Politicians must establish clear operating rules and ensure economic technology transfer for the benefits of eco-innovation to be shared worldwide according to Jean-Claude Steffens of SUEZ.
Jean-Claude Steffensis Senior Vice-President for Environment & Innovation at SUEZ, a global energy company operating from Europe with a large customer base worldwide that feels confident in its reputation for both energy supply and environmental services. While the group encourages eco-innovation by integrating components, adding services and dedicating resources to global policy in this area, it is prudent in its approach. Being big does not necessarily mean having the answer to every problem – certainly when many of the constraints come from local political decisions. There are also important concerns about the protection of the intellectual property (IP) of equipment suppliers that often makes technology transfer difficult to less developed countries.
SUEZoperates in energy – gas distribution and electrical generation – and environmental services. In the environmental services area, we are active in: drinking-water distribution, including desalination in huge quantities in some countries; wastewater treatment; waste treatment with collection, sorting, recycling, reuse and other valorisation; and all types of services to decrease energy consumption and close the loop of resources for industrial customers.
These are the basic services complementing the supply of purely renewable electricity to many industrial customers. We have special contracts where we sell completely green electricity. While our global mix is not only renewables, we have offers where we can guarantee the completely renewable origin of the electricity we sell. About 14% of the energy we supply is currently from renewable sources and we are committed to increase this to 18% in Europe.
We are also committed to applying the best available technologies in all our contracts. If technology is available because we are acquainted with it in more developed countries, we are able to apply it elsewhere. However, really emerging technologies are an additional risk so that in countries where conditions are difficult, we apply very proven solutions – we do not go for a first application in a difficult developing country. I think it is a good mix so that we can try out new technologies in good conditions and then apply them subsequently in more difficult areas.
We also have a commitment regarding the demands of our customers to propose variations or alternatives in our commercial offers covering a range of solutions with lower environmental impacts. It is then up to the customer to accept some additional cost to ensure a reduced impact. This is a general policy of SUEZ: to offer alternatives. However, where we are replying to calls for tender, we have to be able to respond exactly to the tender specification in our offer.
A free-market strategy is a normal way of working for economic purposes. However such a strategy is generally applied on a playing field that is constrained – both by the justifiable prohibition of certain commercial activities and by fact that the playing field is not level. Policymakers have different approaches to promoting some technologies, some activities, some ways of production and consumption, and this is the way we have to work.
Once the playing field is defined – and this is a political decision – then it is better to let business apply market strategy on that playing field. So, for example, if buy-back tariffs have been defined for renewables, politicians should then leave it to the market to make windmill prices go down and to ensure the best locations are used first rather than planning for one windmill every kilometre. Politicians should leave to the market the way it uses the playing field that has been defined to obtain the goal or objectives fixed.
In addition, businesses cannot be expected to make the difficult choices about decreasing economic activity to reduce environmental impact with collateral effects on employment. These are political questions and businesses are not equipped to make the necessary trade-offs and choices. The holistic view is a political one and, within this framework, businesses then have to manage their way with their own logic.
SUEZcan develop technologies and draw up its own targets – such as our ambitious objective to increase our renewables share in Europe to 18% by 2009 – but where we put our renewable power plants will be up to the political framework and support in different countries. It is not the same to put renewable power plants in Portugal, France, Belgium or Sweden. This is the market that decides where the real action is. Moreover, if you look in only one place, you might have the impression that things are not going well but you have to look at this in a more global way.
This is a problem we come across in developing new technologies. When we are partners in projects that develop such technologies, our experience is that the IP question is very important. If it is not solved, it can become a real problem. The IP question can also impede the transfer of technology to developing countries.
SUEZuses technology rather than developing new models of gas turbines, boilers or whatever, so we are limited by restrictions set by our equipment suppliers. For example, it is difficult to offer some power plants to China because our suppliers do not want to build them there.
I believe alternative schemes are needed to reward IP. We should look at solutions such as lump sum compensation for development of technologies as the traditional model of patents and licensing might not be appropriate for some developing countries because you can never be quite sure that IP is protected. This again requires political decisions.
We are developing very new and very expensive technologies. I think the ability of companies to support all these developments in the risky environment that we have now is difficult. While companies are willing, the risk profile of these new technologies and the way in which they will be profitable or not in the future are major questions.
Most of the economic interests of new technologies are policy driven – it is from the carbon price that you can deduce if something is profitable or not. Or it is from the exchange of Clean Development Mechanism (CDM) credits from projects that are approved by countries and executive bodies that you can decide if a technology is economic. This is a different risk from that of the market saying this is a good product and people will buy it. There is no compensation for such political risks and they are too high to develop expensive new technologies just in the hope that regulations will come up.
Therefore we need increased public authority support to develop new environmental technologies in areas such as carbon capture and storage, for example. This increased role for public funding should cover both research and demonstration – demonstration is essential but is very expensive in these technologies.
While we see general political commitment for technology itself and for technology improvement and dissemination, the means allocated are scarce. On one side, the European Commission is saying such work should be funded massively but with Member State money. On the other, Member State governments agree but have their own budgetary limits.
Moreover, we have seen that proposals to use even a small part of the money coming from auctioning in the EU emission trading scheme (ETS) to promote new technology have not been agreed by Member State governments. Political commitment without resources is very dangerous and makes it difficult for companies to act.
Contact: Jean-Claude Steffens, SUEZ – email@example.com