be identified
within the stakeholder forum. Uncertainty about environmental impacts will be
addressed by the promotion of voluntary data-sharing. 
Differentiated revenue support is key for
ensuring that less mature renewable energy technologies can compete on a level
playing field. The recognition of the specific needs of less mature
technologies within the forthcoming Commission's guidelines on revenue support is
therefore an important component of Option 2.
Option 3 (targeted
structural actions) builds on Option 2. It seeks to consolidate the
cooperation between stakeholders and give it a robust institutional support
framework. In addition to the measures outlined under option 2, a European
Industrial Initiative (EII) would be set up to leverage investment and implement
the strategic roadmap. 
A dedicated grid planning platform to
advance the interests of the offshore renewable industry in the grid planning
domain would be set up. To address other infrastructural bottlenecks, a
sector-specific body will be tasked with identifying and assessing the specific
needs of the sector with respect to the supply chain and to
explore possible synergies with other sectors, notably offshore wind, in
a bid to reduce costs and exploit synergies. 
This option foresees the elaboration of a
guidance document to assist with the implementation of Article 13 of the
Renewable Energy Directive, which requires Member States to ensure that
national authorisation and licensing rules applied to renewable energy
installations are "proportionate and necessary". In view of the
potential development of ocean energy, this option explores the possibility of
developing sector-specific guidelines for maritime spatial planning as well as
guidance to assist with implementation of the Habitats and Birds Directives.
6.           Assessment of impacts
Economic impacts 
Under option 1, ocean energy is likely to only
make a marginal contribution to the future EU energy mix. The decrease in the
levelised cost of electricity is likely to be relatively slow. As a result, the
economic benefits in terms the growth of the sector itself and stimulation of
economic activity along the supply chains are likely to be correspondingly low.
Moreover, with no additional support the EU's competitive edge may be lost to
third countries, withering away the growth and jobs already delivered by the
industry. Increased cooperation among stakeholders stimulated by option 2 could
enhance the impact of public and private investment into the sector and deliver
cost reductions. The market uptake would, therefore, likely be above that
assumed for option 1 but its magnitude is uncertain as many of the instruments
are voluntary in nature.
Recognition of ocean energy as a strategic
energy technology and creation of a European Industrial Initiative, as proposed
under option 3, is likely to facilitate the project developers' access to
finance and strongly stimulate innovation. The guidance documents proposed
could yield further savings through avoided transaction costs. On the other
hand, options 2 and 3 are likely to be associated with proportionally higher
electricity costs, and entail a certain degree of administrative burden.
Environmental impacts
The deployment of ocean energy has a
potential to reduce greenhouse gas emissions. Assuming that with each unit
installed an equivalent unit of conventional generation is displaced, the
climate change mitigation benefit is assumed to be low under option 1 and relatively
higher under options 2 and 3. 
Ocean energy installations have a wide range
of local environmental impacts, which can be both positive and negative. Taking
a precautionary approach, it is estimated that option 1, with a relatively
small area taken up by ocean energy installations, will result in a low
negative local impact and options 2 and 3 involve a correspondingly higher
local negative impact. This could however be counterbalanced by the fact that
with increasing installed capacity, the accumulated experience could lead to a
development of effective environmental impact management instruments and
practices.
Social impacts

The commercialisation of ocean energy is
likely to deliver high quality jobs especially under option 3, where deployment
levels are the highest. Most of the job creation is likely to take place in the
  Member States and regions where ocean energy will be deployed although
manufacturing and other economic opportunities are likely open in other
countries involved in the supply chain. As the sector develops, the demand for
highly skilled labour will increase. Under Option 2 and especially Option 3, this
growth in demand for skilled engineers may tighten the competition with
offshore wind in particular and possibly even oil and gas. 
Public acceptance issues could arise with
increasing deployment. Higher proliferation of ocean energy under options 2 and
3 could proportionately increase the potential for conflicts with other users
of the marine space. This impact could however be mitigated through an early
involvement of all stakeholders.
7.           Comparison of options
Effectiveness 
Option 1 fails to deliver on this objective
as it would do little to accelerate the commercialisation of ocean energy.
Option 2 may stimulate greater cooperation and avoid duplication of efforts
however the results will depend on the willingness of stakeholders to engage
and are therefore uncertain. While option 3 cannot be expected to fully tackle
the identified bottlenecks, it is most likely to alleviate them, giving the
industry a tangible stimulus. 
