Europe should embark on a collective project to become the world leader in renewable energy by 2020, write Enrico Letta, President of the Jacques Delors Institute, Herman Van Rompuy, President Emeritus of the European Council and President of the European Policy Center and Bertrand Piccard, pilot of the Solar Impulse, in an open letter to policymakers. Such a leadership effort would go a long way to addressing a multitude of challenges facing Europe: it would lead to growth and innovation, create jobs, lower energy dependence, benefit the environment and the climate, democratise the energy sector, and even lead to lower immigration if Africa is included.
Europe is in need of ambitious and challenging projects that will create a feeling of belonging and pride for European citizens and their governments. What better choice than to make Europe the World Leader of Renewables by 2020.
This is a realistic and most appropriate ambition for the European Union which has been promoting the fight against climate change for two decades, setting clear targets for decarbonisation and devoting 20% of its budget to invest in the energy transition to a low carbon economy in a way that will bring profit and create jobs.
We do not have to drill to make renewables and energy efficiency power our lives
Such a project would be a win-win venture for all: it brings to all citizens better control over their own energy consumption, it offers industry and services a genuine industrial and innovation policy creating jobs and new opportunities in Europe, it creates substantial wealth by reducing the fossil fuels import bill, and leads to lower greenhouse gas emissions and less air pollution.
This project would be a major structural reform and a centrepiece of the modernisation of the European economy. It is perfectly in line with the ability of European industry to deliver the innovative products and services that such ambition implies, building on energy efficiency and the power of digitisation. The recent completion of a world tour by Solar Impulse, the 100% solar-powered plane, is a demonstration of the ability of European researchers and industries to utilise the potential of clean technologies.
If some decide to stay in a dirty past, we must move to a cleaner future
But there is more. It would offer a unique opportunity to boost the European research community and innovators and to foster their cooperation with industry. It would be a great window to show the accomplishments of European cities, as witnessed by the success of the Covenant of Mayors for Climate and Energy, which has mobilised more than 6000 cities and regions across Europe to become carbon neutral in the near future, thanks to renewables and innovative solutions. Community initiatives in Germany, Scandinavia and in other places to invest in renewables show the key role that citizens could play in this endeavour.
We do not have to drill to make renewables and energy efficiency power our lives. Renewables can be the key fuel for electricity, cooling and heating of buildings, and mobility. Reaffirming this goal is all the more important after the ratification of the Paris Agreement – and the US elections. The more so because it is an economically profitable course. If some decide to stay in a dirty past, we must move to a cleaner future.
So what should be done?
The energy sector in Europe is already undergoing a transition towards renewable sources of energy, including the decentralisation of power generation this implies, as well as digitisation and a new role for consumers who are becoming producers themselves or at least more involved in their energy consumption.
This change of paradigm has been recognised by the Juncker Commission when it chose Energy Union as one of its top priorities and called for an holistic approach to the sector. The Energy Union proposed by the Commission is nothing else than the path to a modern low carbon and digital economy driven by the empowerment of consumers, the new decentralised and abundant sources of energy like wind, solar, hydro and biomass, the optimisation of these resources through interconnections across Europe and digitisation making the whole system intelligent and interactive.
Experience shows that in the field of energy, decisions have to be made at the highest political level
It has also been recognised by major energy players such as the incumbent utilities in Italy, Germany, France and elsewhere.
However, the renewables revolution is in danger of stalling. The Energy Union is only moderately supported by the Member States. As confirmed by top class analyses and reports, the EU is losing ground in its renewable leadership, compared to China and even the USA.
What is needed is a dynamic and innovative industrial policy combined with advanced services to deliver the welfare to our citizens. Renewable energy has already created millions of jobs and it has the potential to create many more. Renewable energy is not only a source of Kilowatts or CO2 emission reductions, it is an essential provider of sustainable jobs and growth. New jobs and new growth.
To become a world leader in renewables, the following five steps and policies should be implemented without delay.
First, there must be a clear and long-lasting political will, expressed at the highest level, and now legally mandated by the Paris Agreement, in order to lead the players to invest in renewable sources of energy and energy efficient solutions for which they are right to expect a stable and predictable regulatory framework. Indeed, many investors, be they institutional or corporations, are desperately asking for clear legal frameworks to know in which direction to invest.
Experience shows that in the field of energy, decisions have to be made at the highest political level. The EU would not have been able to lift its renewable share of the energy mix from 6 to 15% between 2007 and 2015 without the decision of the European Council of March 2007 setting a binding target of 20% by 2020 for renewables. It is up to the European Council, legally backed by the co-legislators, on the basis of the Commission’s proposals, to provide the needed stability and predictability and then for the Member States to implement the necessary measures, as framed and decided at European level.
