The S&D group held a two-hour summit to discuss its manifest for future energy policy. The discussion took a ‘revolutionary’ turn with a presentation from Jeremy Rifkin, president of the Foundation on Economic Trends (USA). Please see below for details of the discussion.
Martin Schulz (S&D, DE) called the S&D group energy policy manifesto (to follow) ambitious, but wanted to put it and its demands to the rest of parliament. This ambitious programme contains elements which have gone beyond the currently discussed measures.
Some EU member states are lagging behind their national targets, whilst others are ahead of them, and this needs to be addressed. It will be a thorny path, he said. Energy policy in the EU is still very much an ideological fight. Even in the S&D group, the nuclear energy debate is a very controversial one. He himself is very sceptical about nuclear energy, mainly because if we had invested that much money in other energy sources we could be relying far more on those right now. Of course, as far as energy policy goes, one cannot sweep things under the carpet, he said. Not all countries feel that they have reached the era of renewable energy because they still rely on fossil fuels for 95% of their energy production. A constructive dialogue must therefore take place, with stakeholders, including trade unions and all relevant groups in society, he concluded.
Sigmar Gabriel, president of the Social Democratic Party (SPD) in Germany, began by saying that the upcoming speaker Jeremy Rifkin had contributed to the EU’s energy policy already when Germany was holding the EU council presidency in 2006. He was glad to have him here contributing today. Moving on, he highlighted a few factors that should be driving energy policy:
· Economic – he pointed out the dramatic population rise there has been in his lifetime alone. People will want to continue living in industrial societies, and those areas of the world that are not industrialised yet, will want to be because industrialisation means products at affordable prices. However, we now have the issue of limited resources, and not just in terms of energy. This causes prices to rise, and we depend completely on raw materials imports.
· Ecological challenge – there will be too much of a burden on this planet in future if not enough is done now. He seriously questioned whether we will we be able to keep within the globe’s ecological limits. Biodiversity is of crucial importance, he said.
· Climate change – we have turned the atmosphere into a waste deposit full of greenhouse gases (GHG). What is the civil war in Sudan if not for the small section of land on which agricultural activity can take place, he asked. What is lacking is the political will to create framework conditions. This is important because other parts of the world are sceptical when we tell them there are economic and climate problems. Many people cannot see or accept the link between the two. Many believe that Co2 reductions on a large scale would mean worse conditions in developing countries. We need to show that the protection of species and the climate can be interlinked with economic development. The unique task of the Energy Institute (EI) is to set practical programmes to show this reconciliation. If the 27 member states that are relatively prosperous cannot do this, who else will, he asked.
He went onto say that there are countries in Europe that rely on coal, others on mainly renewable energy. The 27 member states are in principle a reflection of the situation in the whole world. If we cannot convince each type of country in the EU, how can we do this in the rest of the world, he asked. We must set the political framework for success and this will lend great opportunities.
Raw materials and energy costs are 40% or more of overall production costs in Germany, he said. Wages only make up 20% or less. Major leaps in costs are to be found in the filed of energy and electricity. He spoke of the new competition indicator based on the proportion of energy and raw materials costs per unit of GDP. Reducing energy and raw materials consumption is how Germany is competitive.
Europe needs to show that 30% emissions reductions by 2020 can be achieved and Germany needs to reduce 40% of it GHG. 340,000 new jobs were created in the field of renewable energy in Germany. The problem in EU is energy efficiency. The EU has now stated that energy use should be reduced by 20-30%, and this is challenging. We need promotion schemes and incentives because we are nowhere on target to make these reductions.
He said that the energy and innovation summit scheduled to take place on 4th February will in effect be a crisis summit. He stressed that we have gotten no where on the implementation of the “front-runner” products. He said that politicians lacked courage to enforce standards and to have an affect on competition rules. He explained how Germany passed a law on energy efficiency and insulation. This was an enormous employment generation programme and it was a big mistake for the German government to shrink this programme so soon after the crisis. Germany is far from reaching its energy savings potential, he admitted.
