EU’s ECO-INNOVATION STRATEGY – Sunrise for European Industry?

Author: Thomas Sattich

The text was originally published as part of a study for the Polish Ministry of Economics

Introduction: A Third Industrial Revolution for Europe?

According to the European Commission’s latest Communication on industrial policy (European Commission, 2012), austerity programmes and new regulatory mechanisms for financial markets are necessary steps to tackle the economic crisis which hit Europe in 2008, yet ultimately insufficient to overcome it. Instead of short term crisis management the proposal therefore suggests a new approach to industrial policy, making Europe’s manufacturing ready for competition on emerging 21st century strategic global markets. In order to trigger such a “third industrial revolution” in Europe, i.e. the reconfiguration of EU’s economy towards a well established and modern industry, the Commission sets out a medium-term industrial strategy which focused on several innovative key sectors and state-of-the-art technologies.

With regard to past European policies in the field of industry this new initiative comes unexpectedly in many respects: In view of past efforts to develop the Internal Market as a level playing field for competition the strong emphasis on individual sectors of Europe’s economy is particularly surprising. Moreover, at first sight the Commission’s new focus on industrial policy and manufacturing seems to contradict other priorities of the European Union, especially former efforts to bring sustainability, decarbonisation and economic development together in a coherent growth strategy. Furthermore this initiative contradicts EU’s ambitions to put an end to resource-based growth. In the face of these ambiguities the latest Commission proposal therefore aims to square the circle.

While underlining the Single European Market, the Commission proposals suggest economic stimulus in order to reverse the decreasing trend in Europe’s manufacturing capacities and to develop a manufacturing basis for 21st century technology markets. However, the proposal adheres to the aims of sustainable and resource efficient development, which underpins the Europe 2020 strategy for sustainable development.  In order to achieve these objectives the proposal primarily focuses on sectoral actions and, to a lesser extent, horizontal measures to enhance the functioning of the Internal Market. The question arises, how the diverse parts of this proposal go together and whether the last initiative on industrial policy provides the European Union with a coherent approach which integrates industrial policy, sustainability, and the Internal Market agenda.

To evaluate the prospects of the Commission’s renewed interest in manufacturing and industry, the following pages therefore provide an overview of the characteristics and instruments of European industrial policy. Moreover the intersection with related policies in the field of sustainability will be examined in order to identify whether or not the turns of European industrial policy fit with European environmental, climate and energy policy. To this end the concept of “Eco-innovation” is illustrated, since it relates European industrial with energy, climate and environmental policies. The central question is, whether or not the recent turns in EU’s industrial policy put past efforts to combine economics and sustainability in jeopardy.

European Industrial Policy: An Overview

Notwithstanding the post-war attempts to develop common frameworks for Europe’s heavy the post-war attempts to develop common frameworks for Europe’s heavy and atomic industry, the European Economic Community had no legal basis and only very limited competences in the field of industrial policy until the mid 1980s. Industry policy therefore remained a national prerogative and a typical feature of many Member States. Only with the programme aimed at the completion of the Internal Market beginning in the mid-1980s, its formal establishment in 1992 and the widening of EU’s activity in competition policy, the relevance of the Community for industrial policy increased significantly: The governance of the Internal Market since then has – directly or indirectly – great effect on the operation of European industrial enterprises.

The incorporation of industrial policy into the Maastricht Treaty in 1992 hence represents the watershed between national and supranational predominance. Moreover, since Maastricht the Internal Market constitutes the main element of European level industrial policy (Pelkmans, 2006a: 5), binds national policies and excludes measures which might distort competition: Member States are committed to its functioning, dynamics and the resulting adjustments of industry to structural changes. Yet except for this theoretical core of EU industrial policy the transfer of competence for industry from Member States to the EU didn’t provide a working concept for this complex and multi-dimensional policy field. The incorporation into the Treaties therefore resulted in constant struggle between Member States with different national perspectives and interests.

