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EuropeanEnergyandClimatePoliciesNeedaStrategicIndustryPolicyApproach
RuggeroSchleicher-Tappeser
21thREFORMGroupMeeting,SalzburgAugust29,2017
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DifferentPerspectives
materials,processes,concepts
compo-nents
technicalsystems
devices,machines
socio-technico-politicalsystems
⇆ ⇆ ⇆ ⇆Nanotechnology
Semiconductors
3Dprinting
RailwaysystemTransportsystem
High-speedtrain
Smartphone
ElectriccarCharginginfrastructure
Theinternet
Publicelectricitysupply
Electricitydistributiongrid
Lithium-Ion-Battery
Powerelectronicscomponents
MobilephonenetworkPCTelecommunicationsystemRecycling
High-Techceramics
PVpowerplantPVmodule Windturbine
Integratedcircuits
OperatingSystems
OperatingSystem
WarehouseLogisticssystem
Memorychips
ArtificialIntelligence
Watersupplyandwastewatertreatment
PoliticsSociety
ScienceEconomicsIndustry
Technology
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• FordecadespoliticsinEurope,theUSandJapanwasthemaindriverofchangeinnationalandglobalenergyandclimateissues
• Meanwhile,technologyandnewindustrieshavebecomemuchmoreimportantasdrivers
• Atechnologicalrevolutionisbringingdeepchanges:acombinationofmaturingnano-level materialscienceandinformaticsbringsanewgenerationoftechnologieschallengingtheeconomiesofscale oftheeraofelectro-mechanicalandchemicalmacro-technologies
• Inaglobalisedworld,thecapabilityofEuropean,AmericanorJapanesepoliticstocontroltherateofchangehasdramaticallydecreasedàinfluentialincumbentcompaniesloosecontrol,butdamagetheireconomiesintryingtosaveoldinvestments
• InseizingtheopportunitiesoftechnologicaldisruptionsChinesepoliticsandindustrieshavebecomeveryinfluential
Achangingframeworkatglobalscale
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• RenewableEnergy Mainenablingtechnologies– SolarPV PVsemiconductors:nano-levelmaterialscience
powerelectronics:nano-levelmaterialscience– Wind conventionalelectromechanicalengineering
compositematerials:chemistry,nano-physicspowerelectronics
– Systemintegration• Storage electrochemistry:nano-levelscience
powerelectronics• Grids powerelectronics
controls:digitalisation,telecommunication• Sectorcoupling electrochemistry:nano-levelmaterialscience
controls:digitalisationpowerelectronics
• E-Mobility– Powertrain conventionalelectromechanicalengineering
powerelectronics– Storage electrochemistry:nano-levelscience
powerelectronics– Lightweightvehicle compositematerials:chemistry,nano-physics– Autonomousdriving sensors:nano-physics,electronics
digitalisation,telecommunication,artificialintelligence
Maturingnano-levelscienceandinformaticsreducescaleeffects,enableRENandE-Mobility
01.09.2015 4
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Windinstallationsgrowsteadily– Europeslightlyslower
©REN212017
Capacityaddedin2016World 13%EU 9%
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SolarPVgrowsrapidly– butnotinEurope
© REN212017
Capacityaddedin2016:World 33%EU 6%
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ComparingWindandSolarPVdevelopment
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CAGRCompound Annual GrowthRate
Wind SolarPV
2006-2011 26% 63%
2011-2016 15% 34%
2006-2016 21% 48%
Capacity added in2016 Wind SolarPV
World 13% 33%
Europe 9% 6%
Europe/World 0,69 0,18
• GlobalgrowthratesofSolarPVarealwaysmorethandoublethanthoseofwind• Bothgrowthratesaredecreasing
• Europelagsbehindworldgrowthrates:slightlyinwind,massivelyinsolar• Europebetsonthelesspromisingtechnology,neglectsthetechnologywith
mostgrowthandpotential.Why?