He went on to call the council proposal “weak to say the least”. As of 2012 all member states should include energy efficiency standards in public tenders. He asked why private buildings were not included in the scope of the council proposal. In almost all member states there is a second type of rent to pay, and that is the energy bills, and the people paying for this are those poorer people who cannot afford their own homes and therefore to render them more efficient. The council does not have the necessary courage, he said.
We have only achieved 8% of energy efficiency targets in the EU so far. Some say that the lazy member states will remain lazy, and the others will sell their extra to other countries. So why produce when one can buy from Scandinavia, he asked. This is why we need national targets, but also modernised European energy grids. The financing approach on the markets will not work, he said. We need joint promotion schemes, and so it would make sense to use part of the money from emissions trading system (ETS) to set up intelligent energy grids. He spoke, however, of the great resistance of people to having power lines by their homes. An interesting idea is not to use alternative current but a new technology which would require much less investment and would be much more compatible with environmental issues – the classic overseas cables. This is only economically viable if there are more than 250km between where the electricity is generated and where it is used. If the wind energy produced in the north could be used further south, there are great advantages to be had. Likewise, the Desertec programme is another example of this. However, to test such new technologies needs political impetus, and another problem is that politics does not tend to define the way in which things are implemented.
On nuclear energy he said that when he was minister for environment, he heard and read everyday from the International Energy Agency (IEA) how many nuclear power plants were being built everywhere. Only later did he hear that many of these plants had never been built. China and Russia are the exceptions, but more are being closed down than being built elsewhere. Many of these projects are too expensive, especially because they have to rely on state subsidies. The liberalised energy market is also a key factor, and alternative energy gives an impetus to develop more decentralised systems. There is still also the problem of radioactive material and its storage. There is no proper storage, he stressed, and it is frivolous to say that we want to move away from nuclear energy without knowing where else to move to. More alternatives should mean more energy efficiency and more efficient grids, he said. The EU is capable of showing that progress can entail economic, environmental and social progress. The task of socialists and democrats is to show that a combination of social, economic, environmental and cultural actions can work together.
Jeremy Rifkin, president of the Foundation on Economic Trends (USA), started on a sombre note, saying that we have had two events in the past two years which signal the end-game to the industrial revolution based on fossil fuels. Purchasing power has plummeted because we rely on fossil fuels for everything, our construction products, our pharmaceuticals, our food cultivation, to name but a few. If food prices double and triple, this is catastrophic, as is the resulting situation in Egypt at the moment.
He explained the key issue of global peak oil production and peak oil per capita which he said were similar but different. Peak oil production was reached in 1979 and although we found more oil since then, the population has grown. If we try to grow, society will collapse at around €140 a barrel again and again. Next time this happens, we will have to accept that the industrial age is at an end.
Rifkin explained how the report from the climate panel shocked him because it continued to underestimate the speed of climate change because of all the subtle ‘feed-back loops’. He said that a rise in global temperature of 3-4% could cause the loss of 70% of the species on this planet. The temperature would in effect be the same as is was 3million years ago. Every time this has happened in history, it has taken 1m years for a fraction of the species to replenish themselves. Geological records say that to stop the temperature from going up by 6 degrees Celsius a century, we need a radical transformation.
We need a new economic vision that is powerful, practical, deliverable and can be implemented by developing countries at the same rate as we can implement it, and must be implemented within two generations. Only when we can merge a new energy regime with the communications revolution can we manage energy in a revolutionary way and we can have a great shift in civilisation. In the 19c, the coming together of print technology and cheap with steam power signalled a great shift for civilisation. Public schools trained a print literate workforce that could run the complicated new developments. We are on the cusp of a new energy revolution, he said. We have had a big communications revolution with the internet, which is distributive, collaborative and accessible. This is now collaborating with distributive energy, and this could lead to the revolution we are looking for which will change the world dramatically.