These differences constrained the development of a coherent, integrated European approach to industrial policy and European measures ultimately represent a compromise between the principles of a free market and interventionist positions: whereas some Member States prefer the improvement of Europe’s competitiveness by means of favourable economic framework conditions, others underline the necessity for sectorial intervention in order to tackle specific problems and challenges. The application of unanimity rule until the Treaty of Amsterdam further complicated decision making during the 1990s. In the first years of European industrial policy individual measures therefore were scattered and fragmented (Brösse, 1999: 305).

Moreover, European industrial policy gradually shifted its focal point. Three different dimensions of (European) industrial policy can be identified in this respect: Framework conditions, horizontal and sectoral measures. On each of these dimensions two broad groups of policy instruments intervene in the economy: Rules which define the overall economic system in which industry operates, and capabilities which provide companies with the means to perform in the system (Bianchi and Labory, 2006: 20). Whereas the first group comprises legal provisions which define the rules and limits of economic competition, the latter group represents measures which provide industry with finance, infrastructure, knowledge, human capital etc.

Since its incorporation into the European sphere of policy making the focus of European policy gradually drifted from framework conditions and rules to horizontal measures and capabilities. In the last years the emphasis on sustainability, climate protection and environmental policies became the focal point for a sector specific European industrial policy, which underlines the importance of several key sectors and the necessity to develop certain industries. Apart from their actual targets with regard to the environment, world climate and resource preservation, these policies represent branches of a wider European strategy to develop an economy which is able to compete on future markets for “green” goods and services.

Framework Conditions

European industrial policy has its roots in the Internal Market agenda to remove all internal trade barriers between Member States and the principle of the widest possible non-interference with market operation. The Internal Market rationale therefore can be considered as the base for Europe’s policy towards industry: Negative market integration measures such as tariffs reduction, the abolishment of non tariff trade barriers and the limitation of subsidies fundamentally altered the framework under which European industry since operates. In its attempt to define a common European approach for industrial policy, the European Commission subsequently labled the Internal Market as “industrial policy par excellence” (European Commission, 1990).

Today the Internal Market provisions still represent the very heart of the EU’s economic set up. Introduced in view of significant efficiency and cost benefits, this framework still defines prospects and limitations of European industrial policy and the ability of policy makers to interfere with market conditions. But after the official completion in 1992, the proper functioning of the Internal Market became the new leitmotif (Aiginger and Sieber, 2005: 123): Further harmonisation, common regulation and mutual recognition has been regarded necessary to overcome and prevent ever new varieties of market failures. Furthermore, transport and infrastructure measures have been initialised in order to overcome non-tariff trade barriers which distort the free movements of goods and services in Europe.

Moreover the European Union pursues an active competition policy such as state aid prohibition and antitrust policy. As a result, sectoral industrial policy, which has been a common feature of Europe’s economy until the 1970s, strongly lost in importance. Yet the market rationale does not end at the EU’s borders: Beyond all the measures outlined above the European Union pursues an international free trade policy. As a result, global competition weights heavily on Europe’s less competitive industries, especially in the field of older, so called “sunset” industries such as steel and shipbuilding which suffer from massive excess capacity under the present market conditions. Growing heterogeneity between individual regions therefore made active regional, structural and cohesion policies necessary in order to narrow the gap between competitive and less developed parts of the EU.

Horizontal industrial policy

In view of growing global industrial competition and macro-economic uncertainties during the years after the formal completion of the Internal Market, the European Community gradually shifted towards a new approach towards industrial policy (Pelkmans, 2006a: 7): Structural adjustment of the European industry to the newly established framework conditions and the optimal allocation of resources gradually came to the centre. This realignment resulted in a new but heterogenic field of Community policies, which had been unknown on the European level prior to the 1990s. The scope of these policies is very broad and includes a variety of programmes which ultimately aim at the provision of a favourable business environment for Europe’s industry in order to improve global competitiveness.

