Speech by Vice-President for Energy Union Maroš Šefčovič at the Hannover Messe 2016

Ladies and gentlemen,

It’s great to be back at Hannover and see this exceptional gathering of some 5,000 exhibitors from Germany, the US, Europe, including my home country of Slovakia, and the entire world.

Last Friday I was in New York to sign the climate Paris Agreement. There was a great atmosphere; over 170 countries signed the Agreement. We could literally feel the commitment by all countries to adhere to this deal.

As we all know, climate change is a global challenge. At the same time, we have a huge part of humanity which aspires to development, to a better life and who needs more, not less energy. The only way to solve this trade-off between energy and climate is through the deployment of low-carbon technology and innovation.

This is all the more true in developing countries. I was in a meeting, convened by President Hollande and African leaders.

Currently two thirds of the African population have no access to energy and light. Yet, Africa is undergoing a demographic growth of unprecedented magnitude, in 30 years a quarter of the world's population will be living in this region. The electrification of the African continent is therefore one of the greatest challenges ahead of us.

If we want the energy transition to be successful, we have to unleash the potential of new breakthrough technologies and transformational innovation.

Ladies and Gentlemen,

We are at the beginning of a new era with smarter and cleaner technologies in all areas of our economy and society. We are living through a paradigm shift which some call another "industrial revolution", a radical transformation of the way we live, interact, produce, consume, do business, commute etc.

According to world-renowned economist, Jeremy Rifkin, industrial revolutions of the past happened each time there was a simultaneous technological breakthrough in the fields of energy, communication and transport. New energy sources of the past allowed civilisations to redefine their limits, yet, they require new forms of communication for organising and managing the increased complexity.

The current industrial revolution is in some ways as profound and disruptive as the previous ones; nourished by several technological breakthroughs coinciding and mutually beneficial: the combination of new renewable energy and storage technologies, the appearance of electric cars, the hyper-connectivity of our devices through the "Internet of Things", and the ability to produce and analyse 'big data'. This is the new game-changer.

But the prodigies of each generation were those who were able to connect between very different industries. In the modern world, innovators are people who can come up with new integrated solutions!

Ladies and Gentlemen,

This transformation offers us tremendous opportunities. We can fight climate change and allow economies to grow; we can provide for more energy and clean air; we can smarten our industrial production and our transport systems, and we can improve the quality of life and create millions of new jobs worldwide at the same time. The Commission estimates that the EU workforce in the low carbon energy industry at around 9 million people. Perhaps more interestingly, we expect this number to double by 2030!

So this transition to low carbon economy can represent a goldmine for jobs and growth. The new El Dorado if you will.

How can we remain at the forefront of this transformation?

First, we have managed to show the way by decoupling growth from emissions: our economy grew by 46% since 1990 while we reduced our greenhouse gas emissions by 24%. This has given us a first-mover's advantage.

Second, Europe is already a world leader in many advanced technologies. We need to build on our strong position in renewable energy (wind, PV inverters, concentrated solar power, ocean energy), nuclear, smart grids, buildings and cities.

Third, the EU is recognised as a global leader in fighting climate change. Paris was a historic success for the global community, but also the European Union which showed unity and global leadership. Europe was instrumental to building the 'High Ambition Coalition' of developed and developing countries.

There is therefore real reason for optimism; despite past and present difficulties. Paraphrasing the famous slogan of today’s most prominent guest: “Yes, Europe can”! And it's not enough that 'we can'. We will!

I saw for myself the interest around the world for renewables, for energy efficient technologies, but also for Smart City and digital solutions. Urban actors play a key role in developing integrated and sustainable solutions. Two days ago I met with Michael Bloomberg to discuss the means to develop synergies between the Covenant of Mayors (representing over 6,000 cities around the world) and the Global Compact - which together would represent more than 600 million urban inhabitants. Cities are key enablers of the energy transition. The local actors' commitment to reaching ambitious climate and sustainability goals is therefore what will deliver.

The need for global investment in clean technologies is significant. The International Energy Agency estimated that the implementation of the Paris commitments will require USD 16.5 trillion by 2030 (EUR 14 trillion).

This holistic approach must apply to the smartening of our systems. We need to make sure that - through a dedicated instrument - smart financing is allocated to smart buildings and even extend to smart infrastructure and transport in the cities and regions that are embarking on the low-carbon transition.