Distributive energies are found in every square inch of this earth, from sun, wind, garbage, hydro, agricultural waste, ocean tides, etcetera. If harnessed, it can meet the needs of our species and more. The EU has, in theory, committed itself to a five pillar structure for this energy revolution. The 5 political groupings in May 2007 agreed to start a third industrial revolution. The commission has put together many of the components, but now we need the narrative to make the leap. He filled in the gaps:
· Pillar 1 – Expanded generation and use of renewable energy
· Wind, solar, biomass, geothermal and wave power are key
· The EU has committed to achieving a target of 20% reduction in CO2 emissions and 20% renewable production by 2020, or one-third of Europe’s current electricity production
· Pillar 2 –Buildings, buildings, buildings. Buildings as power plants
· Shifting from centralized power generation and distribution
· Buildings will become “prosumers’ – producing consumers
· Homes, schools, offices and factories will become part of a network of renewable power plants
· The EU has committed to converting all 191 million buildings in Europe to produce power through solar, wind and other renewable forms of energy
· Pillar 3 – Hydrogen Storage
· Developing hydrogen and other storage technologies
· Allows for the storage of surplus energy
· Pillar 4 – Development of the Inter-Grid
· Development of the inter-grid – a smart-grid that will allow for stored energy to be distributed much like today’s Internet
· Pillar 5 – Plug-In Ready
· Development of a new energy infrastructure for transportation that supports plug-in vehicles
· Project Get Ready and A Better Place are currently working toward making cities plug-in ready
These pillars have to go together and each has to move at the same speed as the other pillars everywhere. Unidirectional grids need to be modernised. He called this the “democratisation of energy”, or “market socialism”, but made it clear that this is qualitatively new. The reason we can do this now and not ten years ago was that scientists in Silicon Valley had not yet developed grid IT which allows large numbers of computers to be connected and have more power than any super computer. The ability to have distributive power will be better than any coal powered, gas, whatever fossil based energy. This will cause a great shift in power, in the economy, in politics, in culture. Vertical, top down, centralised institutions is moving towards “lateral power” which requires a major change in the political landscape. Unions, SMEs, must work together to make the third industrial revolution happen, so that all can be empowered by energy as we are by information. This is the final stage of European integration, he said.
He called the G2, G8, G20, the last reminence of the old order, and this amused him. The new order will be collaborative, distributive, noble and will not necessitate the giving up of nation states, but these will be nestled in networks, and the EU could be the flagship. There will be a weaker configuration of power, he said, adding that it could be the end of the right and left. He said that kids do not think of right or left anymore already. They think is this human or institutional, transparent, distributive instead of centralised and hierarchical.
What the S&D group has done in the parliament has been critical to the development of this new age, and even stepped up the game. Our responsibility is to lead this in a revolution, he said. He asked the audience to imagine what SME associations working together with the coops and trade unions could do. This is the legacy of political leadership, he concluded.
Jo Leinen (S&D, DE) was very grateful for the inspirational words of Rifkin. We have discussed these things for 30 years now, and this is why Europe can lead the way, he said. We have to be more progressive than those who believe only in the market.
Paul Magnette, Belgian minister for climate and energy policy, was glad this event took place just before the EU summit. He said that he had tried to open many issues in the council of ministers before, and managed to open some difficult issues like consumer policy, but not all. During one of the last informal councils, someone realised that it had been the first time a whole session had been dedicated to consumers. He then made the following points:
· Vision 2050 discussions have started too. Rich discussions so far and we have shown that we have the technology. The costs can be made back from the benefits. However there is a major lack of political ambition. He was alarmed at how unambitious the document that was put on the table was. The European council should send strong messages and be the engine of EU dynamics. Instead, it is very modest on infrastructure and external relations. This is a missed opportunity. We should use this summit to send a clear message to the world and public opinion.
· Big ambitions will be on the table more for Spring until 2012 (Polish presidency), and large alliances will have to be built. We must make sure we can send this message to remind people that the costs of labour is only 20% of production costs, when energy and raw materials is 40%. We must win against mental conservatism on this.
· The ninth point in the document should be the number one priority – energy efficiency. The EU has the capacity to become the world leader and this will have an impact on the purchasing power of our citizens, on growth, employment and so forth.