During the 1990s several ad-hoc measures aimed to create a framework for investments such as industrial cooperation, fair competition and regulatory reform. The Bangemann report (European Commission, 1990) marks the beginning of this new phase of market intervention: While it underlined the responsibility of private firms for their own business development, the European Commission proposed to develop new measures and market institutions. In the wake of the failed Lisbon strategy the horizontal approach to industry policy was systematized, resulting in a set of Communications which examine ways to adjust EU’s industry to global competition (cf. European Commission, 2004; European Commission, 2005a; European Commission 2005b).

These documents emphasise two priorities: 1.) The improvement of the regulatory framework, and 2.) synergies between different Community policies. The first priority aims at “better law-making”, in other words, the simplification and improvement of such regulations which define the limits of businesses operations.  With an action plan on “Simplifying and improving the regulatory environment” (European Commission, 2002) and programmes such as SLIM Simpler Legislation for the Internal Market (European Commission, 2003) and BEST (on the Streamlining and Simplification of Environmental-Related Requirements), the European Union attempted to reduce the daily administrative burden for business, including alternative regulatory methods.

The second priority aims at maximisation of synergies between individual, interrelated Community policies which affect the competitiveness of Europe’s industry. Five main areas have been identified (European Commission, 2004): 1.) The usage of knowledge for the benefit of business by the coordination of European and national R&D, innovation and training policies; 2.) The further optimisation of the functioning of the Internal Market; 3.) Putting cohesion policy in the service of industrial and structural change; 4.) The promotion of sustainability, particularly sustainable production; 5.) Facilitation of access to markets outside the EU. On some of these fields the European Union has only limited competences and funding, though (Pelkmans, 2006a: 35).

Sectoral industrial policy

Global competition, high unemployment rates and low growth rates caused a renewed interest in sectoral industrial policy in the early 2000s: With the rapid ascent of China and the Eastern enlargement on the doorstep, fear of de-industrialisation and de-localisation was rampant. Moreover, economists recognised differing effects of horizontal measures on individual sectors and industries taken by the European Union. With its Communication “Fostering structural change: an industrial policy for an enlarged Europe” (European Commission, 2004) the European Commission therefore cautiously  emphasised the need of industrial policy tailored to the needs of each sector. Yet according to this document this doesn’t mark the return to (old-type) interventionist policies, but the adaptation of horizontal measures to specific needs.

Whereas the horizontal measures aimed at the overall improvement of  the economy’s performance, sectoral measures focus on particular sectors or a small segment of the EU’s economic system. This type of industrial policy potentially works in two ways: Either it supports older, sunset industries, preventing structural adjustment in order to avoid high unemployment rates, or it supports new, sunrise firms and technologies, which potentially lead structural change and modernization. Both forms bear specific risks: Whereas the first approach risks to preserve timeworn industries and the slowdown of the modernization process for the sake of short-term benefits, the latter may channel scarce resources into sectors, which will never turn out to be profitable.

With the Coal and Steal Community the sectoral approach to industrial policy lies at the beginning of the integration process. Yet this type of industrial policy is to a large extent abolished by the EU Internal Market framework. Old-type, interventionist sectoral industrial policy therefore largely disappeared since the 1980s, except for some remnants such as specific technology support for Airbus. In order to limit friction with Internal Market provisions, these exemptions are tailored to keep direct market intervention at a minimum. Moreover, new type European sectoral industrial policies resort to the improvement of factor inputs such as R&D promotion, trade policy (import protection), the surveillance of state aid (grants) and adjustment assistance from structural funds (cf. Pelkmans, 2006b: 301) .

Sustainablity as the new leitmotif for (sectoral) industrial policy?

In the aftermath of the EU’s apparent failure to accomplish the objectives of the Lisbon Agenda, the new Europe 2020 strategy gave industrial policy a new momentum: All main priorities of this multi-annual European strategy intersect with industrial policy one way or the other. Moreover, industry is one of the seven “flagship initiatives” which have been adopted by the European Union in order to translate the Europe 2020 priorities – smart growth, sustainable growth and inclusive growth – into detailed measures to reform the European economy. With its Communication “An Integrated Industrial Policy for the Globalisation Era” (European Commission, 2010c) the Commission addressed a number of barriers which still hamper the efficient allocation of resources in Europe and attempts to identify a new framework for industrial policy.

