Thematic seminar: Sustainable growth

Thematic objective IV: Supporting the shift towards a low-carbon economy in all sectors 30 May 2012
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Outline
Europe 2020 flagships and relevant headline targets Overall context for cohesion policy investments in sustainable energy, including links to investments in research and innovation and ESF investments General implementation principles ERDF and CF investment priorities, with key actions, related ex ante conditionalities and guidance Common indicators
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Europe 2020 flagships and relevant headline targets

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Europe 2020: 7 flagship initiatives

Sustainable energy included in all (except the one on youth)

Smart Growth
Innovation Innovation Union

Sustainable Growth
Climate, energy and mobility Resource efficient Europe Competitiveness An industrial policy for the globalisation era

Inclusive Growth
Employment and skills An agenda for new skills and jobs Fighting poverty European platform against poverty

Education Youth on the move Digital society A digital agenda for Europe

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Europe 2020 headline targets on climate change and energy

A reduction in EU greenhouse gas emissions of at least 20% below 1990 levels (30% if conditions are right) 20% of EU energy consumption to come from renewable resources A 20% reduction in primary energy use compared with projected levels, to be achieved by improving energy efficiency

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Overall context for cohesion policy investments in sustainable energy, including links to investments in research and innovation and ESF investments

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Cohesion Policy investments in Sustainable Energy Context

Cohesion Policy provides the major EU level investment framework for EE/RES, accompanying the EU regulatory framework CSF: "The ERDF, Cohesion Fund and EAFRD can contribute to accelerating the implementation of EU legislation on renewable energy and energy efficiency, in particular the Energy Performance of Buildings Directive, the Energy Services Directive, the Renewable Energy Directive and the Strategic Energy Technology Plan."
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PROPOSED FOR 2014-2020: MINIMUM SHARE OF ERDF INVESTMNETS ON: - Shift towards a low carbon economy - Research & innovation - Competitiveness of SMEs
6 % 80 %
20%

50 %

More developed & transition regions

Less developed regions

Based on overall amounts proposed: Min. EUR 17 bn for low carbon economy in 2014-2020 (ERDF) Large increase from 2007-2013 when EUR 9.4 bn allocated to energy efficiency (EE) and renewable energies (RES) 8 No more ceiling for investing in energy in housing (currently max 4% of ERDF)
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Regional / National R&I Strategies for Smart Specialisation

Research & Innovation

Specific CP funding on sustainable energy

Integrated Sustainable Urban Development

Investments in sustainable energy for socio-economic development through Cohesion Policy (CP)
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Links to investments in research and innovation

Proposed ex ante conditionality for investments in RTDI: Research and Innovation Strategies for Smart Specialisation National/regional strategies which are integrated, place-based economic transformation agendas that:
1) Focus policy support and investments on key national/regional priorities, challenges and needs for knowledge-based development; 2) Build on each country's/regions strengths, competitive advantages and potential for excellence; 3) Support technological as well as practice-based innovation and aim to stimulate private sector investment; 4) Get stakeholders fully involved and encourage innovation and experimentation; 5) Are evidence-based and include sound monitoring and evaluation systems.
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What is Smart Specialisation ?

= evidence-based: all assets = no top-down decision, but dynamic/entrepreneurial discovery process inv. key stakeholders = global perspective on potential competitive advantage & potential for cooperation = source-in knowledge & technologies etc. rather than reinventing the wheel = priority setting in times of scarce resources = getting better / excel with something specific = focus investments on regional comparative advantage = accumulation of critical mass = not necessarily focus on a single sector, but cross-fertilisations

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Innovation for Green Growth

Innovation and Green Growth are interdependent: two sides of same coin! Develop regional strategy/approach to foster green growth though innovation. Key areas such as energy efficiency and renewables, ecoinnovation, resource efficiency, water, transport, ecoconstruction, bio-based products

Upcoming Guide by DG REGIO on Innovation for Green Growth will provide practical guidance on HOW regions can build synergies between innovation and green economy to boost growth, jobs and preserve the environment.

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Links to ESF investments

"The ESF should contribute towards the shift towards a low carbon economy through support for the early detection of labour and skill needs and shortages, the reform of education and training systems, the adaptation of skills and qualifications, the up-skilling of the labour force to improve its employability, and enhancing the creation of new jobs in sustainable low carbon industry and energy sectors."

