IRENA calls EU governments to support energy transition technologies

IRENA calls EU governments to support emerging energy transition technologies, such as kite power and others – being crucial for the long-term energy transition and full decarbonisation of energy systems.

Support R&D, new strategies and industry clusters

Increased R&D for energy transition technologies can become an essential ingredient for COVID-19 recovery programmes. Innovation-driven industrial policies have a key role to play in addressing climate change because innovation along the value chain depends on public institutions that incentivise firms to perform in-house R&D, quality certification, standard setting, incubation, technology transfer and diffusion. Government action is essential because financing tends to skew toward the deployment phase of incumbent dominant technologies rather than early-stage R&D. As a result, in order to stimulate a low-carbon revolution and green technology development, the state should consider providing long-term, patient capital and R&D grants.

The European Union has been a frontrunner in supporting renewable energy industries. Of the EU’s sizeable public funding for green tech R&D, around EUR 5.9 billion (about USD 7 billion) goes towards energy research and innovation projects under the Horizon 2020 programme. These projects create and improve transition-related technologies such as smart energy networks, tidal power and energy storage.

To further promote technology diffusion, governments can establish industry clusters for emerging energy transition technologies. Several renewable energy technologies – notably onshore wind and solar PV, which have become least costly technologies for power generation – have reached market maturity in the past years, but other technologies that will be crucial for the long-term energy transition and full decarbonisation of energy systems, are not yet cost-competitive. Examples include battery storage, hydrogen, synthetic fuels, electric vehicles, tidal power and kite power. Recovery programmes can help to bring emerging technologies closer to technological maturity.

Although these technologies can be supported individually under COVID-19 recovery programmes, policy makers might consider forming industry clusters to further develop them. By adopting national or regional strategies for emerging technologies, countries should be able to localise or regionalise many of the expected socio-economic benefits of industry development and job creation. The Netherlands and Germany, for instance, have developed a national hydrogen strategy aimed at creating a national hydrogen supply chain. Policies and regulation, infrastructure investment and support policies are all parts of the strategy.

IRENA (2020), The post-COVID recovery: An agenda for resilience, development and equality, International Renewable Energy Agency, Abu Dhabi