In order to realise a favourable business environment for Europe’s industry, the initiative lines out a number of measures to enhance the Internal Market’s full potential. Among other things the initiative calls for the improvement of legislation and regulation, the access to finance (especially for SMEs), and infrastructure (transport and energy), especially in the new Member States. Furthermore it calls for an  approximation of national law and proposes a new industrial innovation policy in order to encourage faster development and commercialisation of European industrial goods on the global market. Beyond these measures on the framework and horizontal dimensions, the initiative specifies measures for a number of individual sectors and technologies such as the aerospace industry, and resource- and energy-efficient technologies.

Moreover, the flagship initiative introduces the concept of sustainability and the Europe 2020 priorities for a resource efficient, green economy and sustainable growth as the new leitmotifs for Europe’s industrial policy. Hence, one of the key messages is the mutual consistency of environmental and industry policy: It recommends smart and market-based environmental regulation to develop innovative European markets (e.g. for bio-based products) which reward innovation in environmental goods and services, and hence stimulate energy- and resource efficient investments. In order to prevent competitive disadvantages and carbon leakage the Communication recommends to enhance innovation and action plan for eco-innovation.

Two other “flagships” – on “Innovation Union” (European Commission, 2010b) and “A resource efficient Europe” (European Commission, 2011a) – relate to industrial policy and the Europe 2020 priorities. Key message is the need for a framework which provides business with long-term certainty for investments in resource efficient solutions. EU’s Emission Trading System is outlined as one prime example in this regard and how to channel market forces towards innovative solutions for efficient use of resources. Moreover, the initiative on “Innovation Union” sets out a number of supporting measures at the EU’s disposal such as public support for R&D, which could increase the performance of Europe’s economy to develop innovative technologies.

In view of the financial crisis which hit Europe in 2008, the recent policy initiative from October 2012 recommends further measures to stimulate promising sectors of Europe’s industry. According to the Commission the EU should help to foster investment into six specific priority areas and industries of Europe’s economy, which potentially provide the key components for the short-, medium- and long-term development of Europe’s economy: 1.) Advanced manufacturing and technologies for clean production; 2.) Key enabling technologies such as micro- and nano-electronics; 3.) Bio-based products; 4.) Sustainable industrial policy, construction and raw materials; 5.) Clean vehicles and vessels; 6.) Smart grids.

By means of public-private partnerships, better coordination with Member States, funding for demonstration facilities and new labelling, standards and (simplified) regulations the Commission suggests to support these key priority areas. With several accompanying measures such as the development of an unitary patent system the European Commission furthermore proposes to improve the Internal Market. Likewise the Commission suggests to identify administrative burdens, regulatory overlaps an inconsistencies which hamper business. Furthermore the new initiative recommends a better mobilization and targeting of public financial instruments in order to unlock private funds and improve lending to the real economy.

Push and Pull: Eco-Innovation…

The recent emphasis of policy makers on support for individual sectors of Europe’s economy is rooted in the Europe 2020 strategy (European Commission, 2010a) which promotes the development of “green” industries in order to preserve and develop Europe’s world leadership in environmentally-friendly production, goods, technologies and processes. This European “eco-innovation” strategy is characterized by two sorts of policy tools: On the one hand by instruments such as carbon pricing and high environmental standards which “push” European industry towards targets set by European policy makers. On the other hand the European Union has instruments at its disposal which “pull” industry towards investments in innovative products, such as R&D and the distribution of knowledge.

European policy in the field of sustainability (such as the decoupling of growth from energy use or emission-reduction commitments) therefore can be regarded as tools to stimulate innovation in fields which are believed to be the key markets of tomorrow’s resource constrained, low-carbon future world. The overall concept is described in greater detail in the Eco-innovation Action Plan (European Commission, 2011), which states that growing environmental challenges and resource constraints worldwide will increase the demand for “green” technologies, products and services. According to the Commission, EU’s environmental policy therefore is the key to advance Europe’s traditionally resource intensive industry towards environmental friendly production and eco-services.

