Will Europe lead the Fourth Industrial Revolution?

Up until a few years ago, the expression “industrial revolution” was associated with history, with the radical societal and economic changes that started some 250 years ago. But suddenly, the term is ubiquitous. World-renowned scholars such as Jeremy Rifkin have reminded us that we are living in the middle of a new industrial revolution, one which is again reshuffling our system, presenting us with endless opportunities, if only we knew how to adjust and reap the benefits.

Klaus Schwab, Founder of the World Economic Forum, also recognized the historic turning point and made the new industrial revolution into a prominent theme of discussion at this year's summit of world leaders at Davos. Rightly so: breakthrough technologies in energy, transport and communication are conspiring to create a smarter and more collaborative society.

The opportunities we are currently facing are probably the greatest humankind has ever faced and it is up to us to seize them. New technological capabilities such as big data and the internet of things are transforming our daily lives in ways that could not have been imagined – even by the best sci-fi writers – just a decade ago.

Europe's leap forward

But recognition poses particular opportunities for Europe in these challenging times, as our continent must leverage its comparative advantage in this field and nourish it. In fact, the industrial revolution of the 21st century brings a message of hope and optimism to EU citizens. In Germany, for example, a major part of renewable energy is produced by people using renewable energy sources and smart software, whom we like to call “prosumers”.

We are seeing some major progress in home automation, and driverless technologies for trucks and cars, as well as drones. Together with new responsive sensor labels, these will lead to fully automated logistics based on intelligent transport systems, therefore saving costs and cutting GHG emissions. Further progress in energy storage and the wider spread of electric vehicles can usher in this transformation, the scale of which is difficult to predict even now.

Many would be surprised at how most of these technologies depend on satellite-enabled localization and navigation systems that require great time precision. But here again Europe is a global leader in deploying the most precise global positioning system ever, as well as producing one of the largest big data systems, coming from our space: the Copernicus system.

An additional factor underpinning Europe's readiness for this global technological leap is the rising role and influence of the next generation. It doesn’t matter if we call them the X generation or millennials. I prefer to call them “digital natives” because they were simply born into this new digital world, and for them it is the most natural environment. On top of it, our youngsters have unprecedented access to smart technologies and they are ready even more than us to share, recycle, produce their own products in 3D printers and be environmentally responsible. In the new economy, their short hands don't stop them from reaching the high branches. On the contrary; young Europeans are the first to recognize, adopt or even start new technological trends.

Another reason for my optimism is my observation of one group of decision-makers which has fully grasped these new notions: smart mayors building their smart cities, regions and communities. As we could see from almost 7,000 members allied in the Covenant of Mayors, they are anxious to deliver and to do it in a collaborative manner. This means anyone interested can profit from the experience, best practices, new approaches and even from joint public procurement.

Finally, European society is probably more ready for globalization than any other. For many of us it is normal to cross borders to travel, go to university, start a business, or enjoy our neighbouring country's culture. Even if they don't always realize it, European citizens are more multilingual and cosmopolitan than their peers in other continents – and increasingly so. This gives us a tremendous advantage in the new global digital economy.

I am listing all these EU specifics to highlight the fact that despite the challenges we are facing right now, Europe is in many aspects uniquely predisposed to be the leader of this global economic and societal transformation.

So, the question is: how can we build on these foundations? How can policy-makers facilitate the process for the sake of our fellow Europeans? My answer is that we should help citizens from all corners of Europe work together on the leap towards a truly smart and fair society; one which will embrace the change, accelerate the transition and make sure all can benefit from this bold move forward.

We should focus on building a smart and fair Europe.

We can help to usher this new era by supporting positive mutually reinforcing technological trends across sectors such as energy, transport, logistics and agriculture; by modernizing our industry; by focusing the work of our researchers and innovators on key enabling technologies; by filling in the missing links of a truly circular economy; by democratizing the production process; and by further helping our cities and regions to develop cleaner, greener and smarter energy and transport systems.

To get there we need to create the smart integrated industrial infrastructure of the future.

The power of change

As I've listed above, a lot is already happening. But it is clear that we’re at the beginning of a very demanding process. The first thing we need to change is our focus on the legislation that we propose, the changes we introduce, and the plans we are laying out.

In each and every case, we must ask ourselves whether a change we are about to propose is supporting the transition or not. Is it respecting its key features? Is it based on latest technological achievements? Is it offering integrated solution? Is it future-proof?