Ladies and Gentlemen,

When Jean-Claude Juncker was elected President of the European Commission, he made the establishment of a European Energy Union with a forward-looking climate policy - one of the top priorities for this Commission.

And by the end of this year we will have to put 90% of our deliverables on the table. To give you a few examples; the new electricity market design will be crucial because it is about giving the right signals to drive innovation.

We will review our legislation on Renewable Energy Sources, our Energy Efficiency and Energy Performance of Building Directives.

We are also working on a communication to decarbonise and smarten our transport, as part of our non-ETS package.

The Energy Union shall tap into the potential of the European Single Market by allowing energy to flow freely across borders; it shall guarantee a secure supply of energy everywhere in Europe; and it shall unleash the potential for new technologies and innovation for decarbonising our economy. The conviction behind this project that we can achieve our goals of secure, affordable and sustainable energy in a much cheaper and faster way together than with 28 different national policies.

The brightest ideas and best technologies do not help us, if they are not taken up by the market: the industry and the consumers (or households).

There has to be business case to invest and a reason to buy and use these technologies.

We must therefore create an enabling environment for low-carbon technologies.

One of the first actions of the newly elected European Commission was to look for a plan to mobilise private investment. The Juncker Plan aims at three things: mobilising private capital, supporting to build a pipeline of viable and bankable projects and overcoming barriers to investment. Among the priority areas are renewables, energy efficiency and infrastructure.

The European Fund for Strategic Investment or “Juncker-Fund” has supported so far 222 projects and triggered €82 billion of investment with an input of EUR 10 billion from the Fund. The goal of mobilising a total investment of €315 billion is clearly within reach. The area with the most funded projects is the energy sector.

With regard to the Energy Union more specifically, the first enabling aspect that I would mention is a carbon price that sends the right signal. It is uncontested that it is currently too low. Therefore, we proposed last July a reform of the Emission Trading System for the time after 2020. The proposal is now on the table of the European Parliament and the Member States, and the political debate has started. While in Paris for COP21 I also proposed that we help develop globally and link up with other carbon markets (e.g. China and South Korea). In New York President Hollande was also calling for a global carbon price system. We need to step up the work in that direction.

Our innovation strategy needs to take into account all the new mega-trends of the energy system of the future such as:

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  the increased decentralised energy generation including a larger share of variable renewables, which demands greater flexibility (storage, smart grids),
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  the active role of consumers (or prosumers) into the energy system (demand response, self-consumption, smart appliances),
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  the electrification of transport and its impact on all our networks,
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  the increased digitalisation of our energy system which contributes to the smartening of our homes, of the grids, of our transport system etc.

The energy transition is thus a multidimensional challenge - technology, business, supply chain, human capital, regulation, etc. All dimensions are interlinked: it requires a multidimensional and multi-disciplinary approach.

This is why we decided to come up towards the end of the year with an integrated Research, Innovation and Competitiveness Strategy for a low-carbon economy that will reinforce the synergies between energy, transport, the circular economy, and industrial and digital innovation.

This is vital to make Europe the world leader in renewable energy sources, to make our energy system smarter and more consumer-focused, and to develop the next breakthroughs in storage, transport or building technologies, to name just a few.

One of the key objectives of the strategy is to better connect the EU's support for research and innovation with the strengthening of the EU's competitiveness and the central place of EU industries in relevant global value chains.

Finally, a word on governance: We have to ensure at EU level that the objectives that all 28 Member States have subscribed to are actually achieved. We will have legislation in a number of areas like the ETS system.

But we also want all 28 Member States to adopt National Energy and Climate Plans. The energy transition needs forward-planning, consistency and predictability. Companies, investors, citizens need to know where the priorities are. No one will invest in or buy new technologies if every few years, the orientation and policies change.

We encourage governments to discuss these national plans with all stakeholders, but also with their neighbouring countries. We will therefore continue to promote regional approaches to the energy transition, and - as part of this year's State of the Energy Union - issue regional guidance so that the Member States can cooperate more efficiently.

This process will allow us to compare and discuss the 28 national plans at European level and ensure that they add up and are mutually reinforcing.

The changes ahead of us are very exciting. The European Union offers us the possibility to embark on this journey together as a continent and benefit from opportunities which one country alone could never seize.

Thank you very much for attention.

SPEECH/16/1573

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