The global energy system is changing. Governments around the world are setting ambitious targets to reduce carbon emissions and shift to new sources of energy by 2050 to avert climate change and develop a secure energy supply. But will the billions of euros being channelled into energy research and development actually deliver new technologies – and will the market embrace them? Only if policy makers understand what makes energy R&D different – and what it will take to unlock a far-greater commitment by private industry to co-fund energy innovation.
On March 11, Science|Business held the first in a series of three high-level academic policy symposia focused on the energy R&D challenge, The Energy Difference. It addressed the policy implications of the unique characteristics of the energy market. The aim of the series, which is supported by BP, is to drive new thinking about how to speed new energy technologies to market.
Most governments rely on the same policy toolkits for energy R&D as they do for computers, drugs or missiles. That’s a problem. Energy research is expensive, long-term and big-scale. And despite the risk and big investments in innovative new sources of energy, the final product is a commodity; and markets are highly regulated.
No matter how innovative the technology used to produce energy, the end result is the same. Unlike a ground-breaking semiconductor or software application, new energy sources can’t attract a premium, without ubiquitous carbon pricing. A new type of solar panel must produce electricity at a cost that is competitive with the massive installed base of fossil fuel plants.
Without greater promise of market take-up and financial reward, companies have little incentive to pour billions into new energy technologies. The market structure is skewed against them. “It's not simply a question of rolling out a technology and letting the market adopt it,” Philip Lowe, Director General for Energy at the European Commission, said in a keynote presentation at the symposium. “The market won't adopt it unless they have seen it reach levels of large-scale operation at a competitive cost."
The soon to be released report summarizes the half-day of debate at the symposium and 12 key ideas and recommendations to make energy R&D more effective and to unlock the innovation chain. We quote some of our 40 roundtable guests in this report, our list of recommendations emerged from their lively engagement and the force of their ideas. The symposium took place in Brussels, at the EU Representation of the German state of Baden-Württemberg.
This series of energy symposia is taking place at a critical juncture. To execute its new Strategic Energy Technology (SET) Plan, the European Commission will need to find fresh resources and channel them expertly. But public funds are scarce. As Philip Lowe, Director General for Energy at the European Commission, acknowledged in a keynote presentation, the only thing missing from the SET Plan is “where the money is coming from”. The report aims to help policy makers answer that question and the many others slowing the development of low-carbon technologies and alternative energy.
The full Science|Business report “12 Steps to getting more effective, more efficient energy R&D” will be downloadable free of charge on the Science|Business website soon, please send an e-mail to [email protected] if you would like to be notified when it becomes available.
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