Posts Tagged ‘climate’

EFP Brief No. 228: Visions for Horizon 2020 from Copenhagen Research Forum

Friday, November 23rd, 2012

In January 2012, the Copenhagen Research Forum (CRF) gathered 80 European scientists to discuss the societal chal-lenges to be addressed by Horizon 2020, the next framework programme for European research and innovation, and consider how research could contribute the best solutions. This EFP brief explains the process behind the CRF and gives a summary of recommendations. It ends with a discussion on cross-disciplinarity and strategic partnerships as tools for organising research in order to solve complex societal challenges.

Visions for Horizon 2020 – from Copenhagen Research Forum

The EU Commission’s proposal for a new framework programme, Horizon 2020, is devoted to strengthening the strategic organisation of European research and innovation. The ambition is to mobilise excellent scientists across various branches of knowledge in order to provide solutions for complex societal challenges.

The Copenhagen Research Forum (CRF) set out to assemble a broad spectrum of leading European scientists to give their view on the Commission’s choice of societal challenges and possible ways of implementing Horizon 2020 as a means of tackling them. Approximately 600 scientists contributed throughout the process.

The CRF recommendations clearly affirm the EU Commission’s selection of societal challenges as well as the idea of supporting cross-disciplinary collaboration as a means to address crosscutting problems within and across challenges. The recommendations also send a strong signal of support for a framework where excellence, cross-disciplinarity and simplicity in administrative processes are key components.

The following pages provide an overview of the process behind the CRF, the main recommendations as well as a discussion of new instruments to be implemented to support cross-disciplinarity.

The CRF Process

The main idea behind CRF was to involve a broad spectrum of Europe’s top-level researchers in the making of Horizon 2020 since part of its preparation would take place during the Danish EU presidency in the first half of 2012.

The University of Copenhagen, Technical University of Denmark and the Capital Region of Denmark wanted the scientific community to provide unbiased input to Horizon 2020, with the aim of making Horizon 2020 as attractive as possible to researchers working in the areas covered by the six societal challenges. Professor Liselotte Højgaard was appointed as Chair of CRF.

The concept was finalised in the summer of 2011. The key issue was that CRF should convey ideas, visions and comments from outstanding researchers, all of whom were invited personally to join CRF. A full list of names of conference participants may be found in the CRF report (see link on the last page).

The process comprised several steps and organisational roles:

Chairship – This involved contacting researchers for the six groups and establishing a chairship comprised of one Dane and one European researcher for each challenge:

  • Health: Professor Liselotte Højgaard MD, DMSc and Professor Deborah Smith.
  • Food & Agriculture: Professor Peter Olesen and Director Kees de Gooijer.
  • Energy: Dr. Jørgen Kjems and Professor Kjell Hugo Bendiksen.
  • Transport: Head of Dept. Niels Buus Kristensen and Programme Director Dr. Christian Piehler.
  • Climate & Resources: Professor Katherine Richardson and Professor Johan Rockström.
  • Society: Professor Ole Wæver and Professor Loet Leydesdorff.

The six panel chairships were asked to invite up to 100 researchers to offer their views in a virtual discussion forum. Out of the invitees, 15 researchers from each group were also asked to meet at a workshop conference in Copenhagen on 16 January 2012 shortly after the Danish EU presidency began.

Virtual discussion forum – Divided equally between the six societal challenges, the 600 researchers were invited to comment on the draft text of Horizon 2020. The researchers were asked to contribute personal visions for the future as well as point out needs and possible solutions. They were also asked to suggest and comment on the technologies and the priorities within the given challenge as well as consider the instruments and implementation needed to ensure success as seen from a scientific perspective. Lastly, they were requested to contribute their ideas on how to secure the link between research and the innovation perspective stressed in Horizon 2020. All of the input was collected in a draft report that formed the basis of the aforementioned conference in Copenhagen.

Conference – On 16 January 2012, the six panels met and discussed the draft report, offering comments and adding new ideas inspired by the input collected in the virtual discussion forum. The aim was to reach agreement on (1) the views and recommendations in each of the six panels, (2) a joint statement during plenary sessions expressing the view on scientific issues cutting across all six challenges and (3) recommendations for the implementation of a challenge-oriented framework as a basis for excellent research and far-reaching solutions.

The Danish Minister of Science, Innovation and Higher Education, Morten Østergaard, attended the conference.

Outcome – The conference resulted in a condensed report offering ideas and solutions that could help form Horizon 2020 from a scientific point of view. The conclusions were presented to the European community in an open dialogue as explained in the following.

Dissemination – The CRF recommendations were presented to the EU Council of Ministers’ meeting in Copenhagen on 1 February 2012 and subsequently to the European Commission, the European Parliament as well as directly to Director General for DG Research and Innovation, Robert Jan Smits. The dissemination activities were closely connected to the Danish EU presidency.

In the following section, we provide key statements from the CRF panels’ recommendations. A full version can be found in the report.

Key CRF Recommendations for Each Societal Challenge

Health, Demographic Change and Wellbeing
  • Biomedical research and its implementation in clinical practice must be supported and accelerated. This requires a paradigm shift towards personalised medicine.
  • The global revolution in biomedicine is providing new technologies. Utilising those technologies requires vast efforts to expand and implement them.
  • A European platform engaging all key stakeholders to ensure discovery and delivery of these technologies will be crucial.
  • Establishment of a European Strategic Action for Healthier Citizens is also recommended to assist in strategic long-term healthcare research and planning, including preventive measures and the spread of best practice across Europe.

Food Security, Sustainable Agriculture, Marine and Maritime Research and the Bio-economy

  • Overriding challenges of increasing demand, competition for land use and other resource scarcities create massive pressure to produce significantly more per unit of a given resource.
  • Food, agriculture and land use must be seen in a complex and multi-directional value chain encompassing climate, available resources, environmental sustainability, transport, energy and health perspectives, not to mention social and economic requirements.
  • Key objectives are reductions in food waste and water consumption, valorisation of all bio-resources, including municipal bio-waste and agro- and bio-industrial side streams as well as the recycling of sufficient amounts of carbon and phosphor to maintain soil vitality.
  • Increasing prevalence of diet-related diseases and disorders calls for a balanced healthcare concept more geared towards prevention.
  • There is a need to create a collaborative innovation culture linking researchers, companies (especially SMEs), university education, NGOs and governments.
Secure, Clean and Efficient Energy
  • Horizon 2020 priorities should build on (1) a revised Strategic Energy Technology Plan (SET Plan), including a critical update of technology road maps and (2) a new, complementary systemic approach to combine technological, economical, political, social and cultural research to facilitate the transformation of the energy system as a whole.
  • Collaboration of social sciences and humanities with ‘hard sciences’ must be recognised as necessary and organised and funded accordingly to meet the challenges at the system level.
  • Coupling of educational efforts with research and innovation is critical for realising the ambitious plans for technology implementation and the overall system transition agenda.
  • Direct mobilisation of universities in addressing systemic challenges should be given high priority.
Smart, Green and Integrated Transport
  • The complexity of transport challenges requires closer cooperation across scientific domains and integration across universities, research institutions and industry than in the past.
  • Meeting the challenge of developing smart and green transport systems requires not only technological solutions but also a better understanding of transport behaviour and the use of innovative and effective policy instruments.
  • This calls for a more pronounced role for the social sciences than in previous framework programmes as well as for strengthening the integration of scientific domains.
  • Technological innovation will still be of paramount importance, including cleaner and safer vehicles for all transportation modes, cost-effective alternative fuels, advanced ICT for personalised real-time travel information with modal integration, metropolitan traffic management and smart payment systems.


Climate Action,Resource Efficiency and Raw Materials
  • Climate change constitutes one of the most urgent global resource challenges facing society, where the resource in question is our atmosphere as a receptacle for greenhouse gas wastes.
  • Development of actions and strategies for dealing with this challenge can potentially provide models for dealing with resource scarcity issues (biodiversity, ecosystem services, water, phosphorous, ores and metals etc.).
  • A general paradigm for dealing with resource scarcity is reducing the need for – and more efficient use of – the resource, combined with the adaptation of human activities to changed conditions and/or the recognition of resource scarcity.
  • In dealing with resource scarcity in general and the climate in particular, a major challenge is to channel the knowledge gained on the mechanisms of the Earth’s system into political and societal action. This requires cross-disciplinary approaches that integrate natural sciences with other disciplines.
  • The focus of Horizon 2020 should thus be to underpin societal responses to climate challenges by including research on systemic interaction, collecting baseline information and establishing monitoring activities of different mitigation and adaptation approaches.
Inclusive, Innovative and Secure Societies
  • The focus on ‘inclusive, innovative and secure societies’ provides a highly welcome challenge to the social sciences and humanities (SSH).
  • The Horizon 2020 proposal tends to focus on ‘hard’ technologies, especially statistics, assessments and measures of efficiency (evidence-based lessons), with a corresponding tendency to employ a technocratic definition of the nature of the challenges (e.g. in the security part, critical infrastructure protection is prioritised over international politics).
  • This represents a limited political and social vision that underestimates the power of citizens and communities to contribute to the realisation of inclusion, innovation and security.
  • Corresponding to a vision comprising a broader mobilisation of societal energies are forms of research that employ a wider selection of methodologies and theories to study the dynamics of society as productive and generative, rather than as the site of problems to be solved.
  • SSH can play key roles in the other societal challenges as well. It is important that researchers in the SSH engage scholars in the hard sciences in a joint effort to cultivate research-based innovation regarding the way expertise and democracy interact.

Excellence,Cross-disciplinarity and Simplicity

The ambition of using societal challenges as a means to organise European research requires new approaches. The message from CRF is to pursue this through a combination of excellence, cross-disciplinarity and administrative simplicity.

The CRF report signals a strong will among scientists to enter into cross-disciplinary collaborations in order to address complex challenges for which no single discipline has the solution. But this must not violate an equally strong need for administrative simplification and a continued effort to support excellence in all research activities. Without excellence as a fundamental requirement in all programmes, the cross-disciplinary ambition may become a hollow and strange add-on to ‘real’ science. Whenever a problem calls for a disciplinary approach, this should not be substituted with cross-disciplinarity. Timely application of new approaches must be a key priority.

Strategic Partnerships as Tools for Organising Cross-disciplinary Collaboration?

One of the ways in which cross-disciplinarity may enter the Horizon 2020 programme could be by establishing strategic partnerships devoted to delivering solutions to complex challenges. Strategic partnerships could be a way for the Horizon 2020 programme to nurture new constellations of fields of expertise without establishing very detailed road maps or other guidelines ‘from above’. It would be important to involve industrial and civil society actors in the formulation of strategic objectives in order to ensure that strategic partnerships become platforms for linking strategic priorities from science, policy, industry and other actors and that these partnerships organise collaboration accordingly.

A key feature of implementing strategic partnerships should be to provide them with sufficient operational freedom so as to secure flexibility and entrepreneurship in how partnerships pursue their goals at the project level.

Strategic partnerships should be an invitation and challenge to European research to explore new models of collaboration. This corresponds also with a clear recommendation from the CRF advocating the setup of strategic platforms connecting long-term visions with mid- and short-term investments in a dynamic way.

The advantage of a partnership-based organisation of strategic research is that it allows coordinating a variety of fields and actors while creatively linking actors who would otherwise not establish collaborative ties. Coordination and connection are thus key aspects of well-functioning strategic partnerships – but only if the model builds on principles that afford strategic partnerships sufficient degrees of freedom in organising collaboration projects. Otherwise, the risk of reproducing fragmentation and the resulting problems known from FP7 cooperation will be substantial.

The CRF epitomises an interest among scientists to engage in shaping the framework conditions of research and innovation. Beyond the scope of specific recommendations, the CRF may serve as a source of inspiration for how to establish a direct dialogue between the scientific community and policymakers.

The CRF report was followed up by a ‘CRF II’ process during which the chairship of CRF put together a set of recommendations for the implementation of Horizon 2020 in light of the CRF report. The resulting paper (Højgaard, L. et al. [2012a]) focuses on recommendations for implementing measures to promote excellence, cross-disciplinarity, simplicity and impact. The recommendations for implementation along with the CRF report can be found at the CRF homepage (crf2012.org).

Authors: Brenneche, Nicolaj Tofte                   ntb.lpf@cbs.dk

Højgaard, Liselotte      liselotte.hoejgaard@regionh.dk

Sponsors: Capital Region of Denmark

Technical University of Denmark

University of Copenhagen

Type: European research and innovation policy, Horizon 2020
Organizer: Capital Region of Denmark, Technical University of Denmark, University of Copenhagen

Contact: Anne Line Mikkelsen, amik@adm.dtu.dk

Duration: 2011 – 2012
Budget: n.a.
Time Horizon: 2020
Date of Brief: November 2012

Download: EFP Brief No. 228_Visions for Horizon 2020.

Sources and References

Højgaard, L. et al (2012): Visions for Horizon 2020 – from Copenhagen Research Forum.

Højgaard, L. et al (2012a): Copenhagen Research Forum II. Recommendations for an optimized implementation of Horizon 2020.

Both are available at www.crf2012.org.

EFP Brief No. 161: Roadmap Environmental Technologies 2020 Integrated Water Management

Tuesday, May 24th, 2011

In the project “Roadmap 2020”, funded by the German Federal Ministry of Education and Research, seven fields of environmental policy were investigated in order to explore to which extent research and development activities will be able to foster future environmental innovations. The purpose of the project was the identification of strategic options for research and development and their transfer into practice in the field of environmental technologies by 2020. The results were gained by literature and Internet research, an expert opinion survey and four workshops on different topics.

EFP Brief No. 161_Roadmap Environmental Technologies

EFP Brief No. 159: ForeSec: Europe’s Evolving Security

Tuesday, May 24th, 2011

The objective of ForeSec is to tie together the multiple threads of existing work on the future of European security in an attempt to provide a more coherent guidance, orientation and structure to all future security-related research activities. It aims at enhancing the common understanding of the complex global and societal nature of European security in order to pre-empt novel threats and capture technological opportunities. The project takes a participatory approach in an attempt to facilitate the emergence of a coherent and ho-listic approach to current and future threats and challenges to European security. ForeSec builds a pan-European network around the European security foresight processes and helps foster a societal debate on European security and security research. As this brief is published, ForeSec still has a few months of project work lying ahead. Accordingly, all results presented here are merely intermediate.

