How EU-US trade talks could boost energy research

Calling upcoming US-EU trade negotiations “a real global game changer for the 21st century,” European Parliament member James Elles said a future alliance could accelerate the transition to a low carbon economy in Europe and the US, and that it could become a model for other countries. “A rules-based open international market would promote more cost-efficient and widely available green goods and services and technologies. This environment would further innovation and lead to the creation of high-quality jobs.”

The EU-US trade relationship is already the biggest in the world, with €2.7 billion in goods and services traded every day. Talks to expand that trade are being prepared now, for a new free-trade pact to be called the Transatlantic Trade and Investment Partnership, or TTIP. Elles was speaking at a Science|Business webcast conference on July 1, on US-EU energy collaboration, supported by GE. A new Science|Business study on the EU’s own energy technology forecasts was also released at the conference. 

“TTIP could be and should be a powerful instrument to create jobs and growth in the new low-carbon economy,” said Dominique Ristori, director-general of the Joint Research Centre of the European Commission.

In particular, Ristori called on the EU and US to build “a new scientific transatlantic bridge” in energy research.  He said the two countries should work together to pioneer new techniques“ to obtain shale gas without risk or danger to the environment.” 

Some technologies already are available to speed the development of a low-carbon economy. “We have to look at how to leverage the capabilities that renewables and gas together give us – and we have not reached that optimum yet,” said Fernandino Beccalli-Falco, senior vice president at GE and president and CEO of GE Europe. He pointed to gas installations in Germany that work at undercapacity because “we don’t have the transmission lines that allow us to be effective.” To balance out the wind energy GE produces in northern Germany with higher demand in the south, for example, “investments are needed.” 

The recycling of waste as a raw material also holds major potential for speeding the development of a low-carbon economy, Beccalli-Falco said. “We have a huge availability of this raw material.”

EU and US officials already have begun to seed several energy research collaborations. Ristori said he would soon inaugurate a research hub dedicated to smart grids and electric mobility at the Argonne National Laboratory in Chicago, which will be linked to a similar research lab in Milan planned to open in 2014, putting US scientists in permanent contact with European counterparts. 

The EU-US Energy Council is also promoting research ties. In 2009 it identified nine large fields of collaboration where were incorporated in the European Commission’s Strategic Energy Technology (SET) Plan. US research organisations also participate in some of the European Framework Programme research projects.

The EU and US can benefit most by joint research efforts in nuclear fusion, said Andras Siegler, director for energy at the Directorate-General for Research and Innovation at the European Commission. “That’s where I see huge potential,” he said.  Despite short-term energy policy targets such as cutting greenhouse gas emissions 20 per cent by 2020, mankind needs to know whether it is possible to produce electricity from fusion at an affordable level, Siegler argued. “The value of knowing we can use fusion is tremendous.”

In the nearer term, new technologies that enable the world to use gas more efficiently offers the world a quicker transition to reducing carbon emissions, said Edward Astle, pro-rector of enterprise at Imperial College London. “In terms of quantum steps forward, the ability to directly generate electric power from gas through fuel cell technology is a very attractive medium term win – if we can get there.”

Astle also favored greater transatlantic collaboration in research to bolster electric grid flexibility.  “No grid can operate with significant proportions of renewable energy without greater flexibility.  So energy storage become the big win if R&D can deliver commercially deployable batteries.”  

Ristori agreed, calling for a new investment in smart grids.  “This will require fantastic investment, but in the end it will create a new energy revolution for the consumer – giving him full command of energy consumption and price.” 

But so far there is little large-scale strategic collaboration in energy research between the US and Europe, and their energy markets have fundamental differences, particularly in terms of regulation, panelists noted. “We have to be realistic that market drivers could point us in different directions, even when we have the same underlying needs,” said Astle. He recommended targeting one or two areas of common interest through large-scale Horizon 2020 projects twinned with US national funding programmes.

The first joint funding of EU-US collaborations in energy research based on a TTIP agreement are not likely before the 2020-2025 timeframe, Elles said. “A whole range of things needs to be better coordinated” in addition to energy – including financial services. Europe’s Horizon 2020 R&D programme budget for 2014-2020 has just been set at €70 billion; of that, €7.7 billion, slightly more than 10 per cent, is slated for energy research. The next budget will run from 2020-2025, and policymakers should aim to include joint-EU-US energy research in it.

The EU also needs to work on creating a true single market in energy and eliminate trade barriers within the US to be a strong partner in the upcoming dialogue with the US, Beccalli-Falco added. “We are at a turning point for Europe. Decisions taken today are going to either allow the EU to be the strong economy it deserves to be – or one that always has difficulties, just kicking the can down the road.”

Creating policy goals and technology programmes that are feasible and linked to market reality is another challenge for EU policymakers. Georg Zachmann, a research fellow at Breugel in energy and climate change, said Europe’s Energy Roadmap suffers from a lack of credibility and transparency. It offers a wide array of future energy scenarios, “but it is not clear to market participants how these scenarios were created and what happens when the environment changes.” One example he cited: If carbon capture and storage technologies do not come online as expected in the EU Energy Roadmap, reaching EU carbon emissions targets will require a 250 gigabit replacement in low-carbon energy – equal to about 250 nuclear power plants. 

“When you want a long-term energy transition, what you need is a credible framework that allows market players to align to understand where to invest,” Zachman added, noting that the US looks less long-term but makes its energy R&D investment process more open and transparent – so it can adapt much more quickly to changes in the energy technology sector. “If a technology doesn’t reach an expected breakthrough, the US can adapt (faster).”

Responding to a question from the audience about the possible revision of the EU’s Strategic Energy Technology Plan, launched in 2010, Siegler noted that it is too fragmented, and that it needs more systematic thinking. “There is a single energy system – and the change to one technology may have a big impact on another technology,” he said, noting that the Commission is tackling the issue.  The Commission is also trying to encourage a greater pooling of member state resources and capabilities. 

Ristori agreed that key aspects of the SET Plan need updating, as Europe has reached a turning point in the energy sector.  “We will revisit all the key aspects of energy production, storage transmission and distribution, in particular how to manage the energy transition. Energy is now top priority at national level and the EU level,” said Ristori.

The key question is which technology to choose at which point in time, said Zachmann, noting that it is impossible to remain “technology neutral” in supporting new technologies if budgets are limited.  Understanding what works and what does not work well and investing smarter could save European taxpayers “a huge amount of money,” he said.

A transatlantic trade alliance would also create a new context for confronting issues such as Chinese dumping of solar panels in the US and European markets, which threatens to erode the manufacturing and research base in solar technology in both regions. “It’s about how the transatlantic leadership gets a grip on its future and takes decisions collectively,” says Elles, “And it’s about bringing the Chinese onto our platform where we have a rules-based system in a multi-polar world. It’s not about one energy issue like solar panels. It’s a very broad approach – it’s a true game changer.”

Beccalli-Falco agreed, adding: “If we create an economic bloc that is 50 per cent of the world economy, if not more, it is clear it will create a different relationship with China.  China should be integrated in the conversation – so let’s create a strong North Atlantic bloc which is ready to negotiate and cooperate very well with the Chinese economy.”