Efficiency 
Option 1 fails against the criterion as it
would entail forgoing a substantial part, if not all, of the economic benefits,
which development of the ocean energy industry could bring about. The
establishment of a forum under option 2 requires a certain effort but is likely
to deliver improvements. Its impact would be however highly dependent on
stakeholders' willingness to participate. The creation of a European Industrial
Initiative for ocean energy (option 3) would involve a greater commitment on
the part of the involved stakeholders. Weighed up against the costs, option 3
is judged to be most efficient, with the exception of a creation of a dedicated
body to advance ocean energy interests in grid planning as it would overlap
with existing initiatives.
Coherence 
All policy options are coherent with EU long
term policy objectives, including those related to climate, energy, environment
and economic growth.
Feasibility 
Whilst some measures are feasible in the
short-term; certain measures from option 3 are only viable in the longer-term.
For instance, the industry must have established a strategic research agenda to
establish an industrial initiative. Guidance documents to complement the
environment-related directives require the availability of data on the environmental
impacts. The sector-specific guidance to complement the Maritime Spatial Planning
Directive would only be possible once the directive is implemented and its
impacts are known. Rather than deciding between option 2 and 3, it might
therefore be more appropriate to adopt the option 2 measures as a first step to
form a basis for option 3 measures, which will help the industry to advance
further.
The comparative analysis of the three options
assessed can be summarised as follows:
Option 1 (Current policy framework)
Certain initiatives, relevant to the
development of the sector are underway; however, they do not address some of the
specific needs of the sector. With no specific action taken to support ocean
energy, technology developers will come under a strong competitive pressure
from more advanced renewable and conventional electricity generation
technologies, which have already benefited from favourable policy and large
amounts of private and public investment in the past.
Option 2 (Enhanced political and industry
coordination)
Supporting the sector through stakeholder
networking, voluntary information exchange and its greater integration within
existing funding mechanisms is likely to alleviate the bottlenecks to some
extent and hence deliver improvements. Nevertheless the extent of the positive
impacts is uncertain due to the voluntary nature of the initiatives.
Option 3 (Targeted structural actions)
In addition to option 2 instruments, option 3
includes effective tools to raise the profile of the industry, enhance R&D
and stakeholder cooperation and mitigate some of the administrative barriers
encountered by project developers. It is likely to deliver a strong political
signal but some of the measures may only be feasible in the longer term.
Table
1: Comparison of options against expected output
   || Option 1 (BAU) || Option 2 || Option 3 
 Economic Impacts 
 Levelised cost of electricity || + || ++ || +++ 
 Consolidation of research and development || 0/+ || ++ || +++ 
 Cost for consumers || - || -- || --- 
 Competitiveness || - || + || ++ 
 Grid developments || + || ++ || ++ 
 Development of supply chains and ports || 0 || + || ++ 
 Synergies with other sectors || 0 || + || + 
 Administrative costs* || - || ++/- || ++/- 
 Environmental Impacts 
 Climate change mitigation || + || ++ || +++ 
 Other ecological impact** || - || -- || --- 
 Mitigation of uncertainty regarding environmental impact || 0 || ++ || +++ 
 Facilitation of legislation implementation || 0 || 0 || + 
 Social Impacts 
 Job creation || + || ++ || +++ 
 Creation of jobs in areas of high unemployment || + || ++ || +++ 
 Education and training || NA || NA || NA 
 Skills mapping || 0 || ++ || ++ 
 Health and safety || NA || NA || NA 
 Public acceptance*** || 0 || +/- || +/- 
Key: + positive impact, ++ substantially
positive impact, - negative impact, -- substantially negative impact, 0 no
impact, NA – not applicable/very difficult to assess.
* Whilst the proposed measures under options 2 and 3
would reduce the administrative cost over time, there are also costs associated
with the administrative effort necessary to implement these measures.
** The nature and extent of other ecological impacts
is highly technology specific, but it is prudent to assume that with OE
proliferation, the risk of adverse ecological impact would increase.
*** Depends on the level of stakeholder engagement.
8.           Monitoring
and Evaluation 
It is proposed that the Commission monitors and evaluates the progress of the ocean energy industry on
the basis of the indicators shown in Table 2. The data will be acquired through
surveys distributed to relevant stakeholders including technology developers,
project developers, investors and targeted research institutions. A first
comprehensive evaluation would take place at the latest by 2020.
Table
2: Core indicators to assess development of ocean energy
 Indicator || Relevance 
 Installed capacity || Technology commercialisation 
 Magnitude of investment into the sector || Perceived reliability, efficiency and cost-effectiveness of the technologies 
 Number of collaborative undertakings || Industry cooperation and collaboration, synergies 
 Lead time length (i.e. the total time taken to get building consent and grid connection permits) || Efficiency of planning and licensing procedures 
[1]               COM(2010) 2020, 3.3.2010