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DisruptiveDynamicsofPhotovoltaics2017:PVcheaperthanwind
Source:SolarPower Europe
Costdynamics:PPApriceoffersforPVandonshorewindpowerplants
• Thedifferenceincostreductiondynamicsreflectsthedifferenceinthetechnologicalbase• Thehighcontentofconventionalmacrotechnologiesinwindenergylimitsitscostreductionpotential• Photovoltaicshasahighpotentialforfurthercostreduction:
• Improvednano-scaleprocessescanfurtherraisetheefficiency• ExpensesforconventionalmechanicalsupportcandropwiththeintegrationofextremelythinPVlayersinto
existingstructures(buildings,roads,textiles)• ConcentratingSolarPower(CPV)– whichmainlyreliesonconventionalprocesses– hasalreadybeen
outcompetedbyPhotovoltaics• ThecrossingofthecostcurveswillfurtheraccelerateglobaldominanceofPV– expectashiftfromwind
toPVexceptforwindneededforseasonalbalancing
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NREL:SolarUtilityPVintheUScheaperthancoalandgas
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10Source:SolarPower Europe2017
GlobalAnnualSolarPVInstallations
SolarPVmarkets:Chinaistakingover
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SolarPV:DisruptioninChina79%capacityadded,46%ofglobalnewPVcapacity
+79%
+58%
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12Source:SolarPower Europe2017
EuropeanPVmarketshavecollapsedafter2011
EuropeanAnnualSolarPVInstallations
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Sharesinglobalmoduleproduction• Asia 90%--- China 65%• Europe 5%• US 2%
Toptenmodulemanufacturers• 50%ofglobalshipments• 8Chinese,1American,1Korean
Equipmentmanufacturers• Europeancompaniesstillleading• Chinesestarttobuythem(Manz)
Source:REN212017
SolarPV:Industrystructure
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Source:IEAPVPS2017/own calc.
MarketcollapseinEuropecannotbeexplainedbyhighmarketpenetration,norbyclimate
2%4%25%5%17%
90%
20%1%
17%18%8%
51%79%17%33%9%79%13%58%24%59%8%
235%23%88%
capacityadded2016EU
Capacityaddedin2016:
World 33%EU 6%
Electricitymarketpenetration2016
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PoliticalprioritiesinGermany:EmploymentevolutioninPVandBrownCoal
100.300
22.770 31.600
20.744
0
20.000
40.000
60.000
80.000
100.000
120.000
SolarPV Browncoal
20112015 20112015
-9%-68%
• Browncoal(lignite)inGermanyaccountsfor17,4%ofGHGemissions
• Employmentplaysakeyroleintheintensepoliticaldiscussionaboutshuttingdownligniteminesandpowerplants
• Coalminersandutilityworkershaveverystrongtradeunions.PVworkershavenot.
• Longgrownpoliticalandpersonalconnectionsbetweencompanies,unions,theconservativeandthesocialdemocraticparty
Data:IRENA2017,Umweltbundesamt2017.©RuggeroSchleicher-Tappeser
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Mostlabourrequiredlocally:aroundhalfisO&M
SolarPVpowerplant
Distributionofhumanresourcesrequiredalongthevaluechain
Source:IRENA2017
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• Employmentwasnotthereason• ClimateinEuropewasnotthereason• Highpenetrationachievedwasnotthereason
• INCUMBENTSHAVESTARTEDTOFIGHTBACKIN2010• LowerproductioncostsforstandardmodulesinAsia
donotexplainmarketcollapseinEurope
• EuropewasnotableandnotwillingtodevelopananswertodeterminedimplementationofstrategicprioritiesofChina
• HighqualityproductionwithadvancedtechnologiesinEuropewouldhavebeenpossible
WasthecollapseofPVinEuropeinevitable?DidEuropemissanimportantopportunity?
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DistributionGrid
generation
load storage
nuclearcoallignite hydro&
storageoffshorewind
hydro&storage
windPV
biogas storageindustry
windPV
biogas storageindustry
industry
industry
PV
household
PV
commerce
PV
serviceshousehold commerce services
load generation storage balancing
generation
load storage
consumers prosumers
International exchange
load generation storage balancing
Top-downsupplysystem(centralcontrol)
Multi-levelexchangesystem(subsidiarity,sharedresponsibility)
offshorewind storage
EuropeanSystemCompetenceConsiderablerecentprogressonbalancingatthedistributiongridlevel
©RuggeroSchleicher-Tappeser
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TheDebateaboutEuropeanandAsianstrengths
materials,processes,concepts
compo-nents
technicalsystems
devices,machines
socio-technico-politicalsystems
⇆ ⇆ ⇆ ⇆Nanotechnology
Semiconductors
3Dprinting
RailwaysystemTransportsystem
High-speedtrain
Smartphone
ElectriccarCharginginfrastructure
Theinternet
Publicelectricitysupply
Electricitydistributiongrid
Lithium-Ion-Battery
Powerelectronicscomponents
MobilephonenetworkPCTelecommunicationsystemRecycling
High-Techceramics
PVpowerplantPVmodule Windturbine
Integratedcircuits
OperatingSystems
OperatingSystem
WarehouseLogisticssystem
Memorychips
ArtificialIntelligence
Watersupplyandwastewatertreatment
• IsAsiabetteratmanufacturingcommodities,highvolumestandardcomponents?
