Implications of energy poverty for economic competitiveness and social cohesion

1. Implications of energy poverty for economic competitiveness and social cohesion Open Seminar “ESPON Evidence for Regional Policy-Making” 9-10 June 2010, Alcalá de Henares, Spain

2. Questions posed to the ReRisk project • 1. How and to which degree will an increase in energy prices impact on the competitiveness and cohesion of European regions? • 2. In which fields and to what degree can regional policy makers take influence on the development of renewable energy sources and fight energy poverty? • 3. Which sources of sustainable energy generation can be activated and/or further strengthened within European regions?

3. Impact on the competitiveness and cohesion • Some regions are more vulnerable than others due to an unfavourable economic structure: • A high percentage of wealth creation (GVA) is in industries with higher than average energy costs and / or • A high percentage of industrial employment depends on these industries Ranking of Regions by Gross-Added Value in Industries with High Energy Spending Source: Own elaboration based on Eurostat data

4. Impact on the competitiveness and cohesion • In the Italian regions of Emilia-Romagna, Lombardia, and Veneto, special attention should be paid to the manufacture of cement since energy purchases in this sector represent more than 30% of total purchases and energy spending is almost 10% higher than the EU average. A second critical sector is the “manufacture of glass fibres”, in which more than 18% of purchases are dedicated to energy and energy spending is 8.6% above the average level of spending in the EU. The sector of “manufacture of other non-metallic mineral products”, to which both cement production and manufacture of glass fibres belong, employs more than 30,000 people in Lombardia and Veneto and more than 46,000 in Emilia-Romagna. • In the Czech region of Severovýchod, production processes in the sector of “other non-metallic mineral products” should be analyzed, since energy spending in this sector is 10% above EU average on national level and companies in this branch employ 21,564 persons in Severovýchod. Moravskoslezsko also has a very high level of employment (28,388 persons) in the basic metals industry. Special attention should be paid to processes related to “Forging, pressing, stamping and roll forming of metal; powder metallurgy”, for which energy spending is about 5% higher than the EU average and represents 7.65% of total purchases

5. Impact on the competitiveness and cohesion • Another set of regions can be hard hit by rising energy prices, due to their dependence on motorized transport: • Island regions and capitals: dependence on air transport • Central regions and their “hinterland” with a high level of commuting • High levels of employment in the transport sector • High fuel costs for freight

6. Impact on the competitiveness and cohesion Energy prices are a much greater strain on household budgets in the East of Europe than in the West, as shown by national statistics. Low activity rates and other factors that make families slide into poverty are affecting a large number of Romanian, Polish and Hungarian regions. People living in the poorest region in Romania only earn 14% of the average income in Hamburg, Romanians pay 54% of the German average price.

7. Impact on the competitiveness and cohesion • A large group of so far lagging regions have options for growth by exploiting their potential for renewables, while others could become even less competitive and face growing social problems. • Some of the Pentagon regions, especially in Belgium, could benefit less from growth opportunities in the economic centres, thus dropping out of the circle of best-performing regions in Europe. • So far wealthy regions in the European periphery, especially the North, with a heavy industrial base, may have to analyze how increasing energy bills will affect companies’ competitiveness.

8. Influence of regional policymakers The ReRisk team sent out a questionnaire encompassing 23 questions, addressing 157 NUTS 2 regional energy agencies Response from 41 agencies representing all EU countries Focus on: • The differing emphasis of national and regional energy policy in term of the three pillars of energy policy: security of supply; economic efficiency; environmental protection • The energy sources exploited in the regions (renewables; coal; oil; gas; nuclear) • The mechanisms that drive renewable energy development • The impact of energy prices on energy supply and demand • The relative authority of sub-national actors relative to national and international actors for shaping regional energy development

9. Influence of regional policymakers Regions play a greater role with regard to RES and can go beyond national standards, for example in environmental policy

10. Influence of regional policymakers “Sustainable energy supply structures based completely on the importation of knowledge and technology do not seem to be favourable for countries and regions. Local or regional R&D constitutes a good basis to optimise energy systems and to reduce vulnerability. Besides, the yield of renewable energy sources and the types of optimal technologies depend, in part, on local (climatic) conditions. Thus, specific technologies have to be developed – mostly by means of local or regional R&D” (Luther 2004)

11. Sources of sustainable energy generation Regions can act on various levels to reduce their vulnerability and to improve their capacity to adapt to the challenge of rising energy prices. With the right policies in place, rising energy prices can turn into an opportunity for growth. Region + National / EU Region + (Region) Region + Municipalities

12. Policy Recommendations • Focus on LOCAL Scale • Push municipal leadership in public-private partnerships • Develop integrated spatial planning instruments • Strengthen regional and local networks • Establish urban planning principles for solar energy use • Implement Urban Metabolism procedures • Incorporate solar and wind facilities in urban areas • Improve efficiency of office design and work arrangements • Improved transparency and information on energy consumption • Consumer Awareness and Education • Involve end users in energy efficiency programmes and policies • Social policies fighting energy poverty on household level

13. Policy Recommendations • Focus on REGIONAL Scale • Promote awareness among regional policy makers on the impact of rising energy prices and the need for economic diversification • Prepare for climate change impacts in the regional energy infrastructure • Evaluate the feasible potential of all renewable sources in the region (“map of hidden reserves”) • Promote industrial symbiosis and/or industrial eco-parks • Focus on NATIONAL Spatial Scale • Sustainable use of biocrops • BAT (Best Available Technologies) for industrial energy efficiency (benchmark indicators for subsectors)

14. Policy Recommendations • Focus on EUROPEAN Scale • Promote energy solidarity between regions and territories • Define a vision for regional energy models 2050 • Improve the data on energy use and efficiency in Europe • Create a market for energy efficiency • Fund and stabilize transregional research agencies • Focus on GLOBAL Scale • Accelerate the transition to non-fossil fuels in the aviation industry

15. Thank You for your attention

16. Latest data on risk of poverty and housing Source: EC 2010 “The Social Situation in the European Union 2009”

17. Latest data on risk of poverty and housing Source: EC 2010 “The Social Situation in the European Union 2009”