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General implementation principles

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CSF: General implementation principles low-carbon economy (1)

The bulk of investment in this area should be made by the private sector. MS and regions should ensure that public funding complements private investment, leveraging it, and not crowding it out. In the EE sector, the option of creating value for energy savings through market mechanisms (energy saving obligations, energy service companies, etc) should be considered before public funding.
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CSF: General implementation principles low-carbon economy (2)

Financial instruments should be supported where the potential for private revenue or cost savings is large, including revloving funds and guarantee schemes. In case of physical investment, grants should be used primarily to address market failures or support innovative technologies and investments goind beyond cost-efficient EE performance, thus making sure that energy savings and GHG emission reductions are above those attainable with business as usual.
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Financial instruments
Forthcoming JESSICA "horizontal studies":

Urban Development Fund handbook Energy Focused Urban Development Funds Housing in JESSICA operations JESSICA for Smart and Sustainable Cities Marketing and Communication Socio-Economic Performance

All expected by end July 2012

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ERDF and CF investment priorities, with key actions, related ex ante conditionalities and guidance

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Investment priority (a): Promoting the production and distribution of renewable energy sources
CSF Key actions for the ERDF and the CF: Innovative renewable energy technolgies, in particular technologies mentioned in the SET-Plan and in the energy Roadmap 2050, along with second and third generation biefuels Supporting marine-based renewable energy prioduction, including tidal and wave energy

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Ex-ante conditionality RES*

Actions have been carried out to promote the production and distribution of renewable energy sources (OJ L 140, 5.6.2009, p. 16) Criteria for fulfilment: Transparent support schemes, priority in grid access or guaranteed access and priority in dispatching, as well as standard rules relating to the bearing and sharing of costs of technical adaptations which have been made public are in place consistent with Article 14 (1) Article 16 (2) and 16 (3) of Directive 2009/28/EC: support schemes in place in all MS; grid access/cost sharing rules: work in progress/degree of progress varies A Member State has adopted a national renewable energy action plan consistent with Article 4 of Directive 2009/28/EC: 27 EU MS
* Presidency compromise text, April 2012
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The EU Emissions Trading System (ETS) a system based on the "cap and trade" principle
CP regulatory proposal: The ERDF and the CF shall not support the reduction of greenhouse gas emissions in installations falling under Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community This point on exclusion of funding for emission reductions in the ETS sector is important for ensuring consistency and complementarity with the ETS. As the ETS is capped, there is no benefit in funding emission reductions in this sector, since the overall cap (and therefore emissions) do not change.
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Context Financing of RES

CSF: "Support from CSF funds should complement support schemes for renewable energy."

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RES policy commitments (1)

Key EU documents: Renewable Energy Directive (MS binding targets, RES use in buildings and public infrastructure). Strategic Energy Technology plan: wind, solar, bioenergy (including 2nd generation biofuels), geothermal, marine energies. Key Member State documents: National Renewable Energy Action Plans for meeting the 2020 RES targets (MS technology choices; support measures) National Renewable Energy Progress reports (2011)
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RES policy commitments (2)

Capacity increase needed in all RES technologies. By 2020*:
Wind the main RES technology in electricity (40% compared to 25% 2010) Solar/PV electricity 9% (3% 2010) Biomass in heating and cooling 80% (90% 2010) Solar thermal in heating and cooling 6% (2% 2010) Transport: 2nd generation biofuels + RES-E

Innovative renewable energy technologies - SETPlan

* Source: NREAPs of 27 EU MS
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SET Plan Industrial perspective

Focus on technologies with market impact up to 2020
Wind Solar Electricity grids CCS Bioenergy Nuclear Smart Cities and Communities Fuel cells and hydrogen

Industrial applications Financing

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SET Plan technologies R&D investments

Corporate R&D investment (2007)

24%

Public EU (FP6; annual average)

ca. 2.38 billion

69%
Public R&D spending of EU Member States (2007)

7%

SET Non nuclear technologies R&D spending 2007 Most of the R&D energy spending is focused in 4 countries: Germany, France, Italy and Spain More can be done in other Member States
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Future perspective
Horizon 2020 Energy Challange: EUR 6.3 billion (20142020), including ca EUR 1 billion for the IEE III Risk Sharing Financing Facility: EUR 1.1 billion (2014-2020)
Focus suggestions for Cohesion Policy
Wind: Testing and manufacturing infrastructures Solar: Potovoltaics: Testing and manufacturing infrastructures CSP: First of kind projects/first commercial scale projects

Bioenergy: First of a kind projects for second generation biofuels Smart cities and communities: Energy efficiency in districts of buildings, energy networks and local supplies, transport, ICT
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Links to Research and Innovation Strategies for Smart Specialisation