• IsEuropebetteratdevelopingcomplextechnicalsystems?
• Forhowlongisthisdivisionoflabourviable?
China? Europe?
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ClimateChange:Notimetolose,whendowegetserious?TheCarbonCrunch
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• Incumbentindustrieshavedelayedthetransition– thiswillincreaseoverallcosts
• Whenobligedtoconsiderrenewables,incumbentindustriespreferredwind–anolder,lessdynamictechnology– andhaveusedtheirinfluencetoshapemarkets
• Forequipmentproducersandutilitieswind(especiallyoff-shore)hastheadvantagetopreservesomeeconomiesofscaleandtoexcludesmallcompetitors
• Europeneedsanimportantshareofwindenergyforseasonalbalancing– however,photovoltaicswilldominategloballyandhashugepotentialinEurope
• EuropeanresearchisstilltopinPVtechnology,butdespiteconsiderabledevelopmentpotential,PVwasdeclaredtobea“commodity”
• EuropemissedanindustrialopportunityloosingtheleadershipinSolarPV
• Expertsforecastagrowingshareofsmallandmedium-sizedinstallationsinglobalphotovoltaicmarkets,notleastduetofallingpricesoflocalbatterystorageà economiesofscalefurtherlooseimportanceinpowergeneration
• Pricesforphotovoltaics,storageandpowerelectronicswillcontinuetofallà localpowergenerationgetsincreasinglyattractive
EuropeneedstoacceleratethetransitionNoescapefromchangingstructureofpowergeneration
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LessonsfromtheRenewableEnergyhistoryinEurope– sofar:• Europe’shighvariety,researchcapacityanddemocraticdebatehasproduceda
wealthofideas,approaches,products,experimentsandnewstructuresreflectingurgentneedsandnewtechnologicaloptions
• Europeanincumbentlargeindustrieswereblindforcomingdisruptions,stucktooldstructures,usedlong-establishedpoliticalinfluencefordelayingchange
• Incumbentcompaniesfollowingshort-termconsiderations,tryingtosavecapitalstock,causedlong-termdamagetotheoverallindustrialtissue
• EuropeanpolicieswerenotabletomakeuseofhugeEuropeanopportunities
• Chinahadtheforesight,thedeterminationandthestrategicmeanstotakeadvantageofthissituationafterEuropehadpaidthebillformakingrenewableenergyviable:Ablessingforglobalclimateandenergypolicy!
Incumbentindustriesinslow-growindustrialcountriesthreatenfurtherdevelopment
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• FearraisesthatChinesestrategicdeterminationbackedbyanauthoritariansystemmaythreatenEuropeaneconomiesandindependence
• ThereareotherareaswhereChinasuccessfullyaimsatstrategicglobaldominationofkeyinfrastructure-relatedtechnologies:– Microelectronics– Highspeedrail– Mobilephoneandinternetnetworks– Distributiongridtechnologies– Batterycellmanufacturing
• ElectriccarsandthetransportsystemmaybeanareawheretechnologicaldisruptionsmaymoreseriouslyaffectEuropeaneconomies
• Globalisationhaschangedtherules:Timesareover,whenwesternindustriescouldcontrolthepaceofchangethroughpoliticalinfluence
• Europehashugepotentialsbutneedstodevelopeffectivestrategiclong-termindustrypoliciesinanewcontext
CanChinesestrategiesthreatenEuropeaneconomies,independence,politicalculture?
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Prepareforsuddenchange:Historydoesnotfollowasmoothmasterplan
• Oftenchangeoccurssuddenly:whentippingpointsarereached,anudgeissufficient.WhohasaplanBwhenwindowsofopportunitysuddenlyopen?