The new “eco-industries” supposedly provide Europe with a leading position as a net-exporter for industrial products such as automatic waste separation facilities and renewable power stations. But the recent collapse of Germany’s solar industry due to price competition from China shows how close competition on these markets is.  Between February 2006 and November 2007 the European Commission therefore set up a High Level Group on Competitiveness, Energy and the Environment (HLG). Bringing together several Member States, DGs and a broad range of stakeholders with the objective to examine the links between industrial, energy and environmental legislation the group was mandated to present recommendations for a regulatory framework which aggregates sustainability and competitiveness (European Commission, 2006c).

… by means of climate and energy policy

The HLG addressed the whole complex of climate, environmental and energy policies:  In view of world-wide potential and the competitiveness of Europe’s economy it recommended the promotion of low carbon and secure energy technologies by means of the EU’s energy and environmental policies. One of the main points under evaluation therefore were market conditions which could stimulate the successful commercialisation and early deployment of new technologies in the energy, climate and environmental sector. Key messages in this regard was the necessity for long term visions related to the regulatory environment, key environmental and energy mix choices in order to reduce uncertainties for investments (High Level Group on Competitiveness, Energy and the Environment, 2006: 4-5).

In order to develop the market conditions necessary to unlock the economic and environmental performance of European industry, the HLG proposed an internal (energy) market with minimum barriers for energy efficient and new low carbon technologies (High Level Group on Competitiveness, Energy and the Environment, 2007: 1). Regarding “push” instruments the group expressed its preference for the European Emission Trading System as the central instrument to provide appropriate economic signals for greenhouse gas emissions reduction, but recommended some changes to improve its functioning. However, the HLG was concerned about the market position of energy intensive industries exposed to global competition. The group therefore proposed to steer up efforts to reach a global agreement on climate protection.

With the European Coal and Steel Community (ECSC) and the European Atomic Energy Community (Euratom), energy policy lies at the beginning of European integration: When the treaties were signed coal had a share of 90 per cent of Europe’s prime energy consumption and atomic energy was supposed to become a revolutionary force for Europe’s economy. The attempts to create common markets for these energies therefore represents a bold step in the history of European integration. But the European competence to act was limited for many decades, and so was the ability to control the market as a community. Energy remained a national prerogative. Only with the oil price shock in the first half of the 1970s a “new energy strategy” was launched, shortly after followed by “strategic targets for 1985”. After the adoption of the Single European Act which paved the way for the Community’s Internal Market, the European Commission presented a Working Document on the Internal Energy Market (COM(1988) 238), which proposed a number of concrete measures to establish a deeper integrated market for energy products. Yet the attempt of the European Commission to include a separate chapter on energy into the Maastricht Treaty: Several Member states with large energy resources opposed an integration. It wasn’t until March 2007 that the EU adopted its first energy action. And with the Lisbon Treaty, more precisely, Art. 194(1) of the Treaty on the Functioning of the European Union, an explicit competence of the Community for energy policy has finally been established.

On the “pull” side of European “eco-innovation”, the HLG underlined the responsibility of business for innovation and technology, but pointed out the necessity to assist industry to overcome market failures which delay the adoption of energy efficient technologies. In order to support the market uptake of new technologies, the HLG therefore recommended the establishment of a strategic European Energy Technology Programme to create a platform for research and to accelerate technology deployment. Moreover the HLG recommended to collaborate with the European Investment Bank and financial markets to develop finance packages specifically aimed at SMEs to speed up technology deployment.

In the wake of the financial crisis of 2008 the concept of “eco-innovation” found its way to the core of European policy, as the European Council declared to jumpstart the economy with investments in infrastructure, green technology, energy efficiency and innovation to accelerate the transition to a knowledge-based, low-carbon society. Eventually many elements of the HLG recommendations found their way to EU policy. Eventually energy and climate change package of 2009 became the centrepiece of today’s European policy. Core elements are the revision of the Emission Trading System (European Union, 2009a), which sets a goal of greenhouse gas emissions reduction of 21 per cent below 2005 levels, and the revision of the renewable energy directive, which sets a target of 20 per cent renewables in Europe by 2020.