In assessing their position and assets in the context of the development and the subsequent implementation of their strategies, MS and regions are invited to make full use of the knowledge developed in the framework of the SET-Plan and the Intelligent Energy Europe Programme. A certain number of regions can be expected to decide that they will focus Cohesion Policy resources for RTDI in the area of RES.
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Investment priority (b): Promoting energy efficiency and renewable energy use in SMEs
CSF Key actions for the ERDF and the CF: Energy efficiency measures and renewable energy use in SMEs (including information campaigns)

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Existing experience
A body of experience available through the Intelligent Energy Europe Programme database http://www.eaci-projects.eu/iee/page/Page.jsp Energy audits pre-condition for investments Setting minimum requirements on energy savings/RES generation to be achieved highly recommended Financial instruments providing loans/guarantees along with the TA and incentives good way to improve the access of SMEs to EE/RES investment financing and mobilize the provision of credits
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Investment priority (c): Supporting energy efficiency and renewable energy use in public infrastructures (ERDF and CF) and in the housing sector (only ERDF)
CSF Key actions for the ERDF: Investment in the wider use of Energy Performance Contracting in the public buildings and housing sectors CSF Key actions for the ERDF and the CF: Energy efficiency and renewable heating and cooling in public buildings, in particular the demonstration of zero-emission and positive-energy buildings, as well as deep renovation of existing buildings to beyond cost-optimal leves
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Ex-ante conditionality EE*

Actions have been carried out to promote costeffective improvements of energy end use efficiency and cost-effective investment in Energy efficiency when constructing or renovating buildings. Criteria for fulfilment:
The actions are: Measures to ensure minimum requirements are in place related to the energy performance of buildings consistent with Article 3, Article 4 and Article 5 of Directive 2010/31/EU. Measures necessary to establish a system of certification of the energy performance of buildings consistent with Article 11 of Directive 2010/31/EU. Measures consistent with art. 13 of Directive 2006/32/EC on energy enduse efficiency and energy services to ensure the provision to final customers of individual meters in so far as it is technically possible, financially reasonable and proportionate in relation to the potential energy savings.
* Presidency compromise text, April 2012
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Why focus Cohesion Policy support on Sustainable Energy in Buildings?

A WIN-WIN-WIN OPPORTUNITY: Regional Development/Social Cohesion/Energy Savings Creating new and sustainable jobs; Building local and regional capacities; Creating local opportunities for R&D and innovation; Lowering energy consumption and improving security of energy supply; Reducing energy costs and alleviating energy poverty (in the case of residential buildings); Improving the quality of residential/public/ commercial buildings; Reducing greenhouse gas emissions and improving the local environment. Regional
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Energy Performance of Buildings Directive

Setting the framework for investments through;
Minimum energy performance requirements (EPRs) for new buildings and buildings undergoing major renovation Cost-optimal methodology requiring minimum EPRs to be set at cost optimal levels Energy performance certification of buildings and inspections for heating and air-conditioning systems System requirements for new, replacement and upgrading of technical building systems at least for heating, hot water, air conditioning and ventilation

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 while ensuring an integrated approach!

Importance of energy efficiency of buildings, but linking to and ensuring coherence with general elements which ensure the investments' sustainability (with respect to occupation and obsolescence) Importance of the other investments which determine the environment of buildings or houses: public spaces, shopping areas, schools, accessibility of transport and services, etc. Modernising houses and buildings is a "necessary but not sufficient" condition to guarantee the quality of life in cities
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What is Energy Performance Contracting (EPC)?

A procurement model which supports demandside EE measures in buildings. Brings a customised and integrated approach to delivering EE projects encompassing planning, construction, financing, and operation and maintenance of energy conservation measures. Benefits for property owners:
No upfront capital investment; Transferring technical and performance risk to a third party (Energy Service Company, ESCO); Guaranteed cost savings in line with energy reduction; Providing a means of renewing obsolete assets; and Overcoming public procurement barriers.
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Illustration of "Guranteed savings" EPC model

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Further assistance/experience
Number of innovative projects demonstrated under ELENA Facility and Intelligent Energy Europe Programme Guidelines for MAs on evaluation of EE projects in buildings under development Timing? EIB-EPEC is on awareness-rising tour for MAs contacts in MS needed Specific action on capacity building of MAs foreseen in the IEE WP 2012 Build-up skills: Potential for expansion through the ESF (MS roadmaps for workforce qualification)
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Links to Research and Innovation Strategies for Smart Specialisation

Public authorities expected to take an exemplary role, e.g. in engaging in state-of-the-art renovation of public buildings for improved energy efficiency (demand side). In doing so, they are invited to build on results from research projects under the Energy-efficient Buildings (EeB) PPP and other relevant EU level and national research. A certain number of regions can be expected to decide that they will focus Cohesion Policy resources for RTDI in the area of EE of buildings.
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Investment priority (d): Developing smart distribution systems at low voltage levels
Key actions for the ERDF and the CF: Integrated low-carbon strategies and sustainable action plans for urban areas, including public lighting systems and smart grids

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Why Smart Grids/Metering systems?

