Policy implications in developing and implementing a European Strategic Research Agenda

The subject you asked me to speak about goes far beyond the hydrogen problem and deals with the wider aspects of European research. Science and technology have enormous policy implications. Science is power, and therefore is by its very definition genuine politics. Science is the basis of wealth, not oil or coal or diamonds. The richest countries in the world are those with a solid education and science system, not the oil exporting OPEC countries.

And history shows us that science drives politics much more than politics drives science.

A current example is biotechnology. We do not vote natural laws in our Parliament. We rather try and keep up with the rapid scientific development adapting our thinking and our directives to a changing scientific environment.

In other words, science normally comes first, politics follows.

There are however exceptions, as for instance when politics create the right conditions for break throughs in science and technology. A clear example is the military sector. Another one is big science, e.g. space missions. Hydrogen could be another one. The state can help, either by funding new projects or by creating the necessary political and economic environment.

The state can help, that is true. But the state is a bad manager. And even the most intelligent government cannot foresee the future. It does not know whether a technology will be commercially successful or not. There are many examples where the state has invested money into a project for political reasons and at the end it failed because nobody wanted to buy the product. The same may well happen with hydrogen. Economic reality does not necessarily follow our scenarios. And people react in their own way. Otherwise, we Europeans, would not be so far away from our Kyoto commitments.

So what we need is a mixture of state aid, private participation and public commitment.

Let me take the post-war US economy as an example. As we all know the post-war US economy has provided a rich spawning ground for new industries centred on technology-intensive products. The US was among the first industrial economies to develop substantial commercial industries in products such as semiconductors, computer hardware and software, and biotechnology. In contrast to the structure of their European and Japanese counterparts most of the post-war high technology industries relied on new firms and entrants for technology commercialisation. It was a process of „creative destruction“, which contributed to their higher overall growth – the mature industries declined but their decline was offset by the accelerating growth rates of new industries.

The US-technology policy was primarily „mission-oriented“. Defence policy was and still is a major driving force and sometimes up to 80% of the public support for research went into military projects. But the national security and defence mission was not always the primary motive for post-war federal research and development funding, as a closer look at some key sectors like the information technology, aircraft, nuclear power and biotechnology suggest.

According to the American experience there are also other elements which appear to underpin success. One is competition among those carrying out research or among technology developers, in most cases private firms or laboratories. Tough antitrust policies and weak intellectual property rights encouraged significant dissemination of know-how and technology between firms although in the meantime the Clinton and Bush administration has considerably strengthened the role of property rights. In the early phases of a technology development a diverse array of alternatives was explored in order to avoid misallocation of funds.

There was a great investment in the training of the scientific and engineering workforce through university research. And last but not least, federal R&D support extended well beyond basic research and helped to develop technologies and their commercialization avoiding a specific commercial design or product specification.

Summarizing the American experience I would say that a mixture of mission-orientation, competition, basic research, training and cooperation between universities and new companies create an innovation friendly environment that leads to success.

As far as information technology is concerned, European governments also concentrated their limited support on defence-oriented engineering and electronics firms. But they provided only limited funds and their markets were small and not integrated. After all, companies were not interested in commercial markets but in the one exclusive client, i.e. their own state. On the other hand, American companies viewed their military business as a development vehicle for technology that eventually would be adapted and sold in the open marketplace.

Europe needed some time to learn this lesson. Our science base was relatively sound, but its economic success was doubtful.

Where Europeans considered a market-driven approach, like in the aerospace sector, they turned out to be much more successful.

I don’t want to go into further differences between Europe and the US, e.g. public acceptance of research, which still prevents Europe from becoming a strong competitor in biotechnology, or their public funding which exceeds European efforts. For our purpose it seems enough to underline the link between a mission-oriented policy and competition.

What are the challenges for European technologies in the 21^st century? If we take our commitment under the Kyoto protocol seriously, the mitigation of greenhouse gases is by large the biggest technological challenge of this century. We should focus on technologies, which help us reduce the emissions of greenhouse gases, and hydrogen is without any doubt an intelligent answer to the question. And by doing so, we should focus on solutions that we won't regret, such as competition and commercialisation at an early stage in order to create new industries and many new jobs.

Next, I am going to concentrate on the subject of hydrogen. The most important questions that should  be resolved when shifting to a hydrogen economy are what will the hydrogen be made off and how much will it cost.

Cost is the biggest impediment to using hydrogen more widely as a fuel. For example, electricity is required by many hydrogen production methods, a fact that makes hydrogen more expensive than the fuels it is supposed to replace.