The Emission Trading System is a prime example for the “Pull” side of European policy to modernize the industrial base of its economy: Industrial facilities in the system are allocated a quantity of emission allowances which corresponds with historical figures less a determined reduction commitment (cap). In order not to exceed the scheduled emissions, the companies concerned are forced either to innovate production processes to reduce emissions, or to buy certificates from companies which have been more innovative in emissions reductions and hence have free emission allowances (trade). Economically this puts a price on greenhouse gas emissions (that is the estimated costs for environmental externalities), which industry has to include in their financial planning, which supposedly causes innovation to render production processes.

The revised directive renewable energy (European Union, 2009b) was originally proposed as the Emission Trading System’s counterpart on the “Pull” side, with a harmonized instrument to support the operation of energy systems, which not reached market maturity. Yet despite serious efforts, the attempts of the European Commission to promote harmonization on the basis of a system of tradable certificates analogue to the ETS failed to convince all sides. A harmonization of the different national instruments therefore did not take place and the support schemes largely remain a national prerogative. Member States pursue national targets (set by mandatory national allocation plans) with their individual support systems.

The discussions on support mechanisms for renewables have been focussed on the failure of today’s power market to internalise the external costs of fossil fuels, thus discriminating clean alternatives. But market failure is not the only cause which hampers deployment of renewables. Apart from the open question with regard to support mechanisms, the revised directive from 2009 therefore provides a range of promotion measures which aim at the reduction of administrative and technical barriers to the deployment of renewables: Member States are obliged to ensure the proportionality and necessity of national rules concerning the authorisation, certification and licensing procedures which concern the use of renewables. Moreover the directive compels Member States to develop a grid infrastructure which allows the operation of RES.

Financial support for selected technologies and demonstration projects from FP7, Cohesion and other funds represent other market uptake measures of the European Union in the energy, climate and environmental sector. Moreover, with the Joint Research Centre and the European Energy Institute the European Union provides its own science infrastructure. The SET-Plan (European Strategic Energy Technology Plan) however represents the main cornerstone of Europe’s technology policy. With SET the European Union identified measures to accelerate development and deployment of several key technologies for Europe’s future energy system such as CCS, PV, smart grids, energy efficiency, renewables and nuclear energy. The support measures for these technologies comprise common planning, steering, financial backing and international cooperation.

Conclusion and Outlook

European Union policy in the fields of industry, energy and environment have in common, that they drifted from the periphery of the European Union concerns to the very core of today’s EU policies: Energy policy stands at the very beginning of European integration process, but for decades it was of marginal significance for European politics. Environmental and industrial policy on the other hand mainly date back to the Internal Market agenda. Since the 1970s the three fields developed from mere sidekick aspects to main pillars of the European Union. In the course of this development the three policies also evolved internally. In this respect it is noteworthy, that each of the three policies went beyond the original motive to ensure the functioning of the Internal Market.

The emphasis of industrial policy slowly shifted away from framework and horizontal aspects to sectoral policy. On the other hand environmental, and to a lesser extent energy policy, moved beyond the Internal Market rationale and fused together in a innovation strategy with sustainability (and climate protection) as its leitmotif. It is a logically consistent step to include sectoral industrial policy of a new, non-interventionist type into this equation and to develop this “eco-innovation” strategy further. With regard to the European economic crisis the last developments in European industrial policy therefore may turn out to be the missing link for the recovery of Europe’s economy.

Hence, industrial, energy and environmental policy nowadays form the heart of Europe’s “eco-innovation” strategy. This strategy supposedly provides Europe’s economy with an excellent starting position for global economic competition in the 21st century. The new policy proposal by the European Commission consistently fits well into prior developments of this approach. It constitutes the logical consequence of the last two decades of European efforts which first blended energy, climate and environmental policy together to a relatively sound innovation strategy to stimulate the modernization of Europe’s economy. The sustainability concept points in the same direction.