I am glad to say that in the field of energy and climate policies, we are on the right track. The Energy Union approach represents an integrated cross-cutting approach and legislative proposals. (In 2015 these included the ETS reform, energy labelling, 2030 climate goals, COP21 results and consumer centred policies, among others.) These proposals constitute the needed integrated framework for a deep transition. We will push for ambitious proposals in the fields of energy security, energy efficiency, climate goals, electricity market redesign, infrastructure development and removal of physical and administrative obstacles to the free flow of energy in Europe – all of which are needed to further consolidate progress.

Some of the crucial areas for overall success in this transformation are transport, logistics and space. Here Europe can gain enormously from reducing traffic jams, improving air quality and the liveability of our cities, as well as from cutting GHG emissions. This requires improved integrated infrastructure, massive electrification and alternative fuel use for road transport, modernization of logistics based on proper sensor data and more precise navigation. Many believe that we will soon see driverless cars, trucks and wider use of drones. This requires legislative work on our side as well. Indeed, in December we presented the EU Aviation strategy and this year we will focus on road transport, space and infrastructure.

Five-dimensional Europe

The UN Climate Conference in Paris (COP21) united the world in the determination to fight climate change and speed up the transition to a low-carbon economy. In order to achieve these ambitious goals, we need to deliver on what I call the “5Ds of our energy and climate policies”. This means we must:

1. Proceed with the decarbonizing of our economies

2. Bring even more democracy into energy production and consumption

3. Profit from its digitization to optimise energy use and efficiency

4. Improve the diversification of our energy supplies

5. Help our innovators to deliver on new technologies to speed up the whole process by progressive disruption of traditional energy cycles.

The fifth D is critical: disruptive technologies would speed up and ease up the transition. I don’t think that the change will be achieved through to one single revolutionary invention. Rather, I expect we will continue to see technological breakthroughs – some of them clearly transformational – in the field of energy generation and storage, integration of renewables, home automation, fuel cells, clean engines and intelligent transport, energy efficiency in buildings and industry.

To achieve this, we need to engage Europe's best minds to these key enabling areas, bringing out disruptive technologies. Our companies and researchers need long-term goals and strategies to thrive in a stable and predictable environment.

I was recently told by scientists in Denmark: “Challenge us with ambitious ends, we will find the means.” That is exactly what aim to achieve with our Strategy for Energy Technologies (SET). We are currently working on a wider strategy on research and innovation to provide researchers and industry with clearer and measurable goals to accelerate the change. I told the Danish scientists I had no doubt they would deliver.

Let's get digital

All this must go hand in hand with the development of our digital Europe. In the case of digital energy services, we need to make sure that consumers can control and make the best use of their consumption data, while smart grid management is scaled up.

Data is sometimes described as “the crude oil of the digital revolution” and innovative companies will be the ones that understand how to extract their value and reap the huge potential benefits for consumers and society at large. In that context, digital infrastructure, data mining, the open source approach and (last but not least) respect for data privacy would be key for linking the energy, transport and the internet (or ICTs) in one data superhighway which will be the backbone of this new industrial platform of the future. This is generally very well understood and accepted, but we need to work hard to convince our member states and relevant stakeholders that workable and collaborative solutions are the way to the future.

As mentioned earlier, one group that doesn’t need any further convincing are mayors, cities and regions. The reason might be that they are closest to the citizens and in charge of daily problems with air and water quality, public transport and waste management. They are the first advocates of integrated infrastructure, cleaner environment and taking the cities away from the cars and returning them back to the citizens.

Most of the innovative ideas I have seen in Europe in the field of heating, transport, cycling, walking, waste management or energy efficiency came from municipal or regional levels. This year the European Commission would like to promote this trend by working on smart cities and regions of the future.

I am sure that the European Commission can offer more support for linking up ICT, mobility and energy infrastructure, waste and water management. We will work on a one-stop shop that advises and mobilizes financial resources from the EU budget, Juncker investment funds, the EIB and EBRD.

The path Europe 4.0

All around us we can see how a new economic paradigm is emerging. Europe is well set to embrace it and to create a smart green digital economy based on sustainability and high profitability – benefiting society as a whole. Transformational breakthroughs and disruptive business models must boost economic and sustainable growth while improving the well-being of society’s different groups, including the most vulnerable ones.

Europe was first to embark on this bold new course and it must show the continuous leadership in this effort. This leadership stems from a collective effort; that of governments and parliaments but also and foremost of our citizens, workers, entrepreneurs, start-ups, cities and regions, researchers, companies and universities.

A smart and fair Europe – a Europe 4.0 – should be the new rallying vision for us Europeans and I am sure it will be the best inspiration for all our global partners. Thank you, Davos for putting the new industrial revolution back where it belongs: on the global agenda.

Author: Maroš Šefčovič is Vice President of the European Commission, in charge of Energy Union.