Lena Sommestad, Former Swedish minister for environment, said in terms of the programme that we must be united on this, but must also put energy policy within the wider concept of the society that we want to build. This should be an equal society with good labour and educational policies. It is misleading to think too much about technologies, but this should not be thought of as an individual thing, that individuals are doing things for themselves because, we have to work together. At the city level, local authorities can manage the distributive energies. There is currently an enormous waste of energy. We are loosing about 70% of energy production before it even reaches the consumer. Why? Because we do not use district heating, for example. Entire cities can be heated by waste heat from steel production, for example. What are the limits and potentials for the market, she asked. Answering - technology, a broader setting in society, education, income equality, social trust and sustainable development in general.
Teresa Riera Madurell (S&D, ES) said that there seemed to be a divergence between theory and practice. We need to make the 20% energy efficiency target legally binding so that member states will act. There is a clear lack of ambition in the council document. Yesterday’s commission communication puts the onus on member states and says they should invest more money into this. How do we coordinate at all different levels, she asked. Environmental and economic progresses go hand in hand, she concluded.
Folker Franz, energy director of BusinessEurope, explained that contrary to common belief, none of his members think the status quo is OK. On the 2050 vision, he explained that there were many goals in common with business. He however made three points opposing a little what had been said previously:
· Technology neutrality – He pleaded with policy makers not to lock in any technologies and to stay as technology neutral as possible. All renewable energies have their risks and opportunities and need a chance on a level playing field. He questioned the worth of having PV subsidies in some countries and not others.
· Global realities – it is often said that the EU is better than others on emission reductions or reaching Kyoto targets but this depends on how one looks at it. Many parts of products we make are built outside of the EU, therefore resulting in imported emissions. If these are taken into account, global emissions have actually risen.
· Skills are very important. This could be a focal point of the summit on the 4th February. All the industry sectors who come to BusinessEurope to discuss their issues, all say they need engineers, skills, especially in the energy sector. We need to build a new generation and mindset.
· Energy internet – need the Mark Zuckerberg (founder of Facebook) of the energy internet.
Joel Decaillon, deputy secretary general of ETUC, shared what the minister had said. BEUC had prepared a resolution for the council and deplored the document which suggested that labour costs will not be the determining factors for future policies. There is little financial leeway, he said. In 2007, there was a study on climate change and employment. Climate change efforts could generate jobs if energy programmes were efficient enough. This is contradictory because there is no long-term funding. No solution is suggested in any of the studies because financial perspectives are always in the short term.
ETUC regretted that research is not focussed on enough, and needs a more structured system if it will serve to support policies in this area. We need mutual consistency of these policies, especially as regards international trade with countries who do not follow these energy and labour standards that we are setting for ourselves. We could have International Labour Organisation (ILO) conventions, but this is not consistent. We need long-term financing of intelligent grids, for example. We cannot merely tell Poland that is must change, support is needed. Not having a consistent EU energy policy is regrettable because we started the EU with that. On energy solidarity, he said that we need to reassert the role of Europe to secure the provision of energy for the sake of negotiating with large gas companies. We cannot ask Estonia, for example, to negotiate with Gazprom. The priorities are contradictory, he reiterated.
Lena Sommestad supported cities with energy and energy efficiency provisions, saying that Swedish cities have been able to cut GHG emissions substantively. Combined heat and power is an example of high efficiency and good use of energy. To BusinessEurope she explained that what we have at the moment is an attachment to gas and oil, electricity, although there is local resistance. We need to work more at the local level, she stressed. We need loans so local governments can go ahead with projects.
Marita Ulvskog (S&D, SE) thought that the summit had shown that there is a truly progressive, social and democratic drive behind energy policy ideas. We need a radical and rapid transition. This does not have to be a “left and right” quarrel, she added. There are of course ideological differences, we want politics to be a force for change for people in a society. It is not enough to rely on the market. There are not transparent markets, and they cannot be unregulated. Nonetheless, we must work together, she said. There have been very small results and very low ambitions, and this alternative summit aims to persuade the council to raise its ambitions. The S&D party will not stop fighting for this.