Public-private partnerships key to delivering low-carbon jobs
Post Date: 14 February 2012
A new IEA report on the Energy Efficiency Directive and a new Bioeconomy Strategy put public-private partnerships at the heart of low-carbon sector economic growth and jobs.
As the draft Energy Efficiency Directive reaches a crucial milestone today, Europe is also launching a Bioeconomy Strategy in a combined determination to make low-carbon innovation an engine for economic growth using public-private partnerships.
The Commission’s strategy, ‘Innovating for Sustainable Growth: a Bioeconomy for Europe’, envisages public-private partnerships to drive investment in areas such as bioplastics production and biofuel refining, and has been welcomed by conservation and industry groups.
“We’re really enthusiast about the strategy,” said Joanna Dupont-Inglis, director of industrial biotechnology at the EuropaBio industry association, which represents industrial biotech firms such as DuPont and Novozymes.
The EU's bioeconomy sectors have an annual turnover worth €2 trillion and employ over 22 million people, or around 9% of the workforce.
The strategy comes with no money attached, instead providing a pathway to coordinate and integrate various other trends and national initiatives, that together would be more effective if they were operating in tandem.
These include the Common Agricultural Policy, which is due for reform by 2014, and the Horizon 2020 research programme, which does come with €80 billion of funding to help create sustainable growth and new jobs in Europe, amongst other EU and national programmes.
“We’re too slow and too piecemeal in converting research results into innovation and using these to tackle our biggest societal challenges,” said Máire Geoghegan-Quinn, commissioner for research, innovation and science, in unveiling the strategy, adding that its purpose is to offer “direction” toward sustainable growth.
The Bioeconomy Strategy discusses the conversion of Europe's commercial and agricultural production, such as its pulp and paper, chemical and food industries, so that they reduce greenhouse gases (GHG) emissions, and are adapted to and help to mitigate the adverse impacts of climate change, like droughts and floods.
It reckons that direct research funding under the Strategy using Horizon 2020 could generate about 130,000 new jobs and €45 billion in value added by 2025.
It contains an action plan that envisages a Bioeconomy Panel to coordinate between policies, initiatives and economic sectors.
This will involve the partial replacement of non-renewable products by more sustainable bio-based ones, using evidence-based methods to ensure they do not contribute to climate change.
"Personally, I’ve always been very cautious on biofuels,” Connie Hedegaard, the EU climate change commission, said recently. “It’s great to see the potential in new technologies, but we should take very much care in Europe that we are now not establishing a new big industry that we then - after some time - say, wow, that was not so good.”
Industry greeted the proposals warmly. Jesús Serafín Pérez, president of the trade group FoodDrinkEurope, welcomed the plan, and said he was "looking forward to the EU’s institutions to help make this communication a reality".
The Confederation of European Paper Industries said: “The EU can create a first mover advantage on global markets, if this bio-economy strategy leads to a true system shift and finds its place in a broader industrial policy agenda”.
Energy Efficiency Directive's job potential
The main legislation affecting jobs in the low-carbon sectors currently working its way through the continent's labyrinthine corridors of power is the Energy Efficiency Directive, which is being discussed at today's meeting of the Transport and Energy Council in Brussels.
Martin Lidegaard, the Danish minister of climate, energy and buildings, a key helmsman of the EED, said yesterday: “As Presidency, we will do our utmost to deliver on this request to get an agreement on energy efficiency by the end of June 2012, and to make sure that the current gap to the 20% Energy Efficiency target in 2020 is closed."
Some of Europe’s largest investors and private enterprises, including 1E, Danfoss, Knauf Insulation, Philips Lighting, Schneider Electric, Siemens, the European Climate Foundation and Kyoto Club have called upon national Energy Ministers to change tack on the Directive in advance of the meeting.
Donald MacDonald, a trustee director of the BT Pension Scheme, Britain's largest at £36 billion, and chairman of The Institutional Investors Group on Climate Change (IIGCC), said: "The issue of carbonisation is totally embedded into every single asset class. Failure to take this up in investment policies could be a failure of fiduciary duty."
"Energy efficiency is critical to the wider effort to mitigate climate change," MacDonald added. "For private investment to flow, policy makers must focus on removing barriers to investment inherent in sectors such as the real estate market.
"This requires policies that provide regulatory certainty to investors and are targeted enough to take the complexity of the market into account. The Energy Efficiency Directive will remain crucial to achieving this."
Nick Robins, head of HSBC's Climate Change Centre of Excellence, has said he is optimistic about the EED's implementation, and claimed that opposition to green investment was "bottoming out" after being fuelled by the economic crisis.
"We have the beginnings of a case for being more quietly optimistic. We are recognising the case for energy efficiency," he said.
The EED proposes market based energy efficiency obligation schemes such as the renovation of 3% of public buildings each year.
Research has demonstrated that these schemes could create half a million jobs and save around €50 billion (annually) in primary energy imports by 2020, as well as achieving half of the energy savings needed to close the 20% energy savings gap by 2020.
And the construction industry estimates that the equivalent of up to 530,000 full time jobs would be created in Europe through an ambitious strategy to improve energy efficiency in buildings by 2020.
As for financing the measures, to top up the EU-ETS carbon price investment, a new IEA report, Policy Pathways: Joint public-private approaches for energy efficiency finance, suggests three particular kinds of public-private partnership agreements which could be of use:
- Dedicated Credit Lines, established by a public body (such as a government agency and/or donor organisation) to enable financing of energy efficiency projects by a private-sector organisation (like a bank or financial institution)
- Risk-Sharing Facilities, involving a kind of partial credit guarantee established by a public body to reduce the risk of energy efficiency project financing to the private sector and
- Energy Saving Performance Contracts (ESPCs), which can condition the performance of energy service companies (ESCOs) using targets and private-sector financing.
Story: David Thorpe, News Editor