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European Commission - Speech - [Check Against Delivery]

Speech by Commissioner Miguel Arias Cañete: Research and innovation to accelerate Europe's energy transformation

Luxembourg, 22 September 2015

SET-Plan Conference


Minister Schneider,

Honourable Members,

Ladies and Gentlemen,

Let me start by congratulating Minister Schneider and the Luxembourgish Presidency for organising this timely and successful event.

Along with last week's paper on how we can upgrade the SET-Plan, these two days have provided the impetus we need to kick-start an innovation-led transition to a low carbon and high growth economy.

We will capitalise on that momentum tomorrow when all 28 EU Energy Ministers will join Vice-Presidents Šefčovič, Katainen and I to discuss how best to unlock the potential of research and innovation in the energy transition.

The message that I will pass to my colleagues is simple: we need a more targeted, integrated, and transparent approach.

A rapidly changing energy and climate landscape requires realignment in the way we work.

That is why the vision we have for the SET-Plan is one based on three principles that I would like to present today:

  • Firstly, a simpler, more focused approach. We need to bring the SET-Plan up to speed with 2020/2030 goals by focusing on the priorities with the greatest potential to help us meet the objectives we have set in our Energy Union.
  •  Second, more integration, transparency and accountability. That means putting an end to technology tribalism: innovation breakthroughs in one sector or one country should be shared across the EU energy system.
  • And thirdly, it needs to be powered by smart financing to make sure investment is directed to where it is needed.

 

Inside the Commission we have broken down the silos, as you can see by Commissioner Moedas and I bookending this conference and the two Vice-Presidents joining tomorrow's event.

Now it's up to Member States and industry to show that same commitment. If we want to fully exploit the potential of European innovation we have to look horizontally at the whole energy system across Europe.

And that doesn’t mean reinventing the wheel.

In fact it is about maximising the potential of the great work already happening by better linking it together. Europe needs to be as strong as the sum of all of its research parts. That will need more cross-border, cross-sector integration.

This is why the SET-Plan process will not be a stand-alone one. Together with the Strategic Transport Research and Innovation agenda and with the Global Technology and Innovation Leadership Initiative, they will represent the three strands that will contribute to the research and innovation competitiveness strategy to be presented as of part of the State of the Energy Union in 2016.

 

1. More targeted approach

Getting back to the 3 principles for the new SET-Plan, allow me to start with the need for a more targeted approach.

The current SET-Plan no longer quite fits with today's rapidly changing energy system. And nor has it kept speed with our ambitious climate and energy commitments.

Let me put that into context:

In just a few months we will head to Paris to secure a legally binding, ambitious global climate agreement. As you know our side of the bargain is a 40% cut in emissions, a minimum share of 27% of renewables in our energy system and a 27% improvement in our energy efficiency – all by 2030.

That's backed up by the Energy Union which explicitly commits us to becoming world leader in renewables.

And all of that in a changing energy system made up of more and more active prosumers, increasingly decentralised production patterns and more flexible demand.

The good news is that thanks to the SET-Plan – and many of you here today - we've started moving in the right direction.

Thanks to advances in European technology, the cost of photovoltaic (PV) systems has fallen by 50% in the last four years, while wind turbine prices fell by almost a third over the same period.

And the reason that costs are going down is because we are constantly innovating. Our researchers are developing cleaner energy technologies which help us do more for less.

That work has helped renewables get up to 15% of our final energy consumption, 26% in the electricity sector. That's good but it's still a long way off where we need to be.

In fact we need to step up our game across the board if we are to reach our targets. Consider this:

  • Three quarters of our housing stock is still energy inefficient
  • European buildings are responsible for more than one third of the EU energy-related CO2 emissions.
  • We still have millions of European homes relying on century-old analogue metering.
  • And we have a transport system responsible for a quarter of all greenhouse gas emissions.

Research and innovation will be key to the big transitions we'll need across each of those areas.

That is why our vision is for a SET-Plan that focuses on a small number of big priorities.