Smart Grids are the key enabling solution for the low-carbon economy:
Smart grids integrate energy supply, digital information, communication and services among all actors connected to the grid: prosumers, market actors and grid operators. Bidirectional communication of smart grids increase the flexibility of the energy systems and makes possible large-scale integration of distributed energy resources (RES, electric vehicles, cogeneration, storage, etc.), demand response and home automation systems. It creates jobs and economic growth at local/regional level and enhance competitiveness, security of supply and energy saving at all levels. Implementation of smart metering systems are a first step towards the deployment of smart grids.
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Experiences and future perspectives

Smart Grids enable reductions of global emissions by 15% and can reduce EU primary energy consumption by 9%. Over 5.5 billion invested in some 300 Smart Grid projects over the past decade in Europe. Consumers with smart meters have reduced their consumption by 5-10% in many cases. Some pilots suggest that actual energy savings can be even higher. Low carbon energy industry to date has generated 1.4m jobs in EU. Research in US has indicated that up to 280 000 new jobs could be created by Smart Grid deployment, with more than 50% retained beyond the deployment phase. Only about 15% of EU households have some sort of smart meter installed; the cumulative investments in the EU are estimated at up to 40bn in next 5-8 years by installing 200m of smart meters. It is estimated that expected investments are roughly 15% for smart metering deployment and 85% to upgrade the rest of the system towards Smart Grids (ca. 280bn).
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Legal framework for the roll-out of Smart Metering

Transposition of Art. 3 and Annex 1.2 of Directives 2009/72/EC and 2009/73/EC on internal energy market for electricity and gas: MS shall develop a plan for implementation of smart metering systems It might be subject to a long-term cost/benefit analysis, ready before 3September 2012 At least 80%of smart electricity meters should be installed by 2020 Investments should be in line with Commission Recommendations C(2012)1342 on preparing the roll-out of smart metering systems, covering: Data privacy and security Methodology to carry out the cost/benefit analysis Common minimum functionalities of smart metering systems
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Why Cohesion Policy should support investments on Smart Grids

Public investments in local/regional smart grid pilot projects will substantially help to remove existing technical and non-technical uncertainties associated to the full deployment at national/EU level Investments on Smart Grids will have substantial cross-cutting impacts at local/regional level
Stimulating innovative investments in LV-DSO systems by opening business opportunities to new/local entrants, of both ICT and Energy sectors Promoting new energy services at local level which improves local market transparency and retail market competition Empowering local consumers by active energy management and demand response services Optimising local/regional exploitation of large-scale distributed energy resources Improving flexibility, quality and reliability of the LV-DSO systems
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Investment priority (e): Promoting low-carbon strategies for urban areas

Key actions for the ERDF and the CF: Integrated low-carbon strategies and sustainable action plans for urban areas, including public lighting systems and smart grids.

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Reference Framework for Sustainable Cities (RFSC) Joint initiative of MS, urban stakeholder organisations and the Commission (REGIO) to create a web-tool for cities that promotes integrated sustainable urban development. The RFSC is an attempt to put the principles of the Leipzig Charter, adopted in 2007 by EU-27 Ministers in charge of urban and spatial planning, into practice. Call for tender has been published by the Commission to contract services to support the RFSC dissemination phase in 2012/2013.
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Covenant of Mayors Smart Cities & Communities Delivering low-carbon strategies

3965 cities involved in development and implementation of sustainable energy actions More than 1300 Sustainable Energy Action Plans (low carbon strategies) submitted, visible at http://www.eumayors.eu/actions/sustainable-energyaction-plans_en.html 100 Coordinators involved (mostly regions and provinces) visible at www.eumayors.eu Regular capacity building of signatories and coordinators, efficient vehicle for future MFF Link to the Smart Cities and Communities initiative (technology driver)
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Common indicators

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Common indicators Low carbon economy

Additional capacity of renewable energy production (MW) Number of households with improved energy consumtion classification Decrease of primary energy consumption of public buildings (kWh/year) Number of additional energy users connected to smart grids Estimated decrease of GHG in CO2 equivalents (tonnes of CO2eq)
Upcoming guidance by DG REGIO also on a CO2 assessment tool of OPs; will enable authorities to assess CO2 impacts of investments.
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For more information

Thematic Task Force Sustainable Growth:
http://myintracommcollab.ec.europa.eu/dg/REGIO/Sustainable %20Growth/default.aspx

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