• Fukushima wasdecisiveforterminatingnuclearpower,suddenlyinGermany,slowerelsewhere
• Thefinancialcrisiswasalostopportunityforecologicalinvestments:nobodyhadaPlanB
• InAfrica,intercontinentalbroadbandlinks andincreasinginternetavailabilitysince2011triggeredmassivemigrationtoEurope
• TrumpandBrexithaveopenedmanyeyesforprogressandopportunitiesbroughtbytheEU
• ThecoincidenceofDieselgate andTesla3maytriggeratransitionpreparedbya40year-oldtransportdebate+advancesinbattery,powerelectronicsandAItechnologiesTheendofthe
internalcombustionengine
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TonySeba (Stanford,RethinkX):imminentheavydisruptioninthetransportsector
CostsofindividuallyownedICEcars,i.o.EVsandTransportasaService(TaaS)
BasicAssumption:Autonomousdrivingbecomesavailableby2021(asFordandothermajorcarmanufacturershaveannounced)
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Pricedifferenceelementsbetweenconventionalcarsandtransportasaservice
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Theconsequence:rapiddeclineofindividuallyownedcars
Highspeedadoptionoftransportasaservice(TaaS)
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Projectedtrendsinannualsales
Individuallyownedcars
TaaS vehicles
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Projectedtrendsinfleetsizeandcomposition
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Plummetingrevenuesofcarrelatedindustries
RevenuedistributionalongthecarvaluechainintheUS
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Impactonglobaloil demand
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Evenifthesedramaticforecastsbecomerealityadecadelater,impactsonawiderangeoflivingconditionsandpolicieswillbehugeandcallforactionnow:• Employment&Economicstructure
– EUautomotivemanufacturing:3.3millionhigh-skilledjobs,10.9%ofEUmanufacturingemployment.Whowillwintheraceforprovidingfutureautonomouse-vehiclesandtransportservices?
– EUautomotivesector:12.6million,5.7%ofEUemployment.Millionsoflow-paidjobs(drivers…)willbedisplacedbyautonomousvehiclesandtransportsystems
– Newmanufacturingtechniquesas3D-printingmayadditionallyshrinksupplychains
• Spatialpatterns:– Plummetingpassengertransportcostsandimprovedtransportcomfortfacilitatecommuting– Improvedaccessibilityforruralareas?
• Infrastructure:– Plummetingfreightroadtransportcostsàmodalshift,pressureonroadinfrastructure– Moreefficientinfrastructureuse,especiallyincities– Dramaticgaininfreedparkingspace:newopportunitiesincities– Conventionalpublictransporthastoadapttonewpartnersinintermodalmobility
• Energysupply:– Increasedelectricityconsumption– Opportunitiesforsectorcoupling,especiallywithwirelesscharging
Discussingsocialandstructuralimpactsandoptionsintimewillbeessentialforseizingopportunitiesandavoidingharmfuldisruptionsandheavylossofglobalcompetitiveness.Europehasallresourcesfortacklingthischallenge,butitneedstousethem.
Deepimpactoneconomyandsociety
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Whowillshapethesechanges?AsianCompaniesdominatebatterycellmanufacturing
Source:RolandBerger /fka 2017
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Goodpoliticalstrategiccapacitieshavethreeaspects/components:1. Long-termstrategicevaluationoftrendsandoptions2. Transparent&democraticdiscussion&decisiononoptionsandstrategiesat
differentlevels3. Coherentpoliticalimplementationofstrategiesabletofaceincumbentand
particularinterests
• Neo-liberalismhasabandonedstrategymakingtolargecorporations• Climatechangeconcernshavetriggeredstrongglobaleffortsonaspect1• Chinahasveryeffectivestrategiccapacities– howeverneglectingaspect2• Japanhadveryeffectivestrategiccapacities– neglectingaspect2andkeyissues• BesttimesofEuropeanstrategiccapabilities:Delors /“celluledeprospective”
Europehasexcellentbutscatteredstrategicthinking.Moretransparencyandsystematisationcouldbefirststeptostrengthenaspects2and3.Abetterunderstandingofmulti-levelgovernancewillbeessential.
Europeneedsimprovedstrategiccapacities
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