EFMN Brief no. 159_ForeSec

EFP Brief No. 150: Strategic Capacity Building in Clusters to Enhance Future-oriented Open Innovation Processes

Sunday, May 22nd, 2011

For the purpose of increasing and sustaining business and regional long-term competitiveness, information and training modules were developed to enrich cluster development policies with tools that give incentives for and facilitate ‘outward-looking’ (open innovation) and forward-looking (foresight, technology assessment) activities and thus provide strategic guidance for developing future-proof, open innovation processes. After testing the tools in ICT, mechatronics and life sciences clusters, they are now being applied in a trans-regional foresight approach to develop a joint research agenda for clusters in the economically more and more important creative industries.

Regional Cluster Development to Systematically Boost Innovation

In the globalising knowledge economy, regional clusters are increasingly understood – in particular with respect to their ‘non-regional’ dimensions – as local nodes in global knowledge
flows. The Innobarometer 2006 on clusters’ role in facilitating innovation in Europe confirmed that companies situated in clusters are more innovative and competitive than companies outside. In strategically guided and well-managed clusters, the enhanced innovativeness and competitiveness at the firm level finally results in sustainable regional economic development. Thus, policy-makers at all administrative levels use cluster support instruments to systematically boost innovation and competitiveness of both businesses and regions. The cluster concept captures current discussions of managing (regional) innovation systems and open innovation processes at both the regional and business level. At the business level, management professor H. Chesbrough claims a fundamental shift in innovation paradigms from closed to open innovation and advocates collaborative and open innovation strategies and open business models to take the full benefit from collaborating with external partners. More and more, (in particular multinational) enterprises take into account, in addition to internal resources, the competences of external partners to meet the challenges of  ncreased complexity of research, technological development and innovation (RTDI), growing global competition leading to shortened ‘time to market’ etc. Regional clusters as ‘innovative hot spots’ and local nodes in global innovation networks play an important role for companies looking for external partners to form strategic RTDI collaborations. The business strategy of collaborative and open innovation at the micro-level poses considerable challenges for macro-level innovation policy. For example, new complex interactions and relationships emerge and continue to evolve between public
research organisations and industry, which in turn lead to new ways of organising and managing R&D and innovation by all stakeholders in an innovation system. Thus, horizontal and vertical coordination of policies and support of cross-sectional linkages and networks are imperative for systemic and interactive RTDI policy making. In this respect, (trans-) regional cluster development is broadly seen as an adequate and effective instrument to enhance and coordinate knowledge flows and collaboration between regional stakeholders coming from industry, science and public administration.

Linking Forward- & Outward-looking Approaches

Both the discussions on open innovation business strategies and on systemic regional innovation policies emphasize the vital role of strategic intelligence for innovation and point to the value added of linking forward-looking and openinnovation-focused approaches.
To develop and implement successfully future-oriented collaborative and open innovation processes, businesses rely on strategic economic and business intelligence in order

  • to generate common visions about longer-term market and
    technological developments,
  • to derive promising new products and services and define
    future business models, and
  • to develop and agree on joint innovation projects with
    external strategic partners.

Thus, in a world of open innovation, future-oriented technology analyses – comprising foresight and technology assessment activities – are decisive for strategic knowledge generation and transferring it into new products and services. The faster and easier businesses gain access to strategic knowledge and integrate it in their company strategy, the more successful they will be. This becomes evident in ‘business ecosystems’ where businesses co-evolve their capabilities around new technologies and jointly design a kind of ‘mass customization’ of new products and services to satisfy individual customer needs and to succeed in the worldwide ‘competition for the future’. Though, many enterprises (in particular SMEs) mostly rely on more easily accessible, short-term market information (e.g. from their clients). They often do not know how to sustainably
realise their full market potential by

  • thinking and acting more in a longer-term perspective and
  • developing strategic alliances and networks.

Due to restricted internal resources, most of them would have to use external strategic knowledge if they realise the need to change their business-as-usual approaches. In this context, strategic cluster support instruments can help these enterprises meet future challenges and support strategic capacity building in the region. Strategic cluster support combines forward- and outward-looking approaches (e.g. in cluster foresight type activities) to facilitate knowledge creation processes contributing to long-term competitiveness and sustainable economic development. Specifically, it

  • promotes knowledge exchange and strategic learning processes between cluster stakeholders in order to create a localised and unique knowledge stock,
  • facilitates cross-cluster, trans-regional and transdisciplinary knowledge flows and strategic business linkages to enrich and refresh the local knowledge pool with external impulses and to leverage complementary assets
    and capabilities of clusters in different regions, and enables cross-cluster policy learning and pursuit of common aspects of strategic cluster policies.

Orchestrating Business and Cluster Strategies

The sustainable success of cluster development depends substantially on the concerted actions of many different actors – multiple levels of government and public agencies, companies, educational and research organisations etc. In this context, it is crucial to develop a common vision and to  implement a cluster strategy that

  • reflects the specific needs of the cluster stakeholders,
  • focuses on the most promising international technology and market development perspectives, and
  • integrates a broad range of (European, national and regional) public policies and private sector activities.

Combining forward- and outward-looking approaches also means

  • to provide the regional stakeholders with strategic longerterm orientation by taking stock of available strategic knowledge from both public (e.g. regional foresight) and private actors (e.g. from corporate foresight or roadmapping activities in large companies) and
  • to align business strategies and longer-term regional cluster strategies.

To summarise, succeeding in linking forward- and outwardlooking approaches and creating a multi-actor, multi-level coherence of strategies and congruent activities means leveraging synergies.  Multiplier effects can be achieved (e.g. bundling forces to boost innovation effectively), and better – because broadly based and mutually strengthening – economic decisions lead to increased and  sustained business and regional competitiveness. These positive impacts can be made sustainable if, in addition to facilitating access to external strategic knowledge, the strategic capacities of the  innovation actors themselves are systematically built up in a way that takes into consideration their different absorptive and knowledge management capabilities.

The Connect2Ideas Approach – Strategic Capacity Building in Clusters

The FP6-funded project Connect2Ideas (June 2006 to May 2008) aimed at fostering trans-national technology transfer – mainly between multinational enterprises (MNEs) and SMEs – by enhancing future- and open-innovation-oriented thinking and acting in SMEs, related business networks and clusters. In this context, the Steinbeis-Europa-Zentrum (SEZ) developed a series of two consecutive workshops on Strategic Capacity Building & Open Innovation and tested it in three regional clusters in Baden-Wuerttemberg, Germany with varying open innovation regimes and institutional settings (ICT, mechatronics and life sciences clusters). The strategic experience and knowledge of MNEs, for instance through corporate foresight, strategic planning and open innovation, should be used to improve strategic capacities also in their business environments (clusters, regions and institutions)

  • to overcome mostly short-term orientation by recognising the strategic relevance of future-oriented collaborative and open innovation activities,
  • to develop common visions concerning future trends and challenges (using horizon scanning techniques with a time horizon of ten years) and, based on these results,
  • to derive joint innovation projects aiming at sustainable long-term cooperation.

Target groups and participants were MNEs (e.g. Siemens, IBM, SAP) with deep roots in the region, SMEs, research and education organisations and other regional stakeholders including representatives from public RTDI funding agencies and public administration.
The preparation phase included

  • identifying and mobilising MNEs, company networks and business clusters and
  • analysing in an innovation audit type approach the strengths and weaknesses of the cluster-related innovation system with specific focus on the barriers to open innovation processes.

Common Vision about Trends and Challenges

The first workshops introduced various methods, concepts and approaches to strategic ‘future management’ and then focused on the development of a common vision about future trends
and challenges using specific foresight and TA elements and techniques such as

  • SWOT (strengths, weaknesses, opportunities, threats)/ STEEPV (social, technological, economic, environmental, political and values) analyses to identify key global trends
  • and (based on local strengths and weaknesses identified in advance) to discuss common longer-term challenges and opportunities, and impact analyses to assess the impact of the most relevant trends with a specific focus on business perspectives: for instance, future markets (customer needs), business models, innovation and value creation processes, requirements with regard to human resources (qualifications, skills) etc.

Future-oriented Open Innovation Processes

Based on the results of the first workshops, the subsequent workshops and follow-up activities focused on the development of joint innovation projects aiming at sustainable longterm cooperation using techniques such as

  • technology watch/scouting to identify existing or wanted technologies in the international business environment,
  • value chain analysis to identify potential international cooperation partners in the respective global value chain and innovation network, and
  • partner search and search for funds to identify potential strategic cooperation partners for the cluster stakeholders including relevant funds (e.g. FP7, CIP, ERDF, national, regional) for subsidising the strategic collaboration.

Success Factors and Outcomes

Critical success factors of the workshop series included the comprehensive preparation in close coordination with the responsible cluster organisations (e.g. preparing a draft SWOT and value chain, motivating the relevant cluster stakeholders, attracting high-reputation external experts for keynote speeches etc.). The quality of the introductory statements of the keynote speakers was also important to stimulate a constructive debate on future trends, specific impacts and open innovation processes. These workshops could only prepare the ground for forward- and outward-looking thinking and acting. Thus, interested cluster actors and stakeholders were provided with ongoing advice and assistance for implementation. The pilot workshops in Baden-Wuerttemberg contributed to increasing the strategic capacity at the firm level as well as at the level of regional economies and decision-makers:

  • They provided a basis for collaborative innovation projects with regional and international partners in the specific cluster and regional value chain (e.g. in the context of the German ‘Excellence Cluster’ competition).
  • The involved ministry decided to continue the workshop series in the framework of its participative regional innovation and new cluster policy. In this respect, the workshops
    served as a trigger for further cluster foresight activities in Baden-Wuerttemberg.

Outlook:
From Connect2Ideas to CReATE

The Connect2Ideas approach highlights the fact that strategic guidance enriches traditional regional RTDI policy instruments by generating a creative atmosphere and a seedbed for ongoing learning processes. Thus, it provides – independent of different local open innovation regimes and   institutional settings – a genuine value added – both for businesses and cluster policies. The Strategic Capacity Building & Open Innovation workshops demonstrate how linking forward-looking and openinnovation- focused approaches can support strategic capacity building in clusters and thus enhance future-oriented open innovation processes at the business and regional levels:

  • Businesses overcome their mostly short-term orientation by recognising the strategic relevance of longer-term perspectives and collaboration with external partners.
  • Regional RTDI policy-makers take into account the specific needs of the cluster stakeholders with respect to future challenges and opportunities, and, on this base, create long-term, sustainable competitiveness perspectives and framework conditions for the innovation systems.
  • Aligning future-oriented business strategies and longerterm regional cluster strategies lead to better, broadly based and mutually strengthening innovation processes contributing to increased and sustained competitiveness.

Based on the Connect2Ideas experience and in the context of the German (national) ‘Excellence Cluster’ competition, SEZ developed specific training modules for facilitating and improving
strategic cluster development at multiple levels:

  • cluster level: developing a common vision and strategy for the cluster and defining an action agenda that reflects the unique needs and capacities as well as the most promising international technology and market development perspectives;
  • ‘sub-cluster’ level: refining the cluster strategy, adopting the strategy and agenda to the specific needs and capacities of the respective ‘sub-cluster’ network and implementing concrete joint actions;
  • single firm level: training in future-oriented strategic innovation management results in an endogenous base for competitive, business specific roadmaps and strategies.

This triad in developing innovation-related strategies in clusters leads to aligned innovation processes and therefore increases the impact of coordinated RTDI actions. To avoid negative rigidity
and lock-in effects and to create a climate conducive to visionary, out-of-the-box thinking, the knowledge exchange with external partners is an important element in all strategy processes. In this respect, SEZ took up the Connect2Ideas approach and elaborated for the FP7-funded ‘Regions of Knowledge’ project CReATE (March 2008 to October 2010) a methodology to develop a trans-regional joint research agenda for clusters in creative industries sectors. Creative industries already contribute substantially to economic value creation and employment, and their importance is expected to grow further. So far, however, only some regions benefit from the economic stimuli of creative industries. In addition, enterprises in this sector highly depend on transregional and trans-disciplinary collaboration. Addressing both issues, CReATE aims at boosting the sector as a whole in Europe, especially by stimulating future-oriented open innovation processes between the  takeholders of creative industries clusters. The CReATE methodology uses a modified Connect2Ideas approach to define research priority areas decisive for the future innovativeness and competitiveness of the clusters. Agreeing first on regional priority areas (based both on regional excellence and ‘aspirations’), a trans-regional joint research agenda will be elaborated in a coordinated process of interlinked regional and trans-regional phases. By integrating the broad spectrum of stakeholders (including funding bodies), regional and trans-regional project ideas will be developed. The impact aimed for is to improve the innovativeness and international competitiveness of the creative industries in the participating regions, but also to stimulate growth beyond them in the EU. Processes of learning from and dissemination of the approach and findings beyond the project frame will be secured by tailored training workshops on future-oriented strategy development for companies and cluster managers.

 

Authors: Dr Björn Sautter sautter@steinbeis-europa.de
Dr Günter Clar clar@steinbeis-europa.de
Sponsors: European Commission (FP6/FP7), DG ENTR / DG RTD; regional bodies and enterprises
Type: Cluster foresight exercise
Organizer: Steinbeis-Europa-Zentrum, Stuttgart, Germany (responsible for the project parts described in this brief)
Duration: 2006 – 2010
Budget: € 370,000
Time Horizon: 2020
Date of Brief: Septmeber 2008

Download: EFMN Brief No. 150_Open Innovation

Sources and References

Project website Connect2Ideas: www.connect2ideas.com
Project website CReATE: www.lets-create.eu
For further information, please contact
Dr Bjoern Sautter (sautter@steinbeis-europa.de), or
Dr Guenter Clar (clar@steinbeis-europa.de)
http://www.steinbeis-europa.de/340.html

EFP Brief No. 149: EU-Africa Energy Partnership: Implications for Biofuel Use

Sunday, May 22nd, 2011

This brief intends to provide an overview of the rationale underlying the EU-Africa Energy Partnership, in addition to an analysis of the potential implications of this policy on the development of sub-Saharan African nations. It is posited that the partnership could have potentially negative repercussions if critical uncertainties are not sufficiently taken into account, and that it is in the EU’s best interest to ensure that outcomes are genuinely equitable. The research also has implications for other developing nations around the world seeking to further their economies and raise living standards by means of engaging in the global biofuels industry.