Thus, according to numerous European initiatives, three policies under investigation – industrial policy, environmental policy and energy policy – are densely interwoven and mutually reinforcing these days: European industrial policy stimulates the development of a resource-efficient manufacturing sector for “green” products and services. This modern form of production is environmentally friendly and based on all sorts of renewable primary products. A decisive role in this respect plays the energy sector, which interconnects many elements of this strategy: The development of an Europe-wide, “smart” energy infrastructure would stimulate economic development, and – as a result – allow the use of renewable energy sources, which power new and eco-friendly products such as electric cars.

Theoretically this vision is compelling. Yet legislative proposals and strategy papers cannot replace human ingenuity and creativity. In reality the levers at the disposal of the European Union to stimulate such a development are fewer and contradictions between the three policies are numerous. As example may again serve the European initiative to transform the European energy system towards widespread use of renewables and a European Internal Electricity Market. The construction of an energy system which is based on low-carbon technologies and smart grids of continental proportions, is of course a visionary and suggestive project. Yet until this day it is unclear how the different national power systems will interact in practice.

Economic cost-benefit analysis in the Internal Electricity Market might subvert the development of renewables and cause a recoil towards traditional forms of electricity generation. In such a situation the European Union has only limited options. Moreover, the most prominent example of a centralized regime to pull Europe’s economy in the direction of eco-innovation – the Emission Trading System – doesn’t show the results envisaged by European policy makers and lobbyists. Therefore it can be called into question whether regulatory fine tuning of the Internal Market and diverse accompanying measures such as R&D support and infrastructure measures are powerful enough in order to overcome investment insecurities and to push or pull Europe’s economy towards political targets.

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IES Policy Forum coming up!

Environmental Policy Forum

Benelux: Test case for Europe’s energy transition

Date, Place

12:00-14:30, Institute for European Studies, Pleinlaan 5, 1050 Brussel

The Institute for European Studies, in cooperation with the Institute for European Environmental Policy, kindly invite you to attend the upcoming policy forum on – Date – with:

  • Dominique Gusbin, Federal Planning Bureau (BE)
  • Machiel Mulder, Benelux Association for Energy Economics
  • Pierre Schlosser, Eurelectric
  • Speaker on Flanders

Europe’s power system is in transition: From 2014 onward, the diverse national power systems should be integrated in one single market which interconnects about 500 million consumers and allows to trade electricity freely across Europe. Besides, large scale integration of renewables into the power system constitutes a factor, which increasingly stimulates modification of Europe’s power system: Due to national limitations for absorbing large volumes of intermittent renewables like wind and solar power at peak hours, network fluctuations will increase and exacerbate cross border exchange of electricity. The European electric power industries therefore face the challenge to operate in an environment which progressively demands changes in the way electricity is generated, internationally traded and provided to the consumer. The complexity of these changes makes long term political decisions and investments into the energy system more insecure than ever.

It is therefore time for a deeper look into the regional interplay between the different components of the European energy system. The Benelux countries provide an excellent test case in this respect, since they constitute the intersection point of two main components of Europe’s future energy system: France with its massive nuclear energy sector and Northern Europe (together with Germany) with its high share of renewables on the other. Moreover, with the ports of Rotterdam and Antwerp this group of countries is connected with the world’s markets for all sorts of energy carriers – traditional e.g. coal, or innovative, e.g. biomass. Altogether this makes the Benelux countries an ideal testing ground for the dynamics of the European energy system. Special attention in this respect is warranted to the case of Belgium, which recently committed itself to phase out nuclear power until 2025, which is a formidable task regarding the country’s limited capacity for renewable energy.

Against this background, the speakers at the IES Environmental Policy Forum will discuss the last developments of European energy policy, its regional implications for the Benelux countries, and the implications of Belgium’s nuclear phase-out in this respect. Thereby the speakers will address the following questions:

  • Energy policy in Europe: Do the different pieces fit together?
  • Nuclear and renewables: What model for the Benelux countries?
  • Belgium’s nuclear phase-out: What alternatives to atomic energy?
  • Flanders/Wallonia: Renewables still be operational in the Internal Electricity Market?