Society is now witnessing the implementation of digital currencies, AI and blockchain technology worldwide. These new digital technologies require a high consumption of electricity, currently produced predominantly using coal and fossil fuels that adversely impact the environment. A global shift toward green energy will require the removal of the existing regulatory barriers on technology, infrastructure, finance and tax policy. In this series, my articles evaluate the tax, digital technology and solar policies (including space power satellites) of the countries that emit the highest volumes of carbon dioxide.
Proving the heliocentric model of our solar system put forward by European scientists Aristarchus of Samos (310–230 BC, Greece), Nicolaus Copernicus (1473–1543, Poland), Galileo Galilei (1564–1642, Italy) and Johannes Kepler (1571–1630, Germany) took 2,200 years, when the German–American spaceflight, the Helios 2 solar probe, cruised within 26.55 million miles (42.73 million kilometers) of the sun in April of 1976. Now, the European Union is solarizing its digital economy at a much faster pace.
With renewable energy projected to comprise 90% of the electricity mix in Europe by 2040, three major factors are contributing to this paradigm shift in energy.
Technological: Blockchain-based digital technologies are decentralizing and democratizing the electricity supply by enabling the interoperability of solar cell photovoltaic, or PV, energy produced from diversified PV assets with micro and macro/utility electric grids. This is keeping EU-based companies that perform efficiently, even in cloudy conditions, at the forefront of space-grade and liquid PV innovation.
Economic: Solar energy is an increasingly attractive alternative from an economic standpoint due to the declining cost of solar energy, demand for solar PV panel installations in the EU’s smart cities, an increase in CO2 costs attributable to carbon taxes and environmental lawsuit fines, net metering subsidies, as well as funding — including from the European Investment Bank — in the renewable energy sector, as reported by the United Nations Environment Program.
Environmental: Solar energy does not produce CO2 emissions, thereby improving air pollution and pollinator habitats to avoid a climate change apocalypse. A potential meltdown is relevant to the EU, as it ranks third in the world for CO2 emissions.
Related: Japan to Solarize Its Burgeoning Digital Economy, Expert Take
Space power satellites
The EU’s commitment to solarizing its digital economy in order to lower its CO2 levels in accordance with UNFCCC’s 2015 Paris Agreement is backed by various initiatives undertaken both in space and on Earth.
The European Space Agency is a space, weather and CO2-emission watchdog. With the Copernicus Climate Change Service satellite, it keeps tabs on the CO2 levels of all countries around the world. But since satellites are expensive to build and launch, and are difficult to update once in orbit, the ESA also utilizes a fleet of PV-energized, high-altitude pseudo-satellite, or HAPS. A zeppelin-like HAPS called the “Stratobus” is currently being manufactured by Thales Alenia Space in Cannes to track CO2 emissions.
The ESA has also been actively evaluating the possibilities of utilizing Solar Power Satellites by formulating a European strategy to solarize earthbound electric grids. France’s Airbus Defence and Space is building an SPS that intends to beam earthbound solar energy via high-powered infrared lasers by 2030. Airbus is also making a HAPS called “Zephyr,” as well as a larger version of it that can be used for communications, reconnaissance, deliveries and even laser solar energy transmission. The world’s first HAPS base is already in operation at Wyndham Airfield in Australia.
The ESA also continues to develop the different areas of solar electric propulsion required for deep space exploration missions. With the first picture of a black hole published in the spring of this year, the future may involve “using solar electric propulsion to explore black holes for alternate energy sources,” according to film producer Andrew Lauren of the French science fiction film Highlife, which centers on the same topic.
Smart cities
Over half of the world’s population live in cities that contribute 70% of the global energy-related greenhouse gas emissions. “Cities around the world are the main cause of climate change but can also offer a part of the solution to reducing the harmful greenhouse gases that are causing global temperatures to rise,” explained U.N.-Habitat Executive Director Maimunah Mohd Sharif.
Germany became the EU’s climate change pioneer with its Energiewende (energy transition) policy when it began installing PV rooftop solar panel systems in 1999 that now represent about 23% of all solar power generation capacity installed worldwide. More than a million German buildings now have solar panels on their roofs, with 1 out of every 2 new orders accompanied with a battery storage system.
A decade later, the Danish island of Samsø emerged as the poster child of action against climate change, as it has been carbon neutral for over 10 years. This inspired Spain’s Balearic Islands, followed by another 26 European islands — including the world’s cryptocurrency hub, Malta — to commit earlier this year to transition to 100% renewable energy and ditch coal power.