Europe, Energy Security and Biofuels

It is widely acknowledged that the energy security of the EU, as a whole, is deficient with respect to meeting future energy requirements. At the same time, the EU has resolved to de-crease its carbon footprint and wean itself off from environ-mentally damaging fossil fuels. A further concern is that even if the developed world manages to arrest the proliferation of greenhouse gas (GHG) emissions the developing world will still continue to pollute.
To address these important issues, the EU has developed the EU-Africa Energy Partnership. The rationale, broadly speak-ing, is twofold:

  • Secure the EU’s energy supply and allow its member states to meet challenging emissions reduction targets.
  • Provide sub-Saharan African economies with a further export market, in addition to allowing these nations to leapfrog to lower-emissions technologies.

Although the partnership deals with renewable energy in its broadest sense, there appears to be great emphasis on the cul-tivation of biomass used in the production of renewable fuels such as ethanol and biodiesel, for which there is increasing demand within the EU. Despite the ostensibly sound intentions of the policy, it remains to be seen whether the energy partner-ship will truly be mutually beneficial.
The aim of this brief is to examine the critical uncertainties that could potentially damage the workability and equitability of the energy partnership. A key consideration, here, is that the partnership has seemingly been formulated under ceteris pari-bus conditions. Thus, the partnership’s success is predicated on the continuation of existing trends, such as growth in bio-fuel demand and the ability to cultivate biomass at market-friendly prices in the future. Yet, the increasing complexity of technological systems, the advent and potential adoption of new technologies, in addition to climate change, means that it cannot be assumed that all things will indeed remain equal.

EU Biofuel Policy

The EU has set targets for biofuel usage within the member states. Policy measures designed to stimulate biofuel use were introduced in 1992. The overall aim has been to reduce the cost of biofuels in comparison with conventional petroleum products, which otherwise would be higher given the produc-tion costs and economic risk associated with fluctuations in oil price and the value of biomass-derived by-products (Cadenas and Cabezudo, 1998).
The EU Commission set a political target of substituting 20 percent of conventional biofuels by 2020 (European Commis-sion, 2001, p. 45). The even more ambitious COM(2006)845 proposed that biofuel targets for transport fuel should be 20 percent for the same year. The EU Biofuels Directive (2003/30/EEC) requires member states to ensure that a mini-mum proportion of fuels sold are biofuels (see Faaij, 2006). The aim is to ensure that 5.75% of conventional fuels are re-placed by biofuels, although the Biomass Action Plan (BAP) has concluded that these targets will not be reached (Commis-sion of the European Communities, 2006, p. 6).
There is thus a growing requirement for biofuel production within the EU and indeed a growing demand for biofuels (es-pecially biodiesel). Since the EU member states do not have the capacity to increase biomass cultivation without causing an increase in food prices (a politically unpalatable outcome), it has been deemed necessary to look for alternative ways to satisfy this demand.

Energy Partnership

In this context, the EU-Africa Energy Partnership emerges as an important component of the EU’s aim to increase the use of bio-fuels for transport within the member states, thereby allowing the EU to meet challenging biofuel targets, contribute to global GHG mitigation strategies (such as Kyoto), and address concerns regarding energy security. The partnership is argued to be mutually beneficial, since it will also promote economic and social improvement in sub-Saharan African countries and allow such nations to switch to more environmentally friendly patterns of energy use.
The partnership is intended to promote greater interconnectiv-ity between energy systems and ensure a diversity of energy options (Commission of the European Communities, 2006, p. 15). Although there is reference to alternative energy sources, such as hydropower (ibid.), there is clearly an emphasis on greater biomass cultivation and biofuel production, perhaps to the detriment of other energy solutions.
Energy security is obviously an important component of the partnership. Sub-Saharan Africa thus has the ability to sup-plement volatile supplies (and pricing) of OPEC oil with bio-mass cultivated in the region. Although the sub-Saharan re-gion is also clearly not especially stable, it at least has the ca-pacity to offset some of the risk associated with dealing with OPEC countries.

Production Processes

Given the current high cost of second-generation biofuel pro-duction processes (which use the whole organic matter as a feedstock), it can be assumed that the bulk of the biofuel feed-stocks grown in sub-Saharan Africa would be used in arguably inefficient first-generation production processes. Here, only the sugars and starches (rather than the whole plant) are used for ethanol production, while only the extracted vegetable oil is used in biodiesel production (Charles et al., 2007).

Critical Uncertainties

It is necessary to look at the critical uncertainties that could impact on the success of the EU-Africa Energy Partnership.

Climate Change

The energy partnership, in as much as it relates to promoting sub-Saharan Africa as a source of biofuel feedstock, assumes that current climatic conditions will prevail. Yet climate change could mean that climatic conditions in areas currently suitable for agricultural endeavour might militate against prof-itable biomass cultivation.
There are a number of critical factors associated with climate change that need to be taken into account:

  • Increased uncertainty with regard to rainfall patterns: This will problematize when to plant and place pressure on water use, with potential social repercussions.
  • Increased and more severe meteorological phenomena: Floods could wipe out entire fields; storms could damage or destroy harvests, while uncontrolled fires (resulting from co-factors of drought, thunderstorm activity or hu-man action) could do likewise.
  • Increased incidence and severity of pestilence: Changed climatic conditions could make crops more susceptible to pests, thereby increasing the need to employ pesticides (with cost penalties and potential impact on the local envi-ronment and human health).

These factors, when taken together, suggest that it will be more difficult to plan for weather-related phenomena into the future. Thus, claims of increased energy security within the EU resulting from the partnership need to be tempered with the realization that traditional agricultural techniques do not guarantee constant and predictable harvests, while climate change may exacerbate uncertainty.

Environmental Impacts

Agriculture has brought about widespread environmental deg-radation around the world. Thus, it is important to bear in mind the potentially negative impacts that intensified farming practices will have on ecosystems in sub-Saharan nations, in addition to the region as a whole.
The possible factors that could lead to negative environmental impacts are as follows:

  • Increased use of fertilizers: Run-off from fertilizers in-creases the incidence of algal bloom in aquatic environ-ments; fertilizers lead to an increased level of atmospheric N2O harmful to the ozone layer; and fertilizer production and distribution is energy inefficient and contributes to greenhouse gas proliferation.
  • Increased use of pesticides: Pesticide run-off pollutes local watercourses, results in a loss of biodiversity when food supplies for higher organisms are reduced, can flow throughout food-chains, thereby leading to chemical build-up in higher organisms, especially avian fauna; pro-duction processes and distribution incur GHG penalties, can be harmful to human life and can contaminate water supplies (of particular importance in developing nations).
  • Increased threat of deforestation: Expanding biofuel mar-kets may prompt changes in land-use, potentially leading to deforestation, entailing significant biodiversity and CO2 penalties.

These factors could be aggravated if a greater demand for bio-fuels in the EU member states is occasioned and if changing weather patterns result in a need to ‘make hay while the sun shines’. Such a demand could effectively see the EU exporting local environmental degradation from its member states to sub-Saharan Africa. Environmental degradation could also lead to opportunity costs resulting from a loss of potential eco-tourism income.

Technological Change

Biofuels, at best, will be an important component in a future energy mix. There are no indications that biofuels will ever replace petroleum-derived products on a one-for-one basis (Di Lucia and Nilsson, 2007). Biofuels enjoy a clear advantage over other potential energy solutions, especially since they take advantage of existing infrastructural systems (Foresight Vehicle, 2004). This ensures that switching costs are reduced.
On the other hand, there is the threat that biofuels will be ren-dered redundant by other technologies. There is much evi-dence throughout history to suggest that over-reliance on a single natural resource for a nation’s prosperity is not sustain-able over the long-term. For example, Chile, which prospered on the basis of its export of sodium nitrate (saltpetre), lost this advantage when scientists developed a synthetic alternative.
Some threats to the increasing importance of biofuels are as follows:

  • Increase in use of nuclear energy (and thus ‘clean’ elec-tricity).
  • Switch to cleaner second- (and third-) generation biofuel production processes.
  • Development of a hydrogen economy (predicated on the availability of clean, renewable energy, such as from the sources listed below).
  • Other energy paradigms, for instance, geothermal, hy-droelectric, photovoltaic, wind etc.

Thus, over-capitalization in biomass cultivation for first-generation production processes (in particular) may lead to un-sustainable increases in foreign debt, in addition to severe job losses and resultant social upheaval. In a worst case scenario, more efficient technologies, if they become widely adopted around the globe, could lead to the biofuel industry’s collapse.

Opportunity Costs

Even if the biofuel industry remains important, over-emphasis on biomass cultivation could result in a failure to develop in-dustries that have the potential to contribute greater value added to sub-Saharan African economies. This would espe-cially be the case if insufficient attention were paid to process-ing the feedstock in sub-Saharan Africa, as could occur in na-tions traditionally focussed on exporting natural resources.
Biomass cultivation, in the event of an ever-increasing de-mand for biofuels, would not merely translate into sub-Saharan African countries gaining an OPEC-like significance on the world stage. This is especially the case given a) the potentially wide dispersal of biomass cultivation and b) the high likelihood that biofuels would remain one of several al-ternative energy solutions. African biomass would also have to compete with that cultivated in North and South America, and also in South-East Asia and the Indian subcontinent. Given that these regions are already more highly industrialized than most sub-Saharan African nations, it is plausible that greater value added would occur in these regions.
There is also a danger that biomass cultivation in sub-Saharan Africa could engender an increased dependency on multi-national corporations involved in agribusiness. There are al-ready substantial links to agriculture in developing nations and the research-intensive products, including seeds, support sys-tems and expertise, being offered by multinational agribusi-ness entities.

Export Commodity Dependency

Sub-Saharan Africa has a long history of supplying European nations with raw materials to be used in value-adding produc-tion processes. There is thus the potential for this situation to continue if Europe resolves to view the region merely as source of inexpensive feedstock for biofuel production, rather than as a knowledge-intensive producer in its own right.
Many of the economic and social problems faced today in sub-Saharan Africa are deeply rooted in history. When the Euro-pean colonial powers partitioned Africa, they viewed the colo-nies as suppliers of raw materials for their factories. Farmland traditionally used for food cultivation, even after the inde-pendence of the former colonies, was turned over to cash crops such as cocoa, cotton, coffee and rubber. The result was that Africa exported what it did not need, and imported what it did, thereby leading to substantial trade deficits and continued indebtedness (Carmody, 1998). This is because the low price obtained for cash crops rarely if ever matches the relatively high price paid for imported food, in addition to luxury goods and hardware desired by affluent members of society.
It is important to be awake to the potential for ongoing com-modity dependence to occur, especially if the EU pays insuffi-cient attention to developing sub-Saharan Africa as an energy producer rather than merely an agricultural supplier.

Investing in Sub-Saharan Future

It is possible to formulate a number of potential policy impli-cations that would add rigour to the energy partnership.

  • Moving away from first-generation biofuels: A continued emphasis on first-generation biofuel production processes reinforces sub-Saharan Africa as a supplier of cash crops.There are inherent problems with first-generation biofuel production processes. A failure to address these and move demand towards more efficient second-generation proc-esses could lead to a global undermining of confidence in biofuels as a source of renewable energy.
  • Ensuring environmental sustainability: This is tied closely to the previous consideration, but also with the necessity of preventing local and regional environmental degrada-tion as a result of poor farming practices or indeed wide-spread change in land-use. There is a need to develop mechanisms to ensure that increasing demand for biofuels within the EU does not lead to catastrophic environmental impacts in sub-Saharan Africa.
  • Investing in sub-Saharan Africa’s future: The energy partnership should be used as a component in an overall strategy to enhance economic development in the region. A failure to do so will result in greater amounts of envi-ronmental degradation (including greenhouse gas emis-sions) over the long-term.

In short, the nations of the region need to acquire their own energy security and processing infrastructure. The EU-Africa Energy Partnership must serve as a vehicle to promote these ends. To achieve this end, sufficient political will over the long-term to propagate cleaner biofuel production processes is required. If not, the biofuels market could be irreparably com-promised and the partnership with it, with grave implications for not only the EU and sub-Saharan Africa, but also the planet as a whole.

 

Authors: Michael Charles michael.charles@scu.edu.au
Sponsors: Southern Cross University, Australia
Type: Single issue, energy policy
Organizer: n.a.
Duration: n.a.
Budget: n.a.
Time Horizon: 2018
Date of Brief: July 2008

Download: EFMN Brief No. 149_EU-Africa Energy Partnership

Sources and References

  •  Cadenas, A., and Cabezudo, S., 1998. Biofuels as sustain-able technologies: perspectives for less developed coun-tries. Technological Forecasting and Social Change 58(1–2), 83–103.
  • Carmody, P., 1998. Constructing alternatives to structural adjustment in Africa. Review of African Political Econ-omy 25(75), 25–46.
  • Charles, M.B., Ryan, R., Ryan, N., and Oloruntoba, R., 2007. Public policy and biofuels: the way forward? En-ergy Policy 35(11), 5737–5746.
  • Di Lucia, L., and Nilsson, L.J., 2007. Transport biofuels in the European Union: the state of play. Transport Policy 14(6), 533–543.
  • European Commision, 2001. Green Paper: Towards a European Strategy for Security of Supply. Directorate-General for Transport and Energy.
    http://ec.europa.eu/energy/green-paper-energy-supply/doc/green_paper_energy_supply_en.pdf
  • European Commission, 2006. Communication from the Commission: An EU strategy for Biofuels—Impact As-sessment. Commission Staff Working Document COOM (2006) 34 final.
    http://ec.europa.eu/agriculture/biomass/biofuel/sec2006_142_en.pdf
  • Faaij, A.P.C., 2006. Bio-energy in Europe: changing technology choices. Energy Policy 34(3), 322–342.
  • Foresight Vehicle, 2004. Foresight Vehicle Technology Roadmap: Technology and Research Directions for Fu-ture Road Vehicles, Version 2.0.
    http://www.foresightvehicle.org.uk/public/info_/FV/TRMV2.pdf

EFP Brief No. 143: Teagasc 2030: Reinventing the Irish Agri-Food Knowledge System

Sunday, May 22nd, 2011

Teagasc means ‘teaching’ or ‘instruction’ in Gaelic. It is the name of the food and agricultural research, education and advisory body in Ireland. By 2006, fundamental changes happening to the Common Agricultural Policy in Europe were already being felt throughout the Irish agri-food sector. New and emerging issues were gaining importance and looked likely to have an impact on the sector. It was necessary to ask how Teagasc could maintain its relevance to clients and stakeholders as it moved ahead. The study builds upon previous foresight exercises and long-term strategic studies undertaken in Ireland and the EU.

