Reinhard Bütikofer is the industrial policy spokesperson of the Greens/EFA and the Rapporteur on a European Industrial Policy in the European Parliament. He's also the Co-Chair of the European Green Party (EGP).
How long have you been involved in EU energy policies? What remains the biggest challenge in European energy policy?
I have been involved in European energy policies for more than a decade now, starting in my former position as Secretary General of the German Greens. Later as a Green party chair I followed the evolution of a European energy policy which took shape in 2005 and culminated into the EU's triple 20 targets (20% cut in greenhouse gas emissions, 20% renewables and 20% energy efficiency all by the year 2020). Since taking up my mandate in the European Parliament in 2009, I have continued to follow these issues closely.
The biggest challenge in Europe's energy policy remains the industrial transformation of our energy supply to a low-carbon system based on renewable energies, which would meet the strategic triangle of sustainability, competitiveness and energy security. Energy efficiency and energy savings are key pillars of such a system. A European approach, which would entail solar energy particularly in the South, decentralized onshore wind generation, offshore wind plus bio-based energy would together with a pan-European supergrid ensure that - no matter the intermittency of wind or sun - renewable energy would be available to feed European energy demand.
The challenge is in having an adequate European governance model that co-ordinates such a European Energiewende. We Greens have in this context called for a European Community for Renewable Energies (http://www.erene.org/web/149.html).
We are hearing more and more a discussion on the reindustrialisation of Europe. What are the priorities and what do you think are the keys to success?
More and more people are talking about the need for a European industrial policy. But the term means different things to different people. For some, it is a hidden attempt to use statist protectionist measures to limit trade and insulate industry from international innovation and competitiveness. While others misuse industrial policy to organize a roll-back against environmental and social standards and regulations as if environmental and social dumping were the cure to Europe's industrial woes.
In this context, no clear priorities have been set. European Commission Vice-President Tajani has proudly declared his ambition to raise the share of manufacturing in the EU's GDP to 20%. But the current limited policies won't get us there.
What Europe needs is a co-ordinated industrial strategy based on eco-innovation and a market framework that promotes competition and a reindustrialisation, especially in Europe's Southern rim economies. Important tools for such a transformation are for example putting a fair price on carbon, using public procurement and resource efficiency promotion schemes.
Following the revision of the European Emissions Trading System, several sectors that are subject to the scheme are voicing concerns that this will lead to a further move of factories from Europe abroad. What can the EU do to motivate energy-intensive industries to remain in Europe?
We have to differentiate between real concerns and overly noisy lobby activities. Let's not forget that several other sectors subject to the scheme are also supporting the revision. Shell, Eon and Unilever have for example all supported the European Commission's back-loading proposal. Look at Germany. German industry is doing fairly well even though Germany has some of the highest energy costs in Europe. Economists such as Professor Aghion have shown clear correlations that higher fuel prices encourage firms to redirect capital into innovation and clean patents, which in turn increases efficiency and a company's competitiveness.
The EU is also already doing a lot to ensure energy-intensive industries are not hampered from over-the-top costs. There are a whole range of exemptions with regards to the emissions trading scheme and other regulations.
This issue of the magazine is looking at the potential of renewables powering EU factories. In your opinion is this feasible? What needs to be changed?
Renewables are able to power factories in a wide manner of ways. It is not only about taking power from the central grid based on offshore wind farms. Factories can integrate their own renewable energy systems be it from solar to combined heat and power (CHP) systems or engaging in industrial symbiosis and taking the waste products from other companies to power their own factories. They can also adjust their production facilities by making sure they run their systems in line with renewable power production. For example, when the wind surges and electricity prices fall in accordance, factories crank up production in order to make the most of this window of opportunity. Such smart start-stop energy demand systems that work in tandem with the power and prices available in the market would ensure that production takes place at some of the most opportune moments.
The main barriers for industrial energy efficiency in Europe has been identified as access to finance (especially for SMEs). The technologies are there but not fully applied. What is your view? How can we motivate private financing into energy efficiency?
It is one of the big puzzles why energy efficiency in Europe should find it difficult to find financing. After all, as the former US Secretary of Energy, Steven Chu, liked to say energy efficiency isn't just low-hanging fruit; it's the dollar bills or in our case Euros lying on the ground. A study by the McKinsey Global Institute has calculated that an annual global investment of $170 billion in energy efficiency improvements until 2020 would yield up to $900 billion annually by that year.
New creative financing tools are emerging. For example, in the UK a Green Deal Finance Company - a non-profit making organisation backed by the government - has been established to provide loans for energy efficiency measures where the loans are then afterwards paid back through the savings on the electricity bill. Similar schemes are starting to take off via online crowdfunding websites. Green securitisation is also a tool that could develop over time, where banks pool energy efficiency investments and provide them to institutional investors such as pension funds that need stable assets to match their long-term liabilities.
Last but not least, public finances need to be made available to leverage private financing. In this context, the European Parliament needs to ensure that the EU's budget - in the context of the MFF - is geared towards such measures.