Speech by Vice-President for Energy Union Maroš Šefčovič at the Energy Fest (Start Up Event) in Amsterdam

Amsterdam, 26 May 2016

Ladies and gentlemen,

Let me start by thanking you for inviting me to this first edition of the Energy Fest, hopefully the first of a long series.

One of the most brilliant European minds of all times, Lenardo Da Vinci once said that “people of accomplishment rarely sat back and let things happen to them. They went out and happened to things”.

By ‘happening to things’, Da Vinci meant questioning axioms, challenging the common wisdom, and above all daring to do things differently. This is the spirit that brought Leonardo Da Vinci to be a revolutionary mind in every field he touched (painting, sculpting, architecture, music, literature, mathematics, engineering, anatomy, astronomy, botany, etc.). I am pretty sure if Da Vinci lived today he would be keen to join us here. Because that is exactly what we are doing, what you are doing. All of you, and first among whom, the competition pitch finalists – you are following Da Vinci’s path.

Because what does it take to set up a successful startup? An innovative concept? A business case? Financial support? Yes. All of those are undoubtedly necessary.

But more than anything it takes courage and imagination. Courage to lead the way forward, and imagination on how to bring solutions to society, How to do things better, smarter, greener – differently. If you look into the stories of some of today’s most successful global innovative companies, you will often find that their starting conditions were very humble, sometimes in the founder’s garage or attic. But what kept them going was their strong conviction. They were led by a person with a great drive, vision, and ambition.

That is why I believe that innovation is the new form of leadership of the 21^st century. “Innovation is what distinguishes a leader from a follower”, as Steve Jobs eloquently put it. I would therefore like to thank you for inviting me today. Together we can help foster a culture of innovation in Europe. And when I say ‘we’ I mean governments, I mean entrepreneurs, investors, innovators, universities, researchers, I mean cities and regions, I mean citizens. We all have a role to play.

By the end of this year, together with my team of fellow Commissioners, we will present the new Energy Union research innovation and competitiveness strategy that will reinforce the synergies between energy, transport, industrial and digital innovation.

One of the key objectives of the strategy will be to better connect the EU support for research and innovation with the strengthening of the EU’s competiveness and the central place of EU industry and services in the global value chain.

Our strategy will need to reflect, anticipate and even shape the major trends of our energy transition, and convert them into Europe´sstrengths.

To this end, we will need to offer a robust vision, a stable policy, adequate financing and technology pathways.

Our Vision

As a starting point for this innovation driven vision, I often refer to the 5 (or 6) “D” model, which stands for:

• decarbonisation of our economy – our leadership in the fight against climate change has been strengthened with the historic Paris Agreement; we now need to make sure low carbon innovation will help achieve our ambitious goals;
• diversification of our sources to ensure energy security and improving our trading conditions;
• democratisation of our energy system by empowering consumers and allowing them to become “prosumers”, which we can distinguish from;
• the decentralisation of our energy generation from large-scale energy generation to small inter-connected generation, with a rising role given to smart cities in the energy transition;
• digitisation of our energy and transport system, thus producing a range of new integrated services;

and last – but not least:

• disruption of our business models (such as electric car sharing, smart buildings as energy nodes, and more generally the integration of energy-transport -communications) alongside with new jobs profiles and skills. 

Our Policy

To support and sustain this vision we need to work together on offering the right conditions and incentives.

If Europe is serious about leading the global transition to renewables, it is essential that we build closer and more strategic partnerships with our industries but also and more importantly with SMEs and start-ups. We need to unleash the potential of Private-Public Partnerships (PPPs) and continue to support the impressive work of the Knowledge and Innovation Communities (KIC).

We should create a favourable environment for market actors to invest in and only in what is ‘sustainable’. This topic which was very central during the Paris COP21 summit and my meetings there with the business community. Last month, on the margins of the signing ceremony in New York, I discussed this further with the UN Environment Programme Director, Achim Steiner. We agreed it was critical to minimise the risk of financial instability linked to climate change and the transition to a low-carbon economy. I told him that some EU Member States are taking a lead when it comes to ensuring sustainable investment. The Dutch Central Bank, for example, has updated its mission to not only “safeguarding financial stability”, but also “contributing to sustainable prosperity in the Netherlands”.

