Speech by Commissioner Kadri Simson
EU Sustainable Energy Week
High-level session with the International Energy Agency on the energy transition towards climate neutrality: the EU's support for clean energy technologies and innovation
Ladies and gentlemen, good afternoon.
Welcome to the session.
I’m very happy to be here speaking with all of you today, especially on clean energy technologies and innovation.
The last few months have forced us to focus on the present. At times it felt that life was stopped in its tracks. But this week is firmly about our future. And our hopes for it.
There’s no better expression of hope in the future than innovation.
We innovate because we know that a better world is possible. So we push ourselves to the limit of our creativity.
Yet, vision without execution is just day dreaming. That’s absolutely not going to get us to a climate neutral Europe by 2050. Foresight and determination will.
We will release our first ever Clean Energy Transition - Technologies and Innovations Report, together with the State of the Energy Union report this Autumn.
But before we have these results, I want to share with you already today our thinking on clean energy technologies. To be precise, the Why, the What and the How we plan to innovate our way towards climate neutrality.
I’ll begin with the “Why”.
We have always innovated. We have always searched for new ways and means to improve our lives. It’s in our nature.
Whether it’s because we had a dream. Just like the Wright Brothers who wanted to be the first people to fly.
Or even if it was to better a rival. Just like the space race in the 50’s.
So, the question is what is the reason to innovate, here and now in Europe?
In this moment, for Europe, I see three reasons.
First, we need innovative technologies to reach our targets. Our vision of a climate neutral 2050, without the technologies to support it, will not become a reality. We need breakthrough change, which only innovation can bring. Otherwise, we risk a transition that takes longer, is more costly, is less efficient, and makes the social impacts more difficult to bear for citizens.
The second reason is that our clean energy technology industry has taken a real hit in the crisis.
That translates to a fragile European solar and wind industry: orders have fallen by around 30%.
To ensure their survival, we need to intervene.
The Third reason to focus on developing clean energy technologies is to boost European competitiveness. Yes, we are the frontrunner when it comes to clean energy technologies right now. But we shouldn’t be too complacent about that. This crisis will challenge that position.
We don’t want to fail to seize the right moment.
It has happened before, in the earlier stages of the digital transition, Europe was leading the pack in building digital infrastructure. We let our early advantage go to waste. And Europe lost out while non-European companies became household names.
Now again, in clean energy technologies, other regions are quickly catching up. If we want to avoid history repeating itself, this is the moment to push for greater clean energy innovation.
I’ve explained the Why.
Now let’s consider on what exactly should we do, focusing our innovation on in the clean energy sphere.
Let’s start with where we need to make the biggest leap: hydrogen.
The first thing we need to consider is that by 2050, we are looking to a European power system that will be based on more than 80% renewables.
A key asset underpinning that number is the potential of hydrogen. By 2050 it has the potential to reach 13%. As attractive as that number is, we are very far from there right now. Today it reaches just about 2% of the total energy mix.
We have neither the market nor the infrastructure yet to improve on that number. Think of it like a formula:
The cost of renewable hydrogen is dependent on the cost of renewable electricity plus the cost of electrolysers. So these are the areas where we need to scale-up.
For electrolysers, the costs have already been reduced by 60% in the last ten years. But still, we need to scale-up even further to reach the numbers we need.
For renewable electricity, we are making progress.
Look at offshore wind. The technological challenge is the size of turbines. They can produce more for longer, and we can combine reduced electricity costs with a reduced demand for flexibility.
We are getting there. On average, turbine capacity has increased by 12% every year since 2014.
Although these solutions bring with them a whole set of challenges. Larger turbines also need high-voltage direct-current technologies ready and able to deal with the new capacities. After the summer, we will present our offshore renewables strategy that will help deal with these challenges.
Solar PV is another source of renewable electricity and where there is great potential for upscaling if we have the right technologies to do it.
Just like offshore wind, the cost has reduced dramatically over the past decade. In Germany for example the cost of residential solar PV systems have decreased almost three times over the last ten years.
By the end of last year, we had an installed capacity of solar PV over 134 GW. To reach net zero, that needs to increase exponentially to 320 GW by 2030, and then to 1000 GW by 2050. The technology needs to be market ready at each milestone.
I’ll also mention batteries. It goes without saying that the more we generate renewable electricity the more we need flexibility and storage technologies as well. We get greater energy density for batteries for areas that need it, like e-mobility.
For batteries, upscaling works differently than for turbines. At least for Lithium technology, the cell size remains the same but its performance increases quickly.
In the EU, the biggest battery installation so far, is about 90 MW. We estimate that we are lagging behind in battery production by about five years so we have a clear area to work on.
We have the Why and the What. So let’s finally consider the How? How are we going to push for greater deployment of clean energy technologies? How do we know where to focus our attentions?
The first stop is identifying where to focus our energies. This is the role of the Clean Energy Transition - Technologies and Innovations Report I mentioned earlier.
With this in our hands:
- We have our finger on the pulse of clean energy technologies development.
- We can map out exactly where we are top of the class and lagging behind.
- We can already see which technologies are coming down the line.
It gives us a compass to help us steer our policy and funding choices.
Funding clean technologies has gotten a massive boost recently through the Recovery Plan for Europe that the Commission proposed a few weeks ago. The Green Deal is its growth strategy at its core. So, it is perfectly designed to help accelerate innovative investment through a number of programs.
First, the reinforced Multi Annual Financial Framework, with the proposed increase in Horizon Europe to 94 billion EUR will bring extra resources for the digital and green transitions. Horizon will allow us to support the most innovative new ideas. Something we cannot even imagine at the moment, but what could be the next breakthrough solution.
The InvestEU research and innovation window of 10 billion EUR guarantees help to scale-up private sector investments in R&I. Most importantly it will help downstream bringing the results to the market and seeing a tangible solution.
We have also created a new Strategic Investment Facility to support private investments in European strategic value chains with a guarantee of 15 billion EUR. So if you are planning to invest in clean hydrogen technologies for example, you could use the Strategic Investment Facility for projects to scale up electrolysers or for carbon capture and storage solutions.
What we are trying to do with this combined financial firepower is cover all stages of the innovation lifecycle.
Together, they will help us move into global leadership position.
Before we unlock those new major funds under the next MFF, in July a first 1 billion EUR call under the Innovation Fund will be launched. It will fund - amongst other things - demonstration projects for innovative hydrogen-based and renewable technologies.
Soon after, in September, we will adopt a Green Deal call of 1 billion EUR under Horizon 2020. Of that, more than one third will be dedicated to energy topics, including a call for a large-scale electrolyser.
The private sector also has a very important role in funding clean energy technologies. In fact, private investments still represent roughly three quarters of R&I funding. That’s why we will also launch a new Hydrogen Alliance, to bring public and private to the same table. To have the greatest impact, we need to leverage the best of both sectors while setting sights on joint goals. Joining forces will build up a pipeline of projects and drive our innovative technologies further.
Ladies and gentlemen,
You have heard the Why, the What and the How. But the easiest question to answer of all is When?
The answer is now.
Time is not on our side. It takes decades to turn around an industrial and technological system. But right now we have political buy-in across the board on the need to act on climate issues. The Green Deal offers us the momentum we need for full-scale investment of clean energy technologies and innovation.
Now it is the time to act, before climate change reminds us of Martin Luther King’s words: “in life and history, there is such a thing as being too late.”
This is our roadmap for developing and deploying clean energy technologies in Europe. This is where, with your help, Europe wants to make a difference.
Now I’m looking forward to hearing the international perspective from Dr. Fatih Birol.