Employing Knowledge for  Developing a Positive Vision  and Creating Opportunities

Teagasc 2030 was designed to establish a broadly-shared vision of what the Irish agri-food and rural economy would look like in 2030 and a vision of what Teagasc could become as the leading science-based knowledge organisation in the sector. It set out to develop the strategic capabilities of Teagasc, improve its ability to provide proactive leadership on complex issues, identify strategies and mechanisms to maximize the impact of its knowledge generation and procurement, technology transfer and education activities through innovation support and to develop an internal culture of continuous renewal.

The Steering Committee (SC) included key Teagasc managers, high-level representatives from relevant organisations, such as the university system and the Environmental Protection Agency,influential business leaders from both the farming and food sectors, as well as international experts. The members of the SC played a decisive role in the process in that they were fully engaged and provided constructive input each time the group convened. The Working Group (WG), consisting of Teagasc employees aided by two international consultants, was responsible for the detailed planning and execution of the exercise. The Foresight Panel (FP) consisted of experts from Teagasc, representatives of the farming and food sectors, as well as experts from the research community, including a commercial research service provider. FP members participated in and contributed to workshops and other activities organized by the WG.

Early consultations with the SC reinforced the need for a structural approach that went beyond the traditional sectoral view. The SC emphasized the need for new strategic capabilities that would enable the organisation to operate in a rapidly changing context. One of the first tasks of the WG was to review foresight exercises on food, agriculture and the rural economy that had been conducted previously, whether in Ireland or around the world, start a discussion on the scope of the exercise and get agreement on the nature of the results it should provide. The first observation of the WG was that previous foresight exercises on food, agriculture and the rural economy tended to focus on problems related to commodity markets and the Common Agricultural Policy (CAP) system of payments. It was resolved at an early stage that Teagasc 2030 would have to do more than this by identifying how knowledge could help create opportunities for young people in the sector and by developing a positive and realistic vision of an innovation-led rural economy.

The work itself was organized in two phases. A Divergent Phase, where the main purpose was to study issues relating to the organisation, the sector and the broader economy in a creative and exploratory fashion, brought in outside knowledge and expertise, as well as relevant case-studies from abroad. The second Convergent Phase focused on choices to be made about desired outcomes, long-term visions for the future of Teagasc and the context in which it would operate, as well as the practical immediate steps to be taken on the basis of an action plan. Just before the end of the Divergent Phase a Radical Thinkers Workshop was organized to challenge peoples’ thinking and try to overcome any remaining inertia or scepticism as regards new ideas and the necessity for change.

The Divergent Phase

This consisted of paper writing on a number of key topics that provided important background to the members of the Foresight Panel. The papers were especially important as they allowed people who are not experts in a domain to get an overview of what is happening. The real action, however, was in a series of four workshops (WS).

Turning Towards a
Knowledge Based Bio-Economy

WS1 consisted of a scoping and profiling activity to determine the boundaries of the Teagasc 2030 exercise and to verify that the FP included a sufficiently broad range of actors. Important discussions arose concerning how agriculture and food related to the use of land in Ireland, the relationship between this and both the rural and national economy, how both the theatre and the actors might be changing, and how there was a need to revisit ideas of who the typical Teagasc client was, is now or would be in the future. The immediate output of this workshop was strongly criticized by the SC as not being radical enough. It was thought too traditional or sentimental in its attachment to ‘land’. The modern reality consists of urban agriculture, gardens on the sides of buildings, forests, marine and lake habitats, greenhouses and bio-reactors, as well as a food industry that has long outgrown a dependence on local production and that in some sectors relies almost entirely on imports for raw material inputs. This workshop started a process of reflection that lasted until the end of the exercise.

The feedback of the SC on the results of this first workshop was very important. Its intervention ensured that some of the issues addressed in the workshop did not conclude pre-maturely, but stayed open and continued to be debated for the best part of a year. New ideas need time to mature. The workshop started a process whereby traditional and ultimately limited thinking about farming and the rural economy were replaced with entirely new thinking about the knowledge-based bio-economy or KBBE.

WS2 focused on trying to understand relevant drivers of change, the factors shaping the future of Teagasc and the environment in which it operates. The focus was on identifying the drivers and the impacts that they could have on the economy in 2030. The discussion included references to trends and trend breaks. The exercise was intended to help people develop their ‘intuition’ about 2030.

WS3 focused on strategic issues and started the process of formulating the opportunities and challenges that the various sectors and stakeholders would face in 2030. By this stage the concept of the ‘Sustainable KBBE’ had started to come into focus.

WS4 was about developing scenarios to further develop thinking about the ‘Sustainable KBBE’ in 2030, to further explore and define the issues and challenges, and to identify the big questions, whose answers would impact on the structures and programmes of Teagasc going forward.

A Radical Thinkers Workshop was timed to take place between WS3 and WS4 to provide new ideas to the ongoing foresight process. This consisted of a series of talks followed by discussions, involving speakers from a variety of areas who were capable of presenting challenging views on relevant topics. It involved scientists, geographers, venture capitalists and policy makers. For some participants it was an opportunity to hear for the first time about a renewable chemicals industry based on crops grown for their chemistry rather than for food, feed or fibre. For others, it was an opportunity to hear what foreign experts think. A venture capitalist provided his vision of where important opportunities for investment would arise in future. A Danish speaker raised important questions about the organisation of research and innovation when he explained that, while Denmark performs about 1% of all global research, Danish industry requires access to the other 99% of global research if it is to achieve or maintain global competitiveness.

The Convergent Phase

This consisted of a series of three workshops involving the FP and had to provide an actionable plan for the transformation of Teagasc. Such a plan would require the commitment of Teagasc senior managers. It had to be something they would own and act upon. To make sure that they were adequately prepared, a series of internal meetings was arranged involving senior managers and representatives of the WG to help them understand the implications of the exercise, identify the main axes of change for the organisation and anticipate the detailed requirements of the last workshop. Although the foresight workshops were usually animated by members of the WG with help from the external consultants, the goal was for key sessions of the final workshop to be led by members of senior management with support from the WG. At the same time, an internal dissemination or consultation process took place involving all parts of the organisation. The goal was to explain what was happening and gather feedback on the changes required for moving forward. An external consultation process separately involved farming and food industry representatives. It too explained the ideas that were emerging. It gathered feedback and inputs from Teagasc clients as inputs to the final stages of the foresight exercise.

WS5 was dedicated to the development of scenarios about the Sustainable KBBE. In particular, the goal was to develop more specific thinking about the role of knowledge, learning, research, innovation, training and advice in the sector in 2030.

WS6 was used to finalize the scenarios and flesh out a vision for the sector in 2030 along with an identification of its knowledge requirements and the role that Teagasc would occupy in the system.

WS7 was devoted to the issue of organizational transformation and the directions of change for Teagasc. The senior management meetings played a significant role in determining the structure of this last meeting. Based on their discussions it was decided to focus on transformation under the major headings of leadership, partnership and governance.

The issue of leadership originally emerged in meetings of the SC and was echoed in discussions with industrial stakeholders. Leadership gaps emerged on long-term scientific and technological issues not only for small and medium-sized enterprises, but for larger companies as well.

The Vision of a  Sustainable Bio-Economy

One of the most important results was the development of a vision for the Agri-Food and Rural Economy in 2030 as a knowledge intensive, innovative, internationally competitive and market-led bio-economy. This helped to place the sector at the centre of something big and positive, with significant opportunities that would play a role not only in the rural economy, but also in the general knowledge economy, via its contribution to climate change, energy security, sustainability and the transition to a post-petroleum era.

Recognizing that countries with excellence in agriculture have opportunities for moving up the value-chain by selling not only their products but their know-how, the final report speculated about a time when the most important export of the dairy sector in Ireland might no longer be its milk, cheese, yoghurt and functional foods, but its management expertise and its technical knowledge about the organisation of competitive dairy production systems.

The Four Pillars of the KBBE

From an Irish perspective it made sense to complete this vision by distinguishing four pillars of the KBBE:

  • Food Production and Processing, which mainly represents mature industries where competition is relentless and global, where competitiveness often relies on efficiencies of scale, automation and process technologies, as well as scientific management and competitive sourcing.
  • Value-Added Food Processing, which includes advanced food processing and food service, functional foods, as well as food-additives and ingredients, bio-actives, nutraceuticals and cosmaceuticals. This sector is fast moving and innovative. There is continuous adoption and improvement of technologies for production, processing, distribution and preparation. Supply chains are constantly changing and considerable attention is given to intangibles such as patents,brands, provenance and traceability.
  • Agri-Environmental Goods and Services includes foodsafety and traceability, animal welfare, energy security, climate, clean air and water, fertile soils, bio-diversity, areas of public amenity, natural beauty and those of importance for cultural heritage. Although these are normally treated as spin-offs from other activities based on multifunctionality, they are given a separate identity in recognition of the overall role they will play in the quality of life of citizens, in energy and climate security as well as in the overall sustainability of society and the economy.
  • Energy and Bio-Processing includes the production of feedstock for bio-fuels and bio-polymers. This sector makes substantial investments in harnessing knowledge. It places great importance on knowledge as a factor of production. It corresponds to new and emerging areas of science and to entire new markets. It is characterized by a high level of risk and provides opportunities for government support to lead markets. This sector is where highvalue-added and commodity sectors of the future are being created.

Demographics Facilitating Change

A key observation concerning the future of Irish agriculture was the observation that approximately 40% of farmers in Ireland would retire in the next 10 years and that almost all farms would change hands at least once by 2030. This pointed to an opportunity to use the unavoidable dynamic of retirement and property transfer to restructure the farming sector so that land as a natural resource could make the greatest possible contribution to the economy. This would include enabling successful farmers to increase the area they manage and less successful ones to move on perhaps using models based on leasing.Discussions arose about ‘future farmers’ and ‘foresight farmers’. It is possible that the land transfers that will happen in the coming years will give rise to a younger, better educated and more international generation of farmers. Armed with agricultural MBAs, or degrees in bio-technology, many will approach farming as a business more than a family tradition or vocation. Their approach would be less sentimental and more scientificentrepreneurial. Such farmers represent very different clients for Teagasc than those it has served before.

Leadership, Partnership and Governance

One of the most important currents of debate throughout this foresight exercise concerned the traditional push-approach to technology transfer, the so-called ‘linear model’. The old approach was summarized as follows
143_bild1

whereas Teagasc in 2030 would need to focus on innovation support that would resemble something more like this:
143_bild2

One challenge that emerged was the need to become more demand-led as an organisation. Another challenge emerged from the recognition that no organisation can meet all of its research or knowledge needs internally and that an increasing share of these would need to be sourced outside. This is something that traditional research organisations are not used to doing, and, in future, they will need to engage both private and public service providers, as well as cooperate with international knowledge networks.

The vision that emerged for Teagasc as an organisation in 2030 was that of an organisation suffused with a culture of support for innovation by its clients, capable of:

  • providing leadership where necessary on innovationrelated issues,
  • developing and maintaining the partnerships required for research, innovation, technology transfer and education,
  • employing governance mechanisms to assure relevance and accountability to its clients and stakeholders.

Creation of a Permanent Foresight Unit

In many ways, the implementation of the action plan started even before the exercise was finished. A part of the action plan is a natural continuation of consultations with major stakeholder groups that was started as part of the foresight process. The most immediate and tangible result was the creation of a permanent foresight unit within Teagasc to oversee the implementation of the Teagasc 2030 action plan and to support other foresight activities as needed within the organisation.

The action plan is outlined in the Teagasc 2030 report. It includes steps to create a broader culture of innovation within the organisation and to intensify systematic interaction with client groups and stakeholders. It addresses reform of personnel structures to enable greater mobility of staff within the organisation, facilitate transdisciplinary work and align incentives with the needs of clients. Other structural reforms include a focus on network-based activities, as well as timelimited project-network-like interventions such as technology platforms and commodity working groups that pool the resources of partners and involve stakeholders in management.

The general message of Teagasc 2030 is a positive one based on the opportunities offered by the KBBE, not only for actors currently involved in the agri-food and rural economy, but for a whole new generation of bio-entrepreneurs who may have no prior link to the land.

The key to success continues to be innovation. What is new is the pace of innovation and the need for organisations such as Teagasc to operate simultaneously on several fronts in a more international context and in shorter time frames. The challenge for Teagasc in the future will be to increasingly channel its efforts and resources towards support for innovation, in particular for the development of the knowledge-partnerships required by clients for innovation in the KBBE.

Authors: Patrick Crehan – Patrick.Crehan@cka.be, Lance O’Brien – Lance.Obrien@teagasc.ie, Gerry Boyle – Gerry.Boyle@teagasc.ie, Owen Carton –  Owen.Carton@teagasc.ie
Sponsors: Teagasc the Irish food and agricultural research, advisory and training body
Type: Structural foresight
Organizer: Teagasc, CKA and SEZ
Duration: 1.5 yrs
Budget: €300,000
Time Horizon: 2030
Date of Brief: July 2008

Download: EFMN Brief No. 143_Teagasc 2030

Sources and References

All background papers, scenarios and proceedings as well as the final report are available from the Teagasc 2030 website at www.teagasc.ie/foresight/index.htm. The papers and presentations of the Radical Thinkers Workshop are available at http://www.teagasc.ie/publications/2007/20070725/index.htm.
Lance O’Brien is the head of the new Foresight Unit. He can be contacted at lance.obrien@teagsc.ie.