We must thus strive to develop an enabling environment that removes regulatory barriers, encourages investment and risk taking, provides stability and predictability and rewards innovation in low carbon and energy efficient technologies.

We already have clear targets set by Heads of State and Government for the Climate and Energy framework up until 2030: 40% cut in Greenhouse gas emissions, 27% share of renewables, 27% improvement in energy efficiency.

As part of the Energy Union roadmap, we are translating these targets into legislative proposals. We will also propose a reform of our electricity market design that encourages innovation and market competition. We also need a carbon price which sends the right signals to investors and we are therefore working on a reform of the ETS system.

We need an Energy Union regulatory framework that supports the energy transition, that better factors in innovation, offers integrated solutions, that is future-proof.

Our Financing

One of the challenges to reach that goal is investment and access to finance.

The IEA estimates that the implementation of the Paris Agreement (i.e., below a 2 degree Celsius rise in global temperatures) will mean US 16.5 trillion investment in low carbon technologies, renewables and energy efficiency over the next 15 years. This represents tremendous opportunities in both our domestic European markets and globally.

We know there is no scarcity of investment capital in Europe. But there is perhaps more resistance to assume risks than in other parts of the world, notably in the US.

We therefore need to deploy targeted risk mitigation instruments.

The Juncker Investment Plan and the European Structural and Investment Funds are among key instruments supporting the transition to a low carbon economy.

The Investment plan enables financing more risky project. It also provides an opportunity to support smaller projects by grouping them in thematic or regional investment platforms. This instrument has already mobilised EUR 100 billion with nearly a third for the energy sector and a fourth for research and innovation (and more than 140,000 start-ups, SMEs and Mid-Caps benefitting from enhanced access to finance as a result)

The importance of supporting start-ups is also reflected in the SMEs instrument of Horizon 2020, the EU flagship research and innovation flagship programme (2014-2020). Horizon 2020 is increasingly focused on getting ideas from lab to market and has more than 30 billion euros climate related budget.

The Innovfin facility also provides loans, guarantees or equity type investments to first-of-a-kind commercial scale energy demonstration projects with a higher risk.

Finally – and looking further into the future (post 2020) – an Innovation Fund will be set up to support first-of-a-kind investments in renewable energy, carbon capture and storage (CCS) and low-carbon innovation in energy intensive industry. And some 400 million allowances − representing up to around €10 billion when sold − will be reserved from 2021 onwards for this purpose.

Technologies

When I visited Denmark as part of the Energy Union tour, researchers were telling me : give us an ambitious target on technological performance and cost – and we promise we will deliver.

This is what we are currently doing. In the new Strategic Energy Technology (SET Plan) adopted last year we proposed priority actions to reduce the cost of renewables and improve their integration, to develop smart homes, and more generally increase the smartness of our energy system, to enhance the uptake of energy efficient solutions for buildings, to improve the cost effectiveness of our industry, to strengthen our energy options for sustainable transport, to become competitive in the battery sector, and step up R&I activities in carbon capture, storage and use, and increase nuclear safety.

For each and every key enabling technology we aim to develop ambitious cost and performance targets, which will mobilise the efforts of the innovation community (first among which the so called “knowledge triangle”: higher education, research and business).

Conclusions

I would like to conclude on our innovation culture.

The EU has a vibrant innovation ecosystem. I strongly believe that one of our greatest asset in Europe is our diversity, within the same single market. This can bring together a wide range of traditions, working cultures, and approaches which are mutually enriching. We have so much accumulated knowledge, know-how and expertise, and – provided we manage to pool talents – we can unleash its potential.

This needs a major focus on the last D of the 6 “D” model – the disruptive one. We should not fear disruption, this is what will bring us forward.

Don’t be afraid to fail; failure is an essential part of an entrepreneurial culture. And don’t be afraid to dream; we need more dreamers in Europe – who can keep us ahead of the innovation curve, as Leonardo Da Vinci did in his time.

So, congratulations to the Leonardo Da Vinci’s of today – the start-upists, the leading innovators, the finalists of the pitch competition.

I am delighted that I can deliver to you these recognition certificates. I went through your projects and found them original and ground-breaking. They all aim to make a difference by offering integrated solutions based on the energy, ICT and industrial nexus, to the benefits of end-users.

So, I want to thank you for keeping the innovation flame alive and kicking in Europe.

I thank you very much for your attention.

Compliments of the European Commission