At the moment hydrogen is made from natural gas, in other words steam reforming from methane. Given the actual price of natural gas the cost of hydrogen is equivalent to gasoline, about double or triple the actual price of gasoline. Natural gas could perhaps help launch the hydrogen economy, but only if the finance ministers reduce the tax burden. In the long run it makes no sense to take natural gas as the feedstock for the hydrogen economy if we want to have a fossil poor energy system.

There are other methods to produce hydrogen, each with its own merits and drawbacks. The underlying chemical reaction of most of these methods is to split water into its components. For this purpose electrolysis uses electrical current, and steam electrolysis uses electricity and heat, the last technique making the process more energy efficient. Thermochemical water splitting uses chemicals and heat in multiple steps to split water. Photoelectrochemical systems consist of semiconducting materials like photovoltaics that use sunlight. Photobiological systems are made up of microorganisms that equally use sunlight to split water into hydrogen. Biological systems use microbes to break down a variety of biomass feedstocks into hydrogen. Last but not least, thermal water splitting uses a very high temperature – approximately 1000 ° C – to split water and gasification uses heat to break down biomass or coal into a gas from which pure hydrogen can be generated.

Neither parliaments nor governments should make a choice between the different possibilities. Our role is rather to encourage researchers to investigate all these methods, to provide enough public funds and to allow competition to choose the most effective and cheapest technology.

In the light of our climate policy we have to take an important external cost factor into account: the greenhouse gases carbon dioxide (CO₂) and methane will have a price tag which in the future might easily reach the order of magnitude of 20 to 30 Euro per ton of CO₂ equivalent. If this is the case, the cost of hydrogen produced by solar or nuclear energy might soon become competitive.

At the end of the day the primary energy for the production of H2 must come from somewhere. If we temporarily exclude gas, oil or coal, the only primary energies from which we can produce an emission-free hydrogen are solar energy, nuclear fission and fusion. It is too early to decide among the different options but we shouldn't exclude any of them. However, nowadays it seems politically incorrect to take nuclear energy into account. But who knows, perhaps our first commercial, non-fossil hydrogen will stem from a high-temperature nuclear reactor. But it could also be another solution. Perhaps biologists will develop green algae to become the power plant of the future.

In 1939, Hans Gaffron, a German researcher who fled the Nazi Germany and came to the University of Chicago observed that green algae split water into hydrogen and oxygen for a then unknown reason. In 2001, Melis Energy, an American based company, built a bioreactor containing 500 litres of water and algae that can produce up to 1 litre of hydrogen per hour. Who knows what will be possible in 20 or 40 years when we possibly need much more hydrogen to fuel our cars and to substitute H₂ for oil?

We should, therefore, encourage research into hydrogen production. A special chapter should be reserved in the next European framework programme for research which covers all areas to mitigate the emission of greenhouse gases with a special emphasis on hydrogen. In order to prepare such a decision we still need to do a lot of persuasive work. We have to convince the Commission, the Parliament and the Council to launch Europe’s answer to the perhaps biggest industrial challenge of the future: the mitigation of greenhouse gas emissions. And hydrogen might become the energy vector to move our economy in the 21^st century like electricity did in the 20^th century. Electricity will still have its place but H₂  could fuel our cars.

In order to achieve this ambitious goal we need a roadmap which includes a mission-oriented policy as much as basic research. We need a mixture of curiosity and commercial instinct. In short, we need a new frontier, a challenge to prove that Europe has still enough vitality to convince its younger generations that our identity has something to do with our will to go beyond the limits of the known, to look for the unknown. 

Island, far in the north, rich in geothermal energy and hydropower, has committed itself to be the first country to rely totally on hydrogen for its cars and ships. This courageous decision deserves our support. Other countries or regions with special needs or conditions should follow.

I have just come back from a trip to Brazil, particularly Amazonia. In order to develop the environmentally fragile and vulnerable rain forest to allow the 30 million people - which live in this area - a decent living and to comply with their future energy needs, we shall commit ourselves to a decentralised and sustainable energy supply in Amazonia where hydrogen has its place.

Concerning Europe we should focus on a common framework for a future hydrogen economy. One should be an early inclusion of the transport sector into the CO₂-emission trading. Another should be a legally binding initiative to reduce step by step the CO₂- emission of the cars. And the third area where Europe could be helpful is the creation of a common infrastructure for hydrogen.

Research does not mean the confirmation of our prejudices but to live with the surprise.

The word surprise stems from the French word "surprise", which in the middle ages was nothing else then an extraordinary tax. Today surprise means simply the unexpected. It could even alleviate our tax burden by finding better solutions to save energy and mitigate the green house gases. In this sense: Vive la surprise!