EFP Brief No. 142: Foresighting Food, Rural and Agrifutures in Europe

Sunday, May 22nd, 2011

Through a renewed mandate in 2005 aimed at strengthening the coordination of research efforts in Europe, the Standing Committee on Agricultural Research (SCAR) launched a foresight process to consider the prospects for agriculture in 2015 – 2020 and to help identify political answers to the challenges raised. In July 2006, the European Commission’s Directorate-General Research set up a Foresight Expert Group to support SCAR in identifying long-term research priorities to support a European knowledge-based biosociety. The group was given the remit to formulate possible scenarios for European agriculture in a 20-year perspective allowing for the identification of evidence required (for more robust policy approaches) and innovation needs in the medium to long-term.

Europe’s Agrifuture Challenges

Europe’s agri-food industries and broader rural economies are being rapidly reshaped, predominantly by global trends and policy developments, combined with a diverse range of nonmonetary issues, including food safety/security, environmental sustainability, biodiversity, biosafety and biosecurity, animal welfare, ethical foods, fair trade and the future viability of rural regions. European agri-futures are evolving within the context of the EU’s overarching policy drives (Lisbon and Gothenburg), which project Europe as

  • the most competitive and dynamic knowledge-driven (sustainable) economy, and
  • a responsible global player, particularly vis-à-vis developing countries.

The point of departure for addressing these policy drives is not to consider them as mutually irreconcilable, but to define the most appropriate and effective approaches for creating synchronous efforts thereby generating added value. The ‘agrienvironmental’ measures in Europe’s Common Agricultural Policy (CAP) have been promoting development that incorporates environmental issues and CAP in general is being reoriented towards a wider rural policy perspective integrating environmental issues and rural development perspectives.

Terms of Reference

The Foresight Expert Group, composed of a chair, rapporteur and eight domain experts1, was tasked to work in close collaboration with the EC services involved and the SCAR working group, under the co-ordination of the Commission’s foresight unit (DG RTD E-3), to review and analyse foresight information relating to European agriculture in relation to eight major driving forces (economy and trade, science and technology, rural economy and regional development, societal and demographic changes, climate change, non-food and energy, environment, health). This analysis was to lead to a working paper for each driving force. Based on this analysis, the group of experts would agree on a minimum of three futures scenarios (20-year horizon) for European agriculture and an analysis of the implications for evidence required (for more robust policies) and innovation needs in the medium to long-term. The work was to take into account foresight activities on a global, European and national level, including other ongoing EU projects in this area.

The main objective of the exercise was to set research priorities for the medium to long-term. The terms of reference included:

  • The gathering and analysis of foresight information on the eight major drivers.
  • Preparation of a foresight paper on each of the major driving forces for agriculture in Europe and perspectives for agricultural research.
  • Using the information produced during the first part of the study to conduct a foresight exercise to predict possible futures scenarios (20 year perspective) for European agriculture.
  • On the basis of identified scenarios, to assess the implications for research and innovation requirements of European agriculture over the medium to long term.
  • To present a draft report based on papers presented on the “major drivers” at a foresight conference in early 2007 and production of a final report.

A Creative Disruption Approach

The expert group opted for a disruption scenario approach with four scenarios developed through a simple method, whereby each expert identified four “disruption factors” emerging over the next 20 years. These factors were grouped into three blocks: “climate disruption” (the most significant); “energy disruption” and “socialquestions: health, safety, employment. The following “wild cards” emerged:  “intellectual property” disruption and “monetary disruption”. Four scenarios emerged and a baseline scenario was subsequently developed.

142_bild1

142_bild2

Disruption Scenarios
  1. Climate Shock starts with climate change and the acceleration of related environmental impacts as the driving disruption factor. This scenario combines a primary business as usual scenario – with differing geographical climate impacts, no European-level action is taken, and a crisis situation ensues – with a success scenario built into it at the end, where positive action is taken on a national level. It underlines a fundamental challenge that Europe will increasingly face with the onset of climate change impacts on agriculture, namely how to coordinate European policy responses to the diverse regional and local impacts of climate change bearing in mind different regional contexts and framework conditions.
  2. Energy Crisis focuses on energy supply vulnerability of Europe as the key disruption factor and the acceleration of related economic and societal impacts as the key drivers. This scenario also combines a business as usual scenario, a crisis engineered by the energy global players, with a success scenario developing at the end as a result of Internet-based community empowerment and action. It implies
    a strategic research emphasis at the European level to support in the short-term the improved networking of farmers and researchers with a view to addressing urgent knowledge needs, instituting faster mutual learning processes and supporting communities of practice.
  3. We Are What We Eat focuses on food health and society as sources of disruption jointly determining a more community and consumer-oriented research agenda. This scenario combines an initial crisis situation with a success scenario approach with clear guidelines for an effective European research agenda. It highlights the advantages of a citizen-oriented research where science and technology are effectively harnessed to address the real needs and concerns of citizens. The main priorities relate to quality, safe and functional foods for a range of emerging lifestyles and technologies to produce primarily citizenoriented enabling environments for knowledge production and exchange together with socially-driven, environmentally effective products, processes and services.
  4. Cooperation with Nature focuses on society, science and technology as key joint drivers evolving in a beneficially symbiotic relationship. This primarily utopian scenario projects an ideal situation where science and technology have been effectively deployed to ensure sustainable development at all levels. The key to addressing these needs is the transition to local small-scale production and a shortening and transparency in the food supply chain, and Internet, open learning, and ambient systems creating more globally aware, sustainability conscious consumers.

 

Agro-Food Sector Bound to Change

In spite of the excellent performance of Europe’s agro-food system in recent decades, the European Union is now facing a major disruption period in terms of international competitiveness, climate change, energy supply food security and societal problems of health and unemployment. Disruption means fast change, resulting in both positive and negative impacts and thus the main challenge facing agro-food actors is the speed of adaptation and proactive responses to secure a European lead in this area. Systemic approaches show that decentralised systems adapt themselves faster to change than centralized ones. A careful assessment of agricultural research and innovation systems is needed to identify and modify the places where centralised decision-making generates rigidity, in research as in policy.

Decentralised Adaptation

Decentralised adaptation relies on a high performance information system allowing the decision makers, each operating at his level, to use in real time the best upgraded data necessary to implement their rationality. Technology now offers the operational tools to put upgraded data at the disposal of the farmers and decision makers of the food chain and to allow an exchange of experience between actors.

Early Warning System

Through satellite imaging and Internet diffusion technologies it is now possible to build an early warning, free access information system on climate change and its long-term consequences for ecosystems. This system has still to be developed and marketed and training provided to the end users. The Internet is emerging as a powerful tool for facilitating the development of worldwide networks linking growing communities of practice in a number of agriculture-related areas and themes. The Internet not only changes the research framework and conditions, but also the link between researchers and endusers of research results and has the potential to facilitate a more proactive engagement of rural communities, farmers and citizens in the design and implementation of ongoing research and knowledge exchange activity. In order to facilitate these interactions, eEurope strategies at the European and national levels need to cater for the extension of broadband access at affordable prices to rural communities, farmers, citizens and other stakeholders.

Overcoming the Barriers towards  a Knowledge-based Biosociety

One of the major hurdles facing Europe in making the transition to knowledge-based agri-futures is the need to address the growing challenge of knowledge failures. European agricultural research is currently not delivering the type of knowledge that is needed by end-users in rural communities as they embark on the transition to the rural knowledge-based biosociety. The problems are not exclusive to agricultural research but are felt more acutely in this sector where the role of traditional, indigenous knowledge is already being undermined as a result of the growing disconnection with ongoing research activity.

New System of Education  and Knowledge Diffusion

The social dimensions of the shift to the knowledge-based biosociety are rendered more complex by the demographic and mobility/migration factors. They call for new systems of education and knowledge diffusion and careful consideration of the implications for education as we enter a new system characterised by a shift from engineering, physical and mechanical sciences to converging technologies.
Knowledge exchange strategies and policies, already in place in the more advanced EU member states, need to be formalised and given a higher profile at the EU level, as stand-alone strategies and not merely as add-ons to research and innovation policies and good practices shared with other member states. Knowledge exchange policies differ from innovation policies per se, although they also inter-connect with them. The main emphasis of knowledge exchange policies is to ensure the relevance and accessibility of knowledge to communities, farmers, consumers, young people and educational institutions.

A Case for Action

  1. More coordinated EU, national and regional policy responses to a range of challenges that affect the world rural agri-economy and facilitate the shift to a knowledge-based biosociety are
  2. An overview of emerging global trends, policy developments, challenges and prospects for European agri-futures point to the need for a new strategic framework for theplanning and delivery of research is called for, addressing the following challenges:
  • Sustainability challenge: facing climate change in the knowledge-based biosociety
  • Security challenge: safeguarding European food, rural, energy, biodiversity and agri-futures
  • Knowledge challenge: user-oriented knowledge development and exchange strategies
  • Competitiveness challenge: positioning Europe in agrifood and other agricultural lead markets
  • Policy and institutional challenge: facing policy-makers in synchronising multi-level policies
  1. The complex, dynamic inter-connection of challenges, facing European agriculture research from a forward-looking, 20year perspective requires strategic European policy responses right now. This will entail re-designing the institutional framework for research and putting in place a two-track approach for agri-futures research:
  • a transition research agenda to address the more immediate sustainability and safety/security concerns and the radical transformation arising from the reform of the CAP, combined with
  • a more long-term high-tech research agenda to ensure that appropriate high-tech research investments are put in place so that Europe’s agri-food industries and rural economies retain their competitive position in global markets.
  1. To raise the capacity of rural regions to generate, participate in and translate research developments into economic growth, a regionally-focused, demand-driven approach to research and innovation needs to be developed. A basic requirement is a dedicated funding system designed (i) to capitalise on regions’ comparative advantage, by mobilising all resources available towards attainment of context dependent and demonstrably attainable goals, and (ii) to exploit good practices and models in the governance and delivery of research, technology implementation and innovation.
  2. The competitiveness challenge and demographic decline facing rural communities, combined with reduced global financial support to agriculture, may lead the EU to adopt, under emergency pressure, a temporary protectionist Long-term, strategic and institutional capacities in knowledge transfer, public early warning on ecosystems evolution and decentralised systems of agricultural research and approaches are of even more central importance in the transition from a subsidies-driven to a knowledge-driven biosociety.
  3. Continued, active engagement in foresight is critical for enhancing the strategic and institutional capacities of Europe’s agricultural policy-making and research and knowledgetransfer organisations.
Authors: Jennifer Cassingena Harper Jennifer.harper@gov.mt
Sponsors: FEU Directorate-General Research
Type: EU Foresight Exercise
Organizer: EU Directoral-General Research Mr Elie Faroult elie.faroult@ec.europa.eu
Duration: July 2006
Budget: n.a.
Time Horizon: 2020
Date of Brief: April 2008

Download: EFMN Brief No. 142_ Agrifutures in Europe

Further Reading

Gaudin, Thierry et al. (2007), Foresighting food, rural and agri-futures.
http://ec.europa.eu/research/agriculture/scar/index_en.cfm?p=3_foresight
http://ec.europa.eu/research/agriculture/scar/pdf/foresighting_food_rural_and_agri_futures.pdf

EFP Brief No. 140: Security of Energy Supply: A Quantitative Scenario Study on Future Energy Systems for the EU25 for 2030

Saturday, May 21st, 2011

The quantitative scenario study on the EU energy system focuses on the security of energy supply and different alternatives for the EU energy system. Five different scenarios for the EU25 energy system by 2030 were developed. The scenarios were then grouped into two main families called “advanced conventional” and “domestic action” and their respective pros and cons analysed with regard to all relevant EU-policy fields for providing policy recommendations.

The Dual Challenge of Climate Protection
and Security of Energy Supply

The EU currently faces two different challenges with regard to the future development of the EU energy system and the question of the ‘security of energy supply’. Firstly, the era of cheap and abundant conventional energy resources appears to be coming to an end. This means that maintaining reliable supply levels implies significant and timely investment in new and more expensive oil and gas production, which will put upward pressure on world market prices for oil, gas and, to a lesser extent, coal – with potential impacts for economic development and growth. Furthermore, the geographical concentration of oil and gas export potential, combined with newly emerging
large energy importing economies (i.e. China, India) can be expected to intensify international competition for market access to the declining resources and, ultimately, may also generate international conflicts.
Distinct from these issues, a second challenge has emerged. Climate change requires substantial reductions in global
greenhouse gas emissions, which essentially means using less energy and switching to carbon neutral energy carriers.
Both challenges require determined and timely action from the EU and its member states, as well as from the international community at large. A conventional, albeit advanced, “business as usual” (BAU) strategy is likely to face increasing problems when trying to adequately cope with these simultaneous challenges. In order to analyse important strategies and/or technology decisions (higher/lower nuclear share in electricity generation, increased energy efficiency and use of combined heating and power [CHP], increased use of renewable energies) and highlight
a range of possible future energy solutions for the EU25, five different scenarios have been developed according to the strategies and targets requested by the European Parliament’s Committee on Industry, Research and Energy (ITRE).

Five Options to Go Ahead

In order to draw different possible futures of the EU energy system, five scenarios based on two main sources were designed. The basic data, economic assumptions and the main results for the BAU scenario were derived from the latest available EU energy and transport projections (Decker 2006, Mantzos 2006, Mantzos & Capros 2006). Demand-side projections and analyses of higher penetrations of energy efficiency and renewable energies were derived from a recent scenario analysis by the Wuppertal Institute (Lechtenböhmer et al. 2005a/b). The quantification and combination of potentials, costs, strategies, policies and measures, and the calculation of scenarios were carried out using the Wuppertal Scenario Technique.