A robust signal should be given to European industries and research institutes about the absolute priority to be given to innovation, and notably disruptive innovation
Money and investment tools are abundant in Europe (European Fund for Strategic Investments also known as the Juncker Fund, the Structural Funds, the European Investment Bank, the National Development Banks, institutional investors, crowdfunding etc…). But they do not necessarily find their way to renewables because of the lack of an appropriate regulatory framework and, as a consequence, of relevant projects.
In this respect, the new instruments including the electricity market design and the renewable directive, that were proposed by the Commission on 30 November 2016, should create the right conditions for renewables to be fully part of the market, considering also the stability of the network and the need for continuity of supply. While the aim should be to eliminate all subsidies to any fuel in the foreseeable future, and first of all for fossil fuels, support schemes for renewables should be proportionate to the objectives, market based and be limited in time, auctioning becoming the rule to avoid any oversubsidisation. The lack of a significant price of carbon should be taken into account, in favour of renewable sources of energy given their economic, geopolitical and societal advantages.
Second, there must be a financial and fiscal framework which offers citizens, corporations and cities the right conditions to invest in renewables and to deploy the most innovative technologies.
We should make Member States like Cyprus and Malta, now dependent on oil, the best examples of entirely renewable powered countries
Tax holidays should be designed to incentivize investments by individuals in energy efficiency and renewable energy in buildings. Companies should be encouraged to switch to renewable electricity, as part of their corporate social responsibility policy. Here the example of the leading high-tech corporations in the USA procuring green electricity shows how important and influential this can be.
Third, there must be at European and national levels strongly coordinated and forward looking innovation and industrial policies encouraging the discovery, the development and the deployment of all sources of energy which are renewable, with a view to make them competitive on the market.
A robust signal should be given to European industries and research institutes about the absolute priority to be given to innovation, and notably disruptive innovation, in renewables, mobility, efficiency, batteries, storage, digitisation, transmission and distribution with the encouragement of networks of researchers, stimulating start-ups and midcaps, and of visible inducement awards. Horizon 2020 should be adapted to this ambition and stimulate all other research and innovation entities, private and public, to pursue the same objectives.
Fourth, the European Union should lead by example at home through the boosting of a wide range of tangible and well-coordinated initiatives, making use of all instruments and leverages that are available.
We should for instance make Member States like Cyprus and Malta, now dependent on oil, the best examples of entirely renewable powered countries.
We should also design the biggest public and private project worldwide to put an end to the scandal of 1.2 billion people on our planet having no access to electricity (600 million in Sub-Saharan Africa, 200 in India!). This scandal is one of the reasons of the important economic migration affecting Europe. The COP 22 that just ended in Marrakech showed the importance of integrating the needs of the African continent in future plans of the European Union.
Renewable electricity and especially solar PV offers the most convenient and cost effective solution to this unacceptable situation and the EU has all the ingredients to undertake such project. It should first mobilise the competent private sector resources (manufacturing, operating, digital, financial) to design the project for which it could then mobilise its substantial new future external investment plan, including development cooperation funds.
The challenge here is to move from large costly projects, prone to corruption and suboptimally efficient, to a myriad of microprojects and microcredits, close to people’s preoccupations.
Fifth, a European wide inspirational campaign promoting renewables in all Member States should be launched as the glue that binds together all the elements above.
The ongoing democratisation of the energy sector indicates that the time is ripe to be ambitious and audacious
A roadmap for European renewable leadership should be established to demonstrate the comprehensive approach taken, including an industrial policy encompassing research and innovation, skills development, financing, trade measures and development cooperation tools, without forgetting a robust monitoring of the implementation of the various milestones. This could be launched at the occasion of the next State of the Energy Union due at the beginning of 2017.
Ambitious and audacious
If the EU is to be serious about its ambitions to be the world leader in clean energy transition, as targeted by President Juncker in its political guidelines in July 2014, it is now time to gear up and to mobilise all the resources it has to achieve this goal. The European leaders should convince and engage the citizens on this path. The ongoing democratisation of the energy sector indicates that the time is ripe to be ambitious and audacious, as citizens are more and more willing to become active participants of the energy market, with millions already producing electricity with solar panels on their roof.
And the undisputed contribution of this project to the creation of many qualified jobs, the renaissance of our industry, the partial solution to the economic migration flows, the security of supply, the energy independence and the democratisation of our society means that it has to be undertaken. It may also usefully serve the cohesion of the European Union.
European citizens expect their leaders to show longer term vision and corresponding determination in tackling the fight against climate change while creating jobs and steering innovation to secure a better future. The Juncker Commission launched the right proposal at the right time. But it is now time for all European leaders to fill it with life and transform it into concrete projects to make the Energy Union a reality benefitting all Europeans.
Enrico Letta is President of the Jacques Delors Institute. Herman Van Rompuy is President Emeritus of the European Council and President of the European Policy Center. Bertrand Piccard is pilot of Solar Impulse.