The four core research and innovation priorities we have highlighted are:

  • Reducing the cost of renewable energy technologies to ensure Europe is world leader in the field;
  • Developing smart grids that can reply to the need of energy consumers and prosumers;
  • New technologies to improve energy efficiency, in particular of the building stock;
  • And increasing the sustainability of the transport system, for example through electric vehicles or reducing the cost of batteries.

In addition, Carbon Capture and Storage (CCS) and Nuclear, can be added for those member states interested in those technologies.

In our Communication we have highlighted a series of ten actions to support those priorities.

 

2. More integration, transparency, accountability

But setting priorities and actions is the easy bit. Now we have to make it happen.

We cannot do it without Member States' full commitment to working together and take ownership of the SET-Plan.

In the past, it has been said that the Commission was too prescriptive with its priorities, that it made life more difficult by not joining up its research arm with its energy or transport policies.

We listened to that.

This time round we worked for the last two years with Member States and with industry to define the SET-Plan's priorities in a bottom-up way.

That is how we came up with the ten actions and as of tomorrow we will work with Member States and all stakeholders to define:

- the level ambition (in terms of priorities and funding),

- the modalities for the implementation and

- the timing for the delivery of results.

But with the stakes so high we now need greater transparency.

It is crucial that Member States know what initiatives other countries are working on so as to avoid duplication. And they need to take a far more "open-data" approach to the results of our work.

We believe that that transparency will breed accountability:

We will establish clear performance indicators to measure progress and take a results-orientated approach.

But in return for greater integration, transparency, and accountability we have to make sure that the projects with the greatest potential have the access to the investment they need.

 

3. Smart Financing

We have all seen the results of what targeted investment can do.

Take for example of the Gemini offshore wind farm off the North Sea coast of the Netherlands.

It is the largest farm of its kind in the world. Its 600MW will supply renewable electricity for more than 1.5 million people and 785,000 households! That's equivalent to a 1.25m ton reduction of CO2 emissions. Not to mention the jobs and income it will bring to the region.

But offshore wind farms are expensive – 2.8 billion euros in this case. The truth is that large scale projects of this kind are often viewed as risky. We have to look at new ways to fund these projects – clearly public money will never be enough.

Our strategy is to leverage as much private investment as possible from as little public funding needed. With the Gemini project for example the European Investment Bank invested 587 million euros of EU public money. That investment acted as a guarantee and encouraged a number of other public and private actors to invest the remaining money needed.

And that is exactly the thinking behind the new 315 billion euro European Fund for Strategic Investments (EFSI). Public institutions must act as a guarantor to incentivise private funding and allow financial institutions to offer long-term financing to projects with a higher risk profile.

To support that we have doubled the funding for energy research from 2014 to 2020 and we have ring-fenced 35% of all research money for climate technologies. In fact we are investing in clean energy technologies in all parts of the EU budget – from regional to maritime funds!

There are plenty of funding opportunities at EU level. But the same spirit of collaboration of the SET-Plan applies to investment. Regional approaches might provide common investment needs: where we have common challenges we need to pool together our resources.

 

Conclusion

And that, ladies and gentlemen, is really the foundation for our new vision for the SET-Plan.

We have common energy and climate goals.

We have world leading research institutions and some of the world's top innovators.

EU companies already hold 40% of global patents for renewable energy technologies.

We now need to bring all of that together.

  • The new political approach to SET-Plan will prioritise the areas with the greatest potential to help us achieve our objectives.
  • The new structure will ensure more cross-border, cross-sector integration, more transparency, more accountability.
  • And the range of smart financing tools at our disposal will help us direct investment where it is needed.

The debate over the last two days provides the perfect launchpad for our discussions with Member States starting tomorrow.

Those discussions will continue up to and beyond Paris where I hope we can review our level of ambition upwards. That will then feed into the Commission's Strategic Communication on Research and Innovation due before the end of 2016.

We have a lot of work ahead of us but if this conference is anything to go by I am more confident than ever that we can make it happen.

Thank you.

SPEECH/15/5695


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