In the business as usual (BAU) scenario, the continuation of energy policy trends would already lead to a strong primary energy efficiency increase within the EU25. However, this increase would not be sufficient to compensate for growing GDP. As a consequence, primary energy demand would increase by almost 15% and import dependency by more than a third. Due to an increased share of renewable energy sources (RES) and a switch to natural gas, CO2 emissions would increase by only 3% to 6.6%, depending on the nuclear energy policy. With regard to climate policy, it is assumed in the BAU scenario that the EU25 will accept international emission reduction targets for the commitment periods after 2012 of 15% by 2020 and 30% by 2030.

The N+ scenario – as defined in accordance with the request by the ITRE committee – is a variant of the BAU scenario based on the expansion of nuclear energy (thus N+). While in the BAU scenario nuclear capacity declines by 28% from 141 GW (2000) to 101 GW in 2030, in the N+ scenario the construction of about ten more new nuclear power plants of 1300 MW each is assumed, which would result in a nuclear capacity of about 126 GW in 2030 – or 25% more than in the BAU scenario. CO2 emissions in power and steam generation decrease by about 6.6% vs. BAU by 2030, whereas total emissions from the EU25 decrease by 1.9%. Furthermore, this scenario also includes the use of carbon capture and storage (CCS), which can further reduce CO2 emissions, albeit fairly modestly in the case of the EU (another 6%~7% of the power sector emissions compared to BAU).

The N– scenario marks the other end of a range of possible nuclear energy BAU scenarios. Power plants are assumed to perform less well in this scenario and this, together with waste issues and a stronger perception of the risks of nuclear energy, combines to increase the pressure on plant operators. Consequently, no new nuclear power plants are commissioned and a in 2030. In total, CO2 emissions in this scenario would be at a level of 72 million tonnes, or 1.9%, more than in the BAU scenario by 2030.

Table 1: Comparison of the scenarios – results for 2030
 

 

Scenario  

CO2 emissions (% ∆

1990)

Primary energy

demand

(% ∆

1990)

Import dependency Nuclear share in electricity

generation

RES

share in

PE demand

Energy effi-

ciency

growth rate

(2000 – 2030)

BAU +4.7% +14.6% 64.8% 18.7% 12.2% 1.5%/ year
N+

(+CCS)

+3.0%

(+1.3%)

+16.4% 62.7% 23.6% 12.0%
N +6.6% +12.2% 66.5% 13.8% 12.4%
EE –18.8% – 8.2% 59.8% 15.7% 15.0% 2.2%/ year
RE – 45.1% – 20.1% 49.1% 16.4% 31.4% 2.7%/ year

Source: own calculations, Wuppertal Institute, 2006

 

The energy efficiency (EE) scenario assumes strong policy at EU level, as well as within the member states, targeted at accelerating the rate of increase of energy efficiency in order to reach a level of energy efficiency 50% higher than in the BAU scenario by 2030. This means that energy efficiency (GDP per ktoe primary energy use) would increase by 2.2% per year and reach 10.5 MEur/ktoe in 2030 (BAU: 8.5).

The renewable energy expansion (RE) scenario describes a restructuring towards a renewable energy system with a target of approaching a renewable energy supply as high as possible by 2030. To achieve such a high share of renewable energy, the scenario combines an even stronger drive towards energy efficiency (11.9 MEur/ktoe by 2030) with an accelerated expansion strategy of renewable energies, which reach a share of 31% of total primary energy supply in 2030. This strategy depends on the feasibility of the projected 34% share of fluctuating energies (wind, hydro, solar, tidal and wave) in the electricity system and on the feasibility of accelerating energy efficiency improvement to 2.7% per year.

Policy Choices

The five scenarios developed for the study have been analysed with regard to the core energy policy fields. Brief discussions on recent trends, followed by implications for policy needs with regard to the different scenarios, have been discussed for each scenario.

The energy issues considered in this report interact directly and indirectly with many European policies, in particular the climate policy, the Lisbon strategy and the external (energy markets) policy, which do not focus exclusively on energy but function as framework policies. These policy areas with wider scope can significantly influence the feasibility of potential pathways for the development of the energy system. In addition to these crosscutting policies, the following key energy policies are touched upon in the study: single European energy market, energy efficiency, renewable energies and energy technology policy.

Policies on EU External Energy Markets

The comparison of scenarios with regard to policies on EU external energy markets shows that quite different challenges lie ahead in each scenario. In the BAU scenario – and in both nuclear scenarios – particular emphasis would be needed on external energy supply through the establishment of stable political relations with oil and gas producing countries and (for gas) transit countries and the mobilisation of huge investments– most of all for natural gas. In BAU/N+ the extended efforts to promote clean energy technology transfer in conjunction
with a widening use of emission trading (notably the EU’s emission trading system and clean development mechanism)
are, to some extent, favourable to global stability but, on the other hand, also need global political stability.
The energy efficiency scenario and a fortiori the renewable energy expansion scenario would significantly relieve the
pressure on external supplies to the EU due to decreased imports, while offering additional options to mitigate the worldwide depletion of fossil resources.

Single European Energy Market

In spite of the general current policy lines for the creation of the legal and technical provisions for a single European energy market, which are important in all scenarios and have still to be developed, quite different challenges would lie ahead in each scenario. In the BAU scenario – and in both nuclear scenarios – current
policy trends would have to be pursued and even accelerated. Large investment would be needed for improvements of gas
and electricity networks – about € 45 bn to € 50 bn for electricity grid investment including cross-border transmission, about € 11 bn to € 14 bn for long distance gas transmission, gas storage and liquefied natural gas terminals (CESI et al. 2005) and about € 800 bn over the 25-year scenario period for huge replacements in the existing stock of condensing power plants. The energy efficiency scenario and, to an even greater extent,
the renewable energy expansion scenario would present significant new challenges regarding accelerating progress in
energy efficiency and the restructuring of the energy system towards higher shares of renewable energy sources and of
CHP in district heating and industry. Grid investments for electricity would be expected to be near the upper limit of the above-mentioned numbers, while those for natural gas would approach the lower end. Investments for new power generation would be 20% lower in the EE scenario than in the BAU scenario and 10% lower in the RE scenario. In the RE scenario the effect of much lower capacity is partly offset by higher cost per kilowatt installed. Furthermore, investment would be completely different. While even in the BAU scenario investments in new CHP and renewable capacities are projected to overtake investments in fossil and nuclear generation, the latter will stand in the EE scenario for only 20% of total investment and in the RE scenario for less than 10%.

Policy for Energy Efficiency

The comparison of the current EU policy towards energy efficiency with the three scenarios – BAU, EE and RE – shows
some crucial results. The current EU demand side energy efficiency policy would (by definition) be sufficient in many fields to realise the BAU scenario as well as the two nuclear scenarios N+/N–. However, particularly in the transport sector, in electrical appliances and in industry, further action would be needed. Further action would be necessary as well to protract these policies until 2030. On the other hand, the current political targets with
respect to energy efficiency, as set out by the Green Paper “Doing more with less” and the Energy End-Use Efficiency
Directive, would not be achieved in the BAU scenario. A much stronger policy for energy efficiency in the EU would
be needed in order to meet the energy efficiency and the renewable energy expansion scenarios. This policy would have to instigate strong and rapid action in order to implement ambitious efficiency targets close to the technical optimum, introduce further stepwise improvements in the energy efficiency of cars, appliances, buildings and businesses, strengthen technology development and provide substantial financial support and appropriate institutions. The evolution in energy market design would also affect the progress in energy efficiency and renewable
energy use by affecting end use prices, investment in new and efficient (CHP) generation capacity and the prospects for the introduction of demand side management policies.

Policy for Renewable Energies

It is assumed that the EU will pursue a very active policy to promote renewable energies in all scenarios. As the analysis of the existing policy shows, broad additional activities are indispensable even in the BAU scenario. However, in this scenario – as in all the others apart from the RE scenario – set targets will be missed and the EU would have to solve the problem of further fostering a supportive framework for renewable energies
against a background of possible disappointment. In the renewable energy expansion scenario on the other hand,
both current targets and ambitious targets for the future (20% in 2020, 35% in 2030) are achievable. However, the scenario also illustrates that these targets require a substantial restructuring of the whole energy system and economy by using the opening window of opportunity presented by the ageing energy system and its subsequent high reinvestment need. It appears that current policy for renewable energy – in spite of its impressive success – is not yet in a position to implement the changes needed for the realisation of this scenario.

Conclusion and Policy Implications

Two Ways to Go

The scenarios discussed in this report can be grouped into two main strategies.

The first type of strategy could be called “advanced conventional”. This route is described by the BAU scenario combined with the N+ scenario and specific greenhouse gas mitigation options of carbon capture and storage and, particularly, the use of clean technology transfer and other flexible mechanisms to achieve emission reductions outside the EU.

The other type of strategy, “domestic action”, relies much more on the domestic potential of renewable energy sources and energy efficiency and seems to have the capability to adequately cope with both major challenges so that the risks emanating from these are significantly lower.

Both strategies have crucial preconditions that may pose severe challenges to their feasibility. The advanced conventional strategy crucially relies on the successful implementation of an active foreign energy and technology transfer policy. Strong international competition for energy resources may become an increasing threat for this crucial foreign policy link. However, this scenario would carry less risk with respect to the management of change inside the domestic European society, since changes tend to be less radical than in alternative scenarios. The domestic action strategy, on the other hand, would swap, to some extent, the external threats from climate change and geopolitical turmoil for bigger challenges with respect to the management of the more radical changes inside the domestic European society (i.e. within the EU and its member states). More specifically, this strategy would stand or fall on the successful restructuring of the EU energy system and the bulk of all investment decisions.

Robust Strategies

In spite of the diverging, and at least partly mutually exclusive, directions in which energy policy could steer (energy) policy choices, there are a number of policy actions that would be required in any strategy and which differ only in terms of intensity. Consequently, these policy areas should be given high priority for securing energy supply regardless of the strategy prioritised.

  • The first strategy is enhancing demand side energy efficiency including cogeneration.
  • The next robust option concerns renewable energies. All the scenarios assume high increases in this area as well, particularly in wind power generation and biomass use. What is more, some policies are already partly in place and the current targets on the EU level already correspond to a very ambitious RE scenario, but need to be supported by stronger policies and expanded by 2020 and 2030.
  • In the energy market overall, and taking into account the efforts being made to enhance energy efficiency, it is also important that retail pricing of electricity appropriately reflect its scarcity and emission impacts on the wholesale market.
  • Robust steps towards a future EU external energy and climate policy include the fostering of clean development and clean technology transfer, as this will strengthen international relations, partly relieve demand pressure on energy markets, create additional or strategically needed emission credits and expand markets for renewable and efficiency technologies, which would, in turn, support the domestic development of these technologies.

 

Authors: Stefan Lechtenböhmer        stefan.lechtenboehmer@wupperinst.org

Maike Bunse           maike.bunse@wupperinst.org

Adriaan Perrels       adriaan.perrels@vatt.fi

Karin Arnold, Stephan Ramesohl, Anja Scholten, Nikolaus Supersberger

Sponsors: European Parliament, Committee on Industry, Research and Energy (ITRE), IP/A/ITRE/ST/2005-70
Type: Single issue
Organizer: Wuppertal Institute for Climate, Energy, Environment, Doeppersberg 19, 42103 Wuppertal, Germany, info@wupperinst.org; Government Institute for Economic Reasearch VATT, Arkadiankatu 7, 00101 Helsinki, Finland, webmaster@vatt.fi
Duration: 01/2006-08/2006
Budget: n.a.
Time Horizon: 2030
Date of Brief: April 2008

Download: EFMN Brief No. 140_ Security of Energy Supply

Sources and References

Cesi et al. (2005): Centro Elettrotecnico Sperimentale Italiano, Instituto de

Investigacion Tecnologica, Mercados Energeticos, Ramboll TENEnergy Invest.

Decker, M. (2006): New (2005) Energy Baseline, Presentation to National Emission Ceilings and Policy Instruments Working Group, Meeting on 1. 2. 2006.

Lechtenböhmer, et al. (2005a): Target 2020, Policies and Measures to reduce Greenhouse gas emissions in the EU, Scenario analysis on behalf of WWF-European Policy Office, Wuppertal, Brussels.

Lechtenböhmer et al. (2005b): Energy efficiency as a key element of the EU’s post-Kyoto strategy: results of an integrated scenario analysis. In: Energy savings: what works & who delivers, ECEEE 2005 Summer Study Proceedings; volume 1. Stockholm: Europ. Council for an EnergyEfficient Economy, 2005, p. 203-212.

Lechtenböhmer et al. (2006): Security of Energy Supply – The Potential and Reserves of Various Energy Sources, Technologies Furthering Self Reliance and the Impact of Policy Decisions. Study on behalf of the European Parliament. IP/ITRE/ST/2005-70.

Lechtenböhmer et al. (2007): The Blessings of Energy Efficiency in an Enhanced EU Sustainability Scenario. In: eceee 2007 Summer Study Proceedings: Saving energy – just do it! 4-9 June 2007. La Colle sur Loup, France. ISBN 978-91-633-0899-4.

Mantzos, L. (2006): PRIMES model of scenario results for the EU25, NEC-PI Meeting, July 2006, Brussels.

Mantzos, L., Capros P. (2006): European energy and Transport. Scenarios on energy efficiency and renewables, Ed.: DG TREN, Brussels.

EFP Brief No. 138: Results of Lab on ‘Old and New Energy’

Saturday, May 21st, 2011

The Club of Amsterdam set up an ‘Old and New Energy Lab’ designed to generate novel and potentially viable plans of action for dealing with energy issues by leveraging brainstorming methods to produce innovative thinking and bypass preconceived ideas and assumptions. The process tapped into the expertise of ‘thought leaders’ chosen for their diversity so as to maximise the fertility of discussions.

Lab Challenges to Think Outside the Box

Diminishing reserves of fossil fuels, climate change, geopo-litical factors and a wave of technological advances are bring-ing complex pressures to bear on the landscape of energy gen-eration and consumption. Change seems inevitable, but react-ing appropriately is a challenge. This is especially so when limited modes of supply and consumption have been en-trenched for extensive periods, as is the case with the energy landscape. This can make it very hard for people to think ‘out-side the box’ – arguably much needed at the moment.Thus the challenge addressed at ‘The Lab’ was to bypass pre-conceptions and traditional ways of thinking. Participants were called upon to brainstorm possibilities and then validate the resulting ideas with some tangible, realistic scenarios.

