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European Commission - Speech - [Check Against Delivery]

Speech by Commissioner Carlos Moedas at the SET Plan 2016 – Central European Conference on Energy Union

Brussels, 1 December 2016

Commissioner Carlos Moedas - Commissioner for Research, Science and Innovation

 

 

Ladies and gentlemen,

 

Energy is fundamental to our economy. To our environment. And to our way of life.

 

Today, I would like to talk to you about three aspects:

- The complexity of the subject and how to communicate to the People

- What is role of the Member States and and Union in this particular area

- What are we doing about it.

There has never been a time that I can remember when energy has not been top news. And top of the political agenda. OPEC. Oil crises. Mining. The environment. Even wars.

Energy, and where we get it from, has shaped our world. Shaped relationships between countries.

Climate change now threatens to reshape our very world.

We are all aware of the EU's climate and energy targets for 2030. Vice President Sefcovic has this morning already laid out the European Commission's Energy Union package. It sets out how we deliver on our targets through legislative and supporting measures. The SET Plan is of course an important instrument for this.

The Paris Agreement, negotiated at COP21 last year, reinforced political momentum. And it reaffirmed the need to dramatically change the way we produce and consume energy.

This is complex – incredibly complex.

That is why I was struck by a recent effort of Bill Gates to present the challenge in a clear and efficient way. By using an equation, based on the old Kaya identity.

The equation outlines the four drivers of CO2 emissions:

1) First, the global population

2) Second, the services that each person uses

3) Third the energy needed to provide each of those services

4) and last, the carbon dioxide released to produce the energy that provides the services.

To prevent catastrophic climate change, we need to bring this equation to zero in the next few decades. And mathematically, to do that, at least one of the four factors of the equation should be reduced to zero – or close to it.

Let me go through all four of the factors:

First, population. We know it is rising and will continue to rise.

Second, services. More and more people are getting access to services because of a decrease of global poverty.

A third factor is the energy consumed by each of those services. Here there is some progress in the right direction. We are making gains in energy efficiency. But it is not enough to offset the rapidly rising trend in the first two drivers.

Finally, we have the actual CO2 emissions from the energy to power all those services to all those people.

And this is the key.

If "P" (people) and "S" (services) are increasing, if "E" (the energy per service) is decreasing only marginally, our only chance is that the energy to fuel all that does not emit CO2. Simple, right?

For this to happen, we need more science. More research. More innovation.

I believe that, in innovation and research, the role of the Member States and the Union are essential. It is a very good example where the role of the public sector should not only be to tackle a market failure but also to set directions. As Mariana Mazzucato says: Innovation-led growth is not just about fixing a market failure but also about setting direction and creating new markets. If you just tackle the market failure you can head into the wrong direction.

Now, the question is what Europe's role is in all of this.

And that is exactly what the Communication on Accelerating Clean Energy Innovation is about.

The title says it all. We believe the transition to clean energy is happening. But not as fast as we need it to happen. Climate change and loss of competitiveness mean we need a renewed sense of urgency.

The Communication focusses on what the EU can do pragmatically to correct the market failure and to set the direction into the future:

Correct the market failure:

1) One, Regulations a policy signals    

2) Two, Mobilising private investment

Set the Direction:

3) Three, European public funding

 

Let me start with the policy signals:

The EU can set the political ambition and create the right business environment through targeted signals, policies, standards and regulations. This is about:

- setting strong and consistent incentives for private investment in clean energy research, development and deployment.

- Getting rid of subsidies or support schemes that distort markets by supporting fossil fuels or mature technologies, instead of giving new technologies a chance to enter the market.

- Involving Citizens.

Citizen engagement and consumer demand will drive the market, not the other way round. We are talking about user innovation and about 'prosumers': consumers who use, but also produce, their energy.

Let me give you an example. One of the 6 European companies in this year's MIT 'top 50 smartest companies' is Sonnen – A German company that offers batteries. Batteries store people's own generated solar energy - so they can use it at the moment when they need it. This is not necessarily new. But they also create a community of users that is connected, so people can use each other's surplus energy at times of high demand.

 

Second, mobilising private investment:

The EU can deploy targeted financial instruments to lower the risk of private investments in untested but promising clean energy technologies or business models.

This is about using public loans, equity investments and financial guarantees in projects that are unlikely to find full funding from the private sector due to market, technological or scientific uncertainty;

For example, we will at least double the budget of the InnovFin Energy Demonstration Projects scheme.

 

Third, European public funding to set directions:

In particular through Horizon 2020, we use EU funding to push the frontiers of science and knowledge.

This is about funding curiosity-driven research, mission-oriented research and demonstration projects in order to encourage and accelerate the transition from the lab to successful goods and services that create jobs and generate growth.

But this last point is also about the EU focusing its research and innovation funding.

In the last three years of Horizon 2020, we will put more than 2 billion Euro in 4 specific areas. Areas that build on the priorities of the SET Plan:

1) Decarbonising buildings

2) Renewables

3) Storage solutions

4) Electro-mobility

This is not about being prescriptive. This is about giving direction. About creating impact in those areas that we expect can deliver the best contribution to reaching our climate and clean energy objectives.

 

Ladies and gentlemen,

 

The challenge before us is enormous.

Even though Europe is the world's largest public investor in energy and climate-related

research and innovation;

And private investments in Europe in Energy Union priorities reached almost 23 billion Euro in 2014;

Investment needs are much higher to achieve our objectives.

But at the same time we should not lose sight of the opportunity.

90% of world energy demand will come from outside Europe in the next decade. This offers a unique economic opportunity for Europe to position itself as a leader in low carbon technologies.

We will need to make sure that both Member States and industry seize this opportunity. We need you all to throw your weight behind this initiative.

We want to especially help the many mayors, active citizens, and entrepreneurs and businesses all over Europe who are already helping to make the clean-energy transition a reality. Their continued innovations are critical to help us consume less energy and live in a cleaner environment.

 

Ladies and gentlemen.

 

It is only by taking bold decisions that things will change. The COP21 agreement in Paris last year was the chance for the political leaders of the world to say together:

We have to change.

For this change to happen we need a new era of disruptive innovation. We need collaboration across and between sectors. Only then will we reach our goals and accelerate the clean energy transition.

Thank you.

 

Background

The European Strategic Energy Technology Plan (SET-Plan), which will be discussed at the conference aims to accelerate the development and deployment of low-carbon technologies. It seeks to improve new technologies and bring down costs by co-ordinating research and helping to finance projects.

During the Central European Energy Conference participants will discuss the opportunities to boost investment, jobs, growth, research and innovation as part of the Energy Union

SPEECH/16/4206

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