CLIMATE & INDUSTRIAL POLICY FOR AN ENTREPRENEURIAL EUROPE

Tomas Wyns tomas.wyns@vub.ac.be

CECILIA 2050 CONFERENCE - 6 MARCH BRUSSELS

Outline

•EU 2050 low-carbon Roadmap!

•Industrial competitiveness revisited !

•Development of Industrial low-carbon roadmaps, conclusions!

•2050 de-carbonisation challenge for industrial sectors!

•Key elements of industrial low-carbon transition & examples!

•Suggestions for funding the transition

20501990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

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Reference Scenario

Reduction Scenario

-40%

-80%

European Commission’ s 2050 low-carbon roadmap

-80 to -95% by 2050Reductions Investments Savings

!270 Bn p.a. !170-320 Bn p.a.Fuel cost

!88 Bn in 2050Air quality and health

-80% = domestic, ref. 1990 in EU economy: jobs

infrastructureR&D

EU Member States agree on targets but not on interim milestones

General challenges for the EU industry

Essential factors which determine the competitive strength and hence influence the location of the energy-intensive sectors:

Access to raw materials

Proximity to demand

Transport costs and infrastructure Cost

availability of (competitive priced) energy

Skilled labour-force (STEM)

Best practice industrial roadmaps should include•Thorough sectoral analysis (future growth, domestic demand, challenges, opportunities, move to higher value added, ...)

•Identification of current options to reduce emissions (BAT)

•Identification of future options to reduce emissions (future BAT and breakthrough tech.)

•Broader than only end-of-pipe/process solutions (downstream product design/use)

•Seek broader benefits beyond GHG reductions (e.g. lower capex, opex, higher value added products)

•Identify technical, financial and policy barriers for implementation

•Outline of low carbon roadmap implementation plan

•Policy recommendations to facilitate implementation

EU sectoral roadmaps state of play

EU paper sector was first to develop roadmap (2011)

Followed by EU Ceramics, Steel, Chemicals and Cement sector roadmaps

EU Industrial roadmaps: conclusions so far

• Roadmaps offer interesting insights into possible future sectoral developments, though in most cases quite narrow (e.g. GHG only)!

• Conservative estimates (low mitigation / high cost)• Need for breakthrough technologies• Need for policy support (but not very specific)• Implementation plan missing except for EU paper sector (CEPI two team project)!

Example: CEPI 2-team project

12 months: 5 breakthroughs

0%

25%

50%

75%

100%

1990 2005 2030 2050

100%100%

80%

66%

17%Low-end Industrial sectors scenario E.C. 2050 low-carbon roadmapHigh-end scenario0.8% pa e"ciency improvement as from 2005 (#xed production)

Deployment

of New

Technologies

56%60%

13%

2050 projections for Industry

0%

25%

50%

75%

100%

1990 2005 2030 2050

Deployment of N

ew

Technologies

60%

!!!!10-15 years 10-15 years

time lefttime left to develop & to develop & 60% to develop & 60%

make make breakthrough technologies market ready

2050 = 2030

Key elements of Industrial Low Carbon Transition

ExamplesProcess Innovation

Product Innovation

HISarna Blast Furnace (Tata Steel) Molten oxide electrolysis (MIT AMBRI)

US Nano-steel phase-change insulationmaterials (BASF)

Jeans from wood-fibre

Examples

TRIMET Aluminium Germanymodulated power use (linked to RE)

Business model innovation

Social Innovation

Innovation economics in Finland

Example: Business model change

� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �

Requires: removal of (regulatory) barriers, incentives for on-site generation, support for R&D and investments

Source: CEPI

Example: Business model change

� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �

Requires: removal of (regulatory) barriers, incentives for on-site generation, support for R&D and investments

Source: CEPI

Spire

R&D into higher value added productsEU ETS

auctioning revenues

(e.g.18 Bn EUR2015-2020)

SILC II

Bio-based i ppp

Horizon 2020

Products contributing to EU low carbon roadmap

Diversification into new products, services and/or production/supply chains

Social transition, Education & Entrepreneurship

Process Innovation

Product & Business

model Innovation

ULCOS II

Social Innovation

Suggestions for industrial innovation policy/funding

Possible Funding sources:!

• EU ETS auctioning revenues NER

• Market Stability reserve • EU Coal and Steel Research

Fund • …

Bridge