Conceiving Future Scenarios – the Methodology

Principal approaches employed were Socratic discourse and a future scenario method. Participants were asked to identify a set of driving ‘values’ deemed desirable (e.g. equal access to resources, freedom, quality of life, stability etc.). Socratic dis-course and other techniques were applied to open up discus-sion to the broadest possible level. The outcome was the ob-servation of numerous facts, trends, constraints etc.
The resulting ‘facts’ were then fed into an analysis based on the future scenario method. The values identified earlier were used to drive the scenarios, which were to envision a positive future ten years hence (the goal being to identify possible so-lutions).
Four scenarios were created by choosing two drivers of change: governance and economy. Note that there is nothing absolute about the choice of drivers or even the number of drivers con-sidered, but these were the ones considered most important.
These drivers define the axes of a graph depicting four different environments (symbolized by the numbered circles in the diagram)derived from the possible combinations of extreme cases of both drivers. These environments provided the basis for the scenarios.

138_bild1

Keep in mind that these scenarios are not predictions but simply tools to guide discussion from exploration to identification of potential solutions and analysis of important trends and factors (political, cultural, technological, etc.) and their interactions.

Participants

Four ‘thought leaders’ brought expertise to help keep discussion realistic, whether on technological, economic, political or social levels. Their backgrounds included

  • analysis of new technologies and their commercial and social impact;
  • understanding corruption and conflict resulting from exploitation of natural resources and international trade systems;
  • energy resource analysis and prediction in the context of the International Energy Agency;
  • nuclear policy and law.

Energy Futures – the Four Scenarios

Observations on trends and forces will be split into socioeconomic and cultural, and technological and sectoral. The four scenarios based on these trends and forces will then be outlined before looking at identified opportunities and challenges, which are in turn fed by the scenarios.

Scarcity of Supply, Potential for Conflict, and Environmental Concern – Socio-economic and Cultural Trends/Trend Breaks
  • Rising energy production costs.
  • Concern about climate change (global warming).
  • Increasing sensitivity to energy supply disruption.
  • Concerns over energy dependence and vulnerability.
  • Impending scarcity of fossil fuels with increasing demand from rapidly advancing nations such as China and India.
  • Increasing global tension relating to energy supplies and the possibility of resulting conflict.
  • Environmental concerns about nuclear energy.
  • Increasing interest in alternative energy sources.
  • Increasing interest and efforts in energy conservation.
  • Development of carbon trading schemes.
More Choices and Technological Advances –  Technological and Sectoral Trends/Trend Breaks
  • Capability (in some markets) for energy purchasers to also sell to the grid.
  • Choice (in some markets) over source of energy bought.
  • The nanotechnology ‘revolution’ impacting multiple, interacting energy-related technologies.
  • Multiple parallel and rapid advances in solar technologies promising greater efficiency and/or lower cost.
  • Advances in fuel cells (in many sectors).
  • Advances in batteries and ultracapacitors.
  • Developments in thermoelectrics offering promise for waste heat reclamation and geothermal energy.
  • Availability of smart energy-saving materials (electrochromic or anti-IR window coatings etc.).
  • Lighter/ stronger metals, ceramics and composites.
  • Efficient lighting (especially nanostructured LEDs).
  • Improvements in coal/gas/biomass-to-liquid processes, often driven by improved technology (e.g. nanocatalysis).
  • Advances in hydrogen production and storage.
  • Potential developments in artificial photosynthesis.
  • Potential for low-loss electrical transmission.
  • New CO2 separation technologies.
  • Improved nuclear fission technologies.
The Four Scenarios

Four scenarios were framed assuming environments as described in the methodology section. Remember that they are designed to be optimistic views of a situation ten years hence. Their creation allowed disparate ideas to be brought together in a framework where interactions and socio-economic and political realities could be considered.

Not all the scenarios were recorded in the same degree of detail. Different groups of participants chose different styles of presentation.

 Scenario 1 – ‘Harvesting Energy’ (emerging economy, minimal governance)

The environment envisaged was a poor, sub-Saharan country with village communities as the dominant settlement pattern, poor access to resources and minimal infrastructure. The village in this scenario was assumed to be remote but not overly far from a principal city.

The one plentiful resource is sunshine. New cheap photovoltaics and microloans allow the village to produce electricity. This gives rise to increased productivity and enables more flexibility in trading of staples such as vegetable and meat produce through refrigeration.

The small economic boost and decreasing costs of photovoltaics allow expansion of generating capacity. Direct energy sales become attractive in a future where fossil fuel is expensive and supplies unreliable and the village becomes a supplier of power from solar energy. Improved battery technologies and high fuel prices lead to more electric or hybrid vehicles. Households in and outside the village increasingly use batteries and pay for recharging.

The village has effectively shifted from subsistence agriculture to ‘farming’ sunlight, with batteries as the means of distribution.  The availability of power for transport attracts more vehicles and infrastructure improves. Then cables are laid to directly supply electricity to the nearby city. After all, the village now has the generating capacity, the expertise, and plentiful lowvalue land for expansion. Infrastructure experiences another boost, including communications. The village buys computers and the community now has Internet access. Educational opportunities increase dramatically. Over time the community becomes generally well-educated and thus capable of engaging in even more diverse and complex commercial activities.

Some time in the future (although maybe not in the ten-year frame), solar energy could be captured in a fuel created by artificial photosynthesis, allowing wider export of energy and opening up the solar farming model to more remote communities. This would require importing water (limiting displacement of battery use), but importing water is certainly preferable to importing oil in this (future) day and age.

Scenario 2 – ‘Central Energy Planning’ (emerging economy, strong central governance)

This scenario assumed a top-down, centrally-organised society with an emerging economy. China was offered as an example, on the assumption that much of the traditional communist philosophy still permeates the government, which regulates the allocation of resources. Short-term (business) thinking is constrained for the benefit of the collective when it comes to something as fundamental as national energy supply.

The immediate need for more energy to support growth is urgent. Coal is abundant and coal-fired power stations proliferate, with little thought given to environmental concerns. But this is only the first, quick fix, part of the plan, which is also influenced by oil imports for vehicles, the need to transport energy over great distances and the fact that even coal resources have limits.

Coal-to-liquid processes are used to produce clean diesel to help ease the dependence on oil imports, while a massive research effort creates low-loss electrical transmission based on high-temperature superconductors (doubly important because of the chosen alternative to coal – photovoltaics).

Huge solar ‘plains’ grow in the country’s remote, arid and impoverished west, bringing employment and commerce. Ultimately, the technology becomes simple plastic sheets that can be rolled out and clipped together. They contain nano-engineered structures that exploit the highly-efficient initial step of photosynthesis but feed the liberated electrons into the superconducting transmission lines and on to the energy-hungry coast. China soon becomes a major exporter of these technologies.

In the cities of the East, electric and hybrid cars are encouraged and manufactured. Coal is increasingly used only to produce diesel and dependence on foreign oil now rapidly disappears.

 Scenario 3 – ‘Energy Caps and Taxes’ (strong economy, strong central governance)

Sweden, which aims to become oil-free by 2021, might be an example.

A progressively increasing carbon tax is introduced for individuals and corporations. A flexible power supply network allows individuals to avoid a carbon tax by purchasing energy from sustainable sources. This encourages development of such sources – from the logging and papermaking industries using waste to produce electricity, heat and biofuels, down to individual households generating energy and selling any surplus to the grid.

Central support and legislation for energy-saving technologies in housing and transport increases their uptake through various means. The carbon tax imposes a cost on manufacturers for the lifetime emissions of their products.  The tax alone triggers substantial change, but more comes through governmentdriven, large-scale geothermal, hydroelectric and combined heat and power schemes.

 Scenario 4 – ‘Communicating Energy’ (strong economy, minimal governance, individual action)

This scenario is one of change through popular movements. Analogies might be seen in the growth in the popularity of ‘organic’ produce or that of ‘fair trade’ products, both of which evolved out of grass roots concern. For instance, we can help the environment by buying local produce rather than that shipped great distances, or eating less meat (such unlikely action probably highlights limits to this approach). Other individual contributions are switching lights off, car-pooling, capturing rainwater to water one’s garden or carbon offsetting schemes.

The key is understanding what can be done and creating a culture of willingness and responsibility. Communication is key and the Internet makes this possible as never before.

To some extent this scenario is happening now, but there are clearly limits to how much it can achieve without some topdown initiatives (or economic imperatives) added to the mix.

Top-down Action and Technological Advances are Critical for Seizing Opportunities

The fact that all but one of the scenarios could conceivably address all the main energy issues points to much opportunity. Exploiting this rapidly enough is a major challenge. Another obvious challenge is highlighted by Scenario 4, which suggests that, at least in the developed world, ‘people power’ is not enough and top-down governmental action may well be necessary. Economic and practical pressures would achieve the necessary changes eventually, but it is probably not advisable to wait for the hurricane to prove that you should not have made your house of straw. As for opportunities, the scenarios explored highlight those best. Scenario 1, ‘Harvesting Energy’,
perhaps best illustrates the dramatic achievement that might be had given only certain technological advances. Many other scenarios are possible, of course, and those developed were deliberately positive. But the consensus at The Lab was that all the scenarios were credible, so they probably do represent real opportunities.

Diverse Solutions, Proactive  Government and Advances  in Technology Are Key

In view of policy implications, the full two days of discussion and debate might be briefly summarized in the following manner.1

Oil dependence is a danger that needs addressing

Despite much disagreement about how close ‘peak oil’ is, all seemed to agree that action is needed now to reduce the developed world’s dependence on oil.

Solutions to the problems being faced will be diverse

Different environments are likely to beg different solutions and the diversity of technological developments that bear on the issues prevent simple answers and argue for multiple alternatives to be investigated.

The variation across the scenarios developed suggests that multiple approaches will be needed in parallel, covering conservation, alternative forms of generation, and storage and transmission technologies. The best solution or combination of solutions for a given region will vary with external factors (climate, population density, access to water, etc.) and with developments in numerous interacting technologies. The appropriate focus can vary dramatically depending on the existing situation. For example, a focus on coal in the short-term is sensible for China, if the aim is energy independence, while France might see nuclear in a similar light. In lower latitudes, solar energy will be more quickly economically viable than in higher latitudes, where geothermal may be a better choice. In all cases, conservation makes sense as a priority and gives the most rapid return on investment.

Given this diversity and uncertainty, it seems sensible to recommend broad investment in energy-related R&D and a systematic, inclusive, and iterative analysis of the energy situation at regional scales.

It is worth noting that only two currently achievable sources of energy are sufficient for global needs in the long-term and truly sustainable. They are solar and geothermal energy.

Areas of technological focus to be considered are just as diverse – see section 2 on technological and sectoral trends.

In the developed world government action is probably essential

The ramifications of energy supply disruption and the time needed to change our infrastructure suggest that appropriate change cannot be expected to arise from market and social forces. Accordingly, governments need to be a key player in developed countries. Proactive action from government is almost certainly necessary to avoid the risk of severe economic disruption.

Much of the rest is down to technological developments and their impacts on the economic competitiveness of certain technologies. Though solar emerged from the Lab as the winner in terms of chief long-term global energy sources, the means of capturing it, transporting it and using it produced no clear favourites. The range of possibilities from domestic to industrial to automotive applications in a diverse range of environments suggests that all avenues of research should be actively explored. Since solutions will likely be more complex than the current rather monolithic systems, flexibility, interoperability and rapid adaptability are critical success factors.

In the under-developed world, small changes or actions may have a large and lasting positive effect

When tackling the issue of poverty on a global scale, there may be a possibility of achieving much with little (Scenario 1), given certain technological shifts.

 

Authors: Paul Holister                  paul9@holisters.net
Sponsors: Club of Amsterdam
Type: Field/sector specific
Organizer: Humberto Schwab, humberto@clubofamsterdam.com, Felix Bopp, felix@clubofamsterdam.com
Duration: April 2007
Budget: n.a.
Time Horizon: 2017
Date of Brief: April 2008

Download: EFMN Brief No. 138_ Energy Lab

Sources and References

Club of Amsterdam, Lab on Old and New Energy, April 17 and 18, 2007, in Girona, Spain.

http://www.clubofamsterdam.com/content_list.asp?contentid= 655&contenttypeid=9 

The participating thought leaders were:

  • Nathalie Horbach – Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee;
  • Simon Taylor – director and co-founder, Global Witness;
  • Christof van Agt – independent participant, formerly at the International Energy Agency;
  • Paul Holister – technology impact consultant.

Humberto Schwab, director of the Club of Amsterdam and innovation philosopher, led the process.

EFP Brief No. 137: The Future of Manufacturing in Europe A Survey of the Literature and a Modelling Approach

Saturday, May 21st, 2011

Manufacturing in Europe is facing challenges that may impact on its performance in the near future: the emergence of international competitors, new technologies allowing the emergence of new business models, increased off-shore and relocated activities. The aim of this study was to provide policy-makers with a long-term vision of European manufacturing, its characteristics, its place in the EU economy, in the world and the main challenges it will be facing. Its purpose was to identify, on the basis of current demographic, environmental, technological, economic and social trends, and possible scenarios, the likely bottlenecks, unsustainable trends and major challenges that European manufacturing will have to face over the coming 30 years. From this, implications for various microeconomic policies, notably for industrial policy, were explored, contributing to the mid-term review of industrial policy in 2007 by the European Commission’s Directorate-General for Enterprise and Industry.