So far, most EU countries have committed to phasing out coal plants by 2038, since they are the most significant source of air pollution, indifferent to political agendas, and not contained by the national or city borders of the 28 EU member states. Austria — which is fully phasing out coal by 2020 ahead of other EU countries — is home to a solar company called Smartflower, which manufactures intelligent solar panels shaped like flowers that move along with the position of the sun. As coal-fired power generation can be replaced by installing solar PV panels everywhere — on coal mining sites, building rooftops and agricultural land — to.reduce CO2 pollution. Already, a former coal plant in Germany — where solar energy tops the list of sources for public electricity supply — is reinventing itself as a Cultural Center for experimental/electrical art that is fueled by green energy.
Under the Horizon 2020 project, 70 EU cities are switching to clean energy sources that are digitally distributed using artificial intelligence, the Internet of Things and blockchain-enabled networks. Germany leads the way in EU’s digitalization of the energy sector, as outlined in its Blockchain Strategy. “Generating cheap green energy is no longer a challenge. The price of PV installations has tumbled over the last 10–20 years, so we’re now seeing huge investments in this particular energy source. The challenge is to link energy production from myriads of small installations across the landscape with a country’s total energy demand and energy production from other sources, some of which is also linked across national borders,” explained Marta Victoria, a professor who investigated and mapped the capacities of solar PV generation in the European countries that vary considerably from one state to another.
Providing the solar digital link by creating smart-city energy districts are: Hivepower, ABB, Space10, Sonnen-TenneT, EDF Energy and UK Power Reserve, Insolar, SMA Solar Technology and Iota. On the latter, “The IOTA Tangle brings the promise of Distributed Ledger Technologies (DLT) to the Internet-of-Things. A growing energy community of private and public enterprises and academia are now coming together to explore its potential in real world testbed environment, paving the way for a more open, transparent and decentralized energy system,” Wilfried Pimenta de Miranda — the business development director at the Iota Foundation, which is part of the CityxChange H2020 consortium — said in an email.
Solarized electric-transportation
“Pollution often is a silent killer and is one of the greatest health hazards in Amsterdam,” explained the city’s traffic councilor, Sharon Dijksma, about Amsterdam’s ban on gasoline and diesel-fueled cars and motorcycles by 2030. Similarly, other zero-carbon smart cities of the EU will need to address the role of solarized electric transportation and the blockchain-based energy network that will enable the interoperability between PV-energized transportation — such as cars, bikes, flying water taxis and roads — and the electric grid, particularly in light of Volkswagen’s “dieselgate” emissions-cheating scandal.
The German Fraunhofer Institute for Solar Energy Systems has developed a solar car roof with highly efficient solar cells to extend the driving range of electric cars as well as a new solar cell textile that is woven into truck tarps to power onboard equipment. Audi’s A8 already features a solar sunroof, and another two PV electric car companies — German Sono Motors and Dutch Lightyear — are working toward putting their cars on the road by 2021. U.S. electric car manufacturer Tesla plans to invest $4.4 billion in a Berlin factory to manufacture the company’s SUV Model Y, which could be produced as early as 2021. The Mobility Open Blockchain Initiative is developing a blockchain-based Electric Vehicle Grid Integrator that will connect electric cars to the grid, while other solar energy blockchain projects include an electric car charger and a car wallet with a wide variety of use cases, including ride-sharing technology that allows the deployment of underutilized personal vehicles to provide rides.
Related: Is US Environmental Tax Policy Hindering Solar Power to Fuel Digital Technologies?
The world’s first dockless ride-sharing program was designed by Luud Schimmelpennink in Amsterdam in 1965 to counter the rise of pollution from cars. Called the “white bike” program, bicycles could be borrowed and left anywhere in the city to be borrowed again by the next individual. However, the dockless bike-sharing system was unsuccessful due to vandalism and theft.
Ever since, there have been at least five generations of evolution in bike-sharing programs put forward, driven mostly by advances in digital and PV technology. The second-generation bike-sharing program was born in Denmark in 1991, which allowed bikes to be picked up and returned to several central locations with a coin deposit. Theft was also a problem in this case, largely due to user anonymity. The third generation of bike-sharing systems was born in Portsmouth University in England and involved several technological improvements, such as bike docks that locked electronically, onboard electronics tracking user identity, swipe cards and telecommunication capabilities. The French cities of Lyon and Paris launched highly successful third-generation bike-sharing programs during the early 2000s and were followed by many cities around the world. The fourth-generation bike-sharing program, which won the Genomineerd voor de Computable Award in 2017, utilizing blockchain technology to track the identities of electric bike users and accepting payment in cryptocurrencies, was jointly developed by the Netherland Vehicle Licensing Agency and IBM, called “BikeBlockchain.” Today, an electric bike company based in the United Kingdom called “50 Cycles” manufactures cryptocurrency-mining e-bikes, enabling electric bike-share riders to mine cryptocurrency while peddling to earn their crypto fees, with a German company called “Mobility House” producing the chargers for these electric bikes. The Swiss city of Zug — or “Crypto Valley” — was the first city to implement this fourth-generation bike-sharing program, which utilizes uPort’s eID program to track user identity and AirBie for payments in Ether (ETH).