Future of European Manufacturing

Manufacturing in Europe is affected by a changing world. In 2004, ten countries joined the EU followed by Bulgaria and Rumania in 2007. Most of the new member states have a different economic structure and other comparative advantages than the ‘old’ EU-15, in particular in labour-intensive industries. This is also the case for the candidate countries from the Balkans and Turkey. Enlargement hence not only offers opportunities in terms of a larger domestic EU market, but also in terms of specialisation and – associated – economies of scale and scope.
Secondly, a new wave of globalisation unprecedented in terms of scale and speed is unfolding. This process of economic integration – with resources becoming more mobile, economies becoming increasingly interdependent and financial markets becoming increasingly international – has important implications for the future of manufacturing. This also holds for the integration of China and India in the world economy; each is home to about 20 percent of world population. Both countries are leading and highly competitive exporters, India in software and IT-enabled services, and China in skill-intensive manufactures. Especially China has emerged as the powerhouse of the Asian region and has in less than 20 years become the world’s manufacturing and trading platform. Globalisation has also impacted European manufacturing in another way: lower production costs and the potential of new consumer markets have caused European manufacturers to increase the quality and design of their products and
have led to international sourcing of (parts of their) production. Thirdly, consumer demand in Europe itself is changing. As its citizens are becoming wealthier, they demand more services and place higher requirements on manufactured goods. Demographics (ageing) might strengthen this change. Finally, the pace of technological change appears to have sped up in viewof globalisation and increasing international competition. Globalisation, EU integration, shifting demand and progress in science and technology, and innovation – whether disruptive or not – will all have a major impact on how the manufacturing landscape in Europe in terms of location, production, distribution of labour and physical appearance will manifest itself in the near and longer-term future. The purpose of this long-term scenario study was twofold: (1) to provide policy-makers, decision-makers and others with
two long-term scenario-based views on the future of European manufacturing and (2) to explore the scope for EU policies to positively address and influence the future.

Combining Qualitative and Quantitative Foresight Approaches

The scenarios in this study have been developed in three consecutive stages, consisting of (i) a survey of existing futures studies, (ii) the drafting of qualitative scenarios, and (iii) a quantification of the scenarios using WorldScan, a dynamically applied general equilibrium model for the world economy. This approach was designed as a hybrid combining the traditional foresight studies with more quantitative oriented economic-scenario studies.
One important difference between the two groups of studies is the detail with which technological factors are explored in the foresight studies compared to the economic-scenario and modelling studies, which generally treat them as exogenous factors. Furthermore, while the foresight studies, in contrast to the modelling studies, largely employ qualitative scenarios, this study aims at combining the benefits of both approaches:
first synthesising the results from many foresight studies to develop qualitative scenarios, followed by a quantification of the expected implications to check for the consistency of the scenarios as well as assess the expected impacts of policy packages. Furthermore, the communities conducting foresight studies and economic-scenario modelling studies have largely co-evolved with little interaction between them. This has led to foresight studies, focusing on participative processes and qualitative (policy) analyses and recommendations, producing
results that are challenged by approaches focusing on quantitative analyses. This study therefore aimed to bridge the two communities by employing methods used in each of them. As such, the results of the study can also be seen as an experiment on how to conduct such studies in the future, combining methods from different communities.

A Three Part Structure

As outlined above the study consisted of three distinct parts: a literature survey, the development of qualitative scenarios and the quantification of the scenarios using a modelling approach.

Survey of Future Studies

The survey of futures studies served two goals: (1) to help identify the relevant main drivers and trends that form our current perspective and knowledge that can be seen as key to the future of manufacturing in Europe and (2) to explore what other expert groups and think tanks regard as possible manufacturing futures.

The timeframe considered in the literature surveyed ranged from 2015 to 2050. During the course of stage one, 101 foresight reports, scenario studies, academic publications and policy documents were surveyed along five clusters: international, technological, social and environmental trends and drivers as well as new business models. The studies surveyed covered European studies, global studies, North-American studies and South-East Asian studies in order of importance.

FutMan, ManVis and Manufuture – three major EU-wide foresight projects conducted over the past five years – formed the backbone of the survey. The results of these foresight studies were supplemented by other materials ranging from theme or aspect futures studies (e.g. expected income developments; impacts of climate change) to similar foresight studies carried out in other countries, such as the U.S. (e.g. IMTI, 1998; SRI), Japan (Nistep, 2005) and China (NRCSTD, 2005 – for further references see full background report [Zee & Brandes, 2007]).

Qualitative Scenarios

The survey identified at least five sets of major drivers affecting the future of European manufacturing. These drivers are: (1) globalisation and international competition, (2) technological progress, (3) socio-demographic change (in income and wealth, social values, shifting preferences, ageing), (4) energy and resource scarcity, and (5) climate change and the environment. Based on these, two scenarios were developed: Cosy at Home and Adventuring the World. The two scenarios exemplify two explicit but ‘moderate extremes’ based on further integrating markets, on the one hand, and a stalling or reversal of market integration, on the other. In Cosy at Home, inwardlooking, risk-averse, indecisive behaviour dominates the public as well as the private realm. In Adventuring the World outward-looking (resulting in a further opening-up), risk-loving and pro-active behaviour is prime.Cosy at Home  This scenario depicts a European manufacturing sector that faces an overall business and political climate that gradually becomes more inward-looking and passive. Uncertainty and indecisiveness at world level are answered with

a European response of retreat. Politically unstable regions, threats of international terrorism, absence of binding action at global scale to tackle the negative consequences of climate change and the inevitable depletion of fossil fuels, and – related – a lack of real breakthroughs in alternative energy production and promising new technologies (nanotechnology and to a lesser extent biotechnology), give people the feeling of standstill and uneasiness. This in turn translates into a downturn in consumer and producer confidence and more inward-looking and risk-averse behaviour. Trust is something that may be found close by, but certainly not far from home. Rising energy prices and strong increases in monitoring and control of international movements of persons, goods and services result in a cost explosion in international transport and trade, which significantly alters the turn-of-the-century trend towards a further integrated world economy.

Adventuring the World  This scenario depicts a European manufacturing sector that is faced with an overall business and political climate of international cooperation, openness, but also strong competition. European self-confidence strengthens as the political and ideological emptiness that characterised the turn-of-the-century era has been replaced with new inspiring notions of Europe’s role in the world. This includes Europe assuming the position of a front-runner in solving problems of global warming, energy use and ageing as well as major breakthroughs in European social and cultural integration. Renewed decisiveness has triggered momentum at the global level and geo-political instability and threats of international terrorism are gradually disappearing. Considerable progress is made in alternative energy production and promising new technologies (nanotechnologies and biotechnology) have taken hold. A general upswing in consumer and producer confidence combines with new openness, and outward-looking and adventurous entrepreneurial behaviour. Trust relationships thrive. Rising energy prices stimulate new and more cost efficient energy-saving ways of transport of persons and products. Adequate road pricing and energy taxation increasingly supplant traditional labour taxes, making mobility and energy consumption better manageable and curbing harmful consequences.

Quantification of Scenarios

In the third step, the scenarios were quantified using an applied general equilibrium model for three main purposes: (1) the model ensured that the scenarios were consistent, since economic variables allow to describe and relate constraints and the current knowledge about interactions in the economy in a consistent form; (2) the quantification gave a feeling for the relative importance of various developments for the future well-being of society; (3) the model also offered the possibility of assessing the impact of framework policies and their relative importance.
However, large parts of the scenarios could not be quantified, as the general trends observed are expected to impact variables over too long time horizons for workable quantitative assumptions. The complex feedback loops furthermore make it only realistic to illustrate the scenario trends related to economic growth and economic integration, which are at the heart of the WorldScan model. (For details on the quantification of the scenarios and their expected impact on manufacturing please see the ‘final report’).

Impact of Framework Policies on Scenarios

The quantification of scenarios sketched the macroeconomic developments, showing the possible impact of globalisation, technological change, ageing and structural change towards a service economy on economic growth and trade. Europe is expected to become less important as a place for manufacturing production in both scenarios as manufacturing shifts to Asia. The question whether these trends could be affected by policies was assessed in the third step. Rather than thinking about targeting and subsidizing specific industries, framework policies that could affect the environment where industrial production takes place in Europe were modelled for potential impact on the scenarios. The framework policies analysed were: (1) upgrading skills, (2) more effective regulation and less administrative burdens for firms, (3) R&D and innovation policies, (4) a strong competitive single market, (5) environmental policies, (6) supporting energy policies and (7) global trade policy. The macro-economic outcomes for the EU as a whole in 2025 for both scenarios were analysed under the different framework policies. The differences between the two scenarios are minor. In Adventuring the World, GDP increases slightly more than in Cosy at Home, mainly because of the large impact of R&D and internal market policies. Exports increase faster in Cosy at Home, largely due to a composition effect of a higher share of total exports destined for other European countries. An increase in intra-EU exports due to new single market policies thus has a larger effect on total exports. R&D and innovation policies have the largest impact representing about 40% of the total GDP effect based on the lower bound returns in the literature. The reduction in administrative burden adds about 1.5% to GDP, internal market policies about 2% and skills even less. However, over time, when the whole labour force has been educated, the effects of upgrading skills will be larger. From Gelauff and Lejour (2006) we know that GDP effects will be three times as high in 2040 compared to 2025. However, compared to other framework policies, the economic effects even in 2040 will be unsubstantial.

A Future for Manufacturing

The analysis has shown that the share of manufacturing in employment and value added has decreased in Europe for decades reflecting structural changes in the global economy. However, manufacturing will remain important for trade and productivity increases, outpacing by far the service sector.

Global manufacturing is expected to grow, fuelled by Asian economic development. Nevertheless, there is a future for manufacturing in Europe. In 2025, Europe’s share in global manufacturing production and trade is estimated to be about 20%, much higher than its share in global population. Manufacturing is also estimated to contribute more than 15% to European value added in 2025 and to remain the most important driver for exports. A further strengthening of the internal market and adequate R&D and innovation policies can have a substantial impact on these shares. Both can be influenced by EU policy-making, but the framework policies cannot reverse the trends in shares of value added and employment. Within the manufacturing sector various developments will take place. The study discriminated between ten aggregate manufacturing sectors: ‘food products’, ‘textiles and wearing apparel’, ‘wood and other manufacturing’, ‘pulp, paper and publishing’, ‘chemicals, rubber and plastics’, ‘basic metals’,
‘non-metallic minerals’, ‘electronic equipment’, ‘transport equipment’ and ‘other machinery and equipment’. Based on
historical productivity growth paths of these sectors, their trade openness, R&D intensity, energy efficiency and skill intensity, it is highly likely that these (sub)sectors will develop differently over time. This also applies to subsectors within the ten sectors identified. Most sectors can distinguish between basic and specialized manufacturing activities, with basic manufacturing on average being more affected by international
competitiveness than specialized manufacturing.

Openness a Key Determinant

A number of interesting conclusions about the future of manufacturing in Europe were drawn. The increase in trade and,more generally, globalisation appears to be one of the most important drivers, making the sectors that are already most open to international trade also the ones mostly affected in the future. They include textiles and wearing apparel, wood and other manufacturing, chemicals, rubber and plastics, electronic equipment, transport equipment and other machinery and equipment. Overall, the sectors food products and pulp, paper and publishing will be less influenced. These are more domestically oriented sectors, less R&D intensive and face less technological
progress. Europe has no comparative advantages in textiles and wearing apparel, electronic equipment and basic
metals. This disadvantage will become further manifest in the oncoming twenty years. In particular, this applies to electronic equipment, which – while in the past representing a relatively large sector – will decline even further. Textiles and wearing apparel is an already small sector in terms of value added and employment, which means that an even less prosperous future for this sector will also have less overall impact. Chemicals, rubber and plastics, transport equipment and other transport and equipment will be the most important manufacturing sectors in Europe,
despite a deteriorating comparative advantage in the other machinery and equipment sector. These sectors are important for European exports and will account for about a quarter of global production and trade in these sectors over the coming decades. Of the framework policies analysed in this study, improving skills, reducing the administrative burden and increasing energy efficiency, have the least impact on manufacturing. R&D and
innovation policies and strengthening the internal market, on the other hand, have the strongest and most positive impact on manufacturing. They are also the most ambitious in terms of policy formulation and implementation, and potentially very effective in supporting manufacturing because of their R&D intensity and open-to-trade nature. In the coming decades, Europe’s decreasing share in global manufacturing production and trade will flatten. The EU framework policies support this slowing of the relative decline of manufacturing activities in Europe, which may even come to a near standstill in sectors such as chemicals, rubber and plastics, and combined machinery and equipment.

Authors: Felix Brandes (TNO-IPG)  felix.brandes@tno.nl
Sponsors: European Commission – DG Enterprise & Industry
Type: European futures study on manufacturing
Organizer: CPB, the Netherlands (Arjan Lejour) & TNO-IPG (Frans van der Zee)
Duration: 01/2007-05/2007
Budget: 130,000€
Time Horizon: 2037
Date of Brief: March 2008

Download: EFMN Brief No. 137_ Manufacturing in Europe

Sources and Links

The key results of the study were published as part of Chapter 5 of the European Competitiveness Report 2007. More details and the full scenarios are published in the background reports and final report and can be accessed via the website of the European Commission and the CPB the Netherlands.
http://ec.europa.eu/enterprise/enterprise_policy/industry/index _en.htm

Brandes, F., A. Lejour, G. Verweij & F. van der Zee (2007)
“The Future of Manufacturing in Europe”, Final Report, 31st May 2007, available at:
http://ec.europa.eu/enterprise/enterprise_policy/industry/doc/f
uture_manufacturing_europe_final_report.pdf

CEC (2007) “Chapter 5: The Future of Manufacturing in Europe – a survey of the literature and a modelling approach”
in European Competitiveness Report 2007, 31st October 2007,SEC (2007)1444, available at:
http://ec.europa.eu/enterprise/enterprise_policy/competitiveness/1_eucompetrep/eu_compet_reports.htm

Lejour, A. & G. Verweij (2008) “Two quantitative scenarios
for the future of manufacturing in Europe”, CPB Netherlands
Bureau for Economic Policy Analysis, available at http://www.cpb.nl/nl/pub/cpbreeksen/document/160/doc160.pdf

Zee, F.A van der & F. Brandes (2007) “Manufacturing Futures
for Europe: A survey of the literature”, TNO the Netherlands,
available at:
http://ec.europa.eu/enterprise/enterprise_policy/industry/doc/future_manufacturing_europe_literature_final_report.pdf