The fifth-generation, solarized, docked electric bike-sharing program was designed by Christopher Cherry, Stacy Worley and David Jordan of the University of Tennessee, Knoxville in 2010. A U.S. bike company called “Electric Bike Company” recently began manufacturing solarized electric bikes. However, Cherry said in an email, “I haven’t seen anything more than a pilot test like ours,” regarding the implementation of the fifth-generation bike-sharing program so far. Nevertheless, PV panels are already energizing bike paths and roads of European cities.
The world’s first solar bike path, SolaRoad — a 70-meter stretch of bike path between two suburbs of Amsterdam that generates solar power from rugged, textured, glass-covered photovoltaic cells — has been in operation since 2014. The world’s first solar PV road — a patented French innovation that combines road construction and photovoltaic techniques — was installed in 2016 in France by Wattway. Similarly, the world’s first electrified road that recharges the batteries of electric cars and trucks from two rails opened in Stockholm in 2018.
Related: Is US Environmental Tax Policy Hindering Solar Power to Fuel Digital Technologies?
EU regulatory and tax policies
The EU has the authority to develop a unified energy policy under the 2009 Lisbon Treaty. The European Commission’s Directorate-General for Energy is responsible for implementing the EU’s Renewable Energy Directive to transition to a low-carbon economy with the aim of becoming the global leader in renewable energy. The Renewable Energy Directive foresees that EU member states reaching a certain percentage of renewable energy by 2020. However, member states are free regarding the choice of support instruments for reaching these targets. The EU launched the Blockchain Observatory and has developed various blockchain related legislative and policy under the European Data Protection Supervisor.
High-level industry standards for data protection, interoperability and sharing of key blockchain technologies used in peer-to-peer energy trading, smart grids, metering and aggregators was established by the Digitalization & Solar Task Force of Solar Power Europe. Danish blockchain company DataHub is developing a system to ensure meeting these standards in the electricity market.
Environmental tax policy: The power to levy taxes is central to the sovereignty of EU member states, which have assigned only limited competences to the EU in this area. Therefore, the EU lacks a coherent renewable energy or digital tax policy.
Carbon taxes provided the 28 EU nations and Norway more than 400 billion euros ($450 billion) in gas and oil taxation revenues in 2015.
The EU ranks number four in subsidies to the hydrocarbon industry, at $289 billion, which is failing to decrease despite the bloc’s commitment to the Paris Agreement on climate change targeting net-zero emission levels.
State aid issues: Since the EU lacks a uniform tax regulator, energy tax and renewable energy subsidies are monitored by the EU Anti-Trust Commission, which is in charge of policing state aid that skews competition within the EU.
The guidelines on state aid for 2014 through 2020 allow aid to renewable electricity generation granted as a premium in addition to the market price (feed-in premium) in an open, competitive bidding process on a nondiscriminatory basis.
For example, EU state aid law does not allow Germany’s tax rebates on solar power modules and other renewable energy installations of up to 2 megawatts, while Germany’s parliamentary finance committee (Finanzausschuss) has voted to align national taxation with EU laws.
Conclusion
The collective commitment to renewable energy made by the International Renewable Energy Agency and the United Nations Framework Convention on Climate Change did not stop the record-hitting heat waves that extended across Europe this summer and shut down power plants. “Time is running out — we are already seeing worsening climate change impacts around the world — including unprecedented heatwaves — and we need to grasp all opportunities to rapidly deploy clean, renewable energy at scale to prevent the worst climate scenarios from becoming a reality,” Patricia Espinosa, executive secretary of the UNFCCC pointed out. The World Meteorological Organization published new data showing 2014–19 to be the warmest five-year period on record.
Further digitization in the EU is inevitable, with the financial sector set on establishing a blockchain payment system by 2020 to compete with blockchain-based payment systems developed by China and the U.S., a cryptocurrency-based trade finance mechanism called Instrument in Support of Trade Exchanges and the digital currency “Eurocoin.”
Blockchain in the energy market is set to grow fivefold from its current market value to over $25 billion by 2024, as reported in a study by Global Market Insights, Inc. But on the bright side, the EU’s digitization will be solarized, with PV installations doubling in the next three years according to a Wood Mackenzie report, and self-consumption accounting for almost 40% of all new capacity installed according to the Europe Solar PV Market Outlook 2019. France has opened Europe's largest floating solar farm. “The EU and China are the parties that can take this forward,” said Frank Rijsberman, director general of the Global Green Growth Institute.
Selva Ozelli, Esq., CPA is an international tax attorney and CPA who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.