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SPEECH/06/147












Günter Verheugen

Vice-President of the European Commission responsible for Enterprise and Industry




Synthetic fuels for a more competitive and environmentally friendly Europe






















Synthetic Fuels Alliance
Brussels, 7 March 2006

Ladies and Gentlemen,

Thank you for inviting me to speak at this conference. It is a pleasure to be at the launch of the Synthetic Fuels Alliance. Many of the Alliance’s aims symbolise what Europe is currently discussing and striving for.

Namely:

  • Increased competitiveness through innovation and research;
  • Improved energy security through efforts by European industry;
  • Friendliness and concern for the natural environment, in particular through reduced greenhouse gas emissions.

I am particularly happy to see that two of Europe's “flagship” industries – the automotive industry and the fuel industry – have joined forces in working together towards a better future for the entire continent. The Synthetic Fuels Alliance brings together the best in European industry. I therefore have very high hopes that the Alliance will achieve its results.

The launch of this Alliance will also help to contribute to several key, long-term policy objectives of the European Commission. I want to assure you that the aims you are working towards have my full backing and I am ready to provide you with support and help.

In other words, I would like to warmly welcome the Alliance for Synthetic Fuels as a key partner in striving towards a more competitive, prosperous, secure and environmentally-friendly Europe.

[Policy context – General]

Ladies and Gentlemen,

Energy policy in general and alternative fuels in particular are currently on the top of the European Agenda.

As you will know the European Commission has recently adopted a Biomass Action Plan and a Communication on an EU-Strategy for Biofuels.

In a wider context and as a follow-up to the European Council in Hampton Court last autumn, the College will tomorrow decide on a Green Paper “A European Strategy for Secure, Competitive and Sustainable Energy for Europe”. While my colleague Andris Piebalgs will later on present the general lines of the Green paper I would like to use the opportunity to putting alternative fuels in general, and synthetic fuels in particular, into the context of a competitive Europe in the early 21st century from the industrial perspective.

The world has undergone a cardinal change in the last decade – both economically and politically. The speed of development has moved up several gears. Priorities and focal points have shifted and we face a world full of unprecedented opportunities, but also of unprecedented risks.

European industry has generally been successful in adapting to and taking advantage of the opportunities it has been presented with. From an economic perspective, the industries represented here today offer a good example of embracing new markets and engaging in previously closed environments.

However, we also have to accept that the nature of the challenges we face, or consider important, has changed:

  • Climate change threatens our planet;
  • Our security concerns are increasingly focused on energy supply;
  • And, above all, the traditional world economic order is being redefined.

Europe must adapt if we wish to retain our way of life and continue being an example, which many in the world wish to follow.

[Policy context – Competitiveness]

Ladies and Gentlemen,

Globalisation and world-wide competition are a reality and we have to face the fact that there exist no credible alternatives to this process. To make sure that Europe is able to adapt to this new environment, the Commission has put an ambitious programme for bolstering competitiveness, growth and jobs at the heart of its political agenda.

What does this mean in practice? – Simply, that we must concentrate and focus on areas where Europe possesses a competitive advantage. It is clear to me that Europe will not be able to, nor should we wish to, compete on the price of what it produces and offers. In my opinion the European economic way can only be based on the quality of our products and our services.

In short, we have to be better than the rest of the world.

This, in turn, is only possible if we are at the vanguard of the ongoing and accelerating technological revolution.

It means concentrating on innovation and research. New technologies, new processes and new products providing employment to a highly educated European population – this is the European way in the 21st century.

This Alliance’s focus is on innovation, research and new technologies. Its success would not only provide a direct boost to Europe’s competitiveness through the industries involved. It would also provide significant opportunities to other sectors of the European economy. It would help to stimulate even sectors considered as traditional to contribute to our competitiveness agenda. This in turn should lead to new employment opportunities.

[Policy context – Energy security]

Another risk, unfortunately more prominent today than ever before, is that of security of supply. Global energy demand is growing and recent events and energy price developments have confirmed Europe's need to diversify its sources of energy and the geographical locations from which we obtain our energy. A modern economy and society, such as the European one, simply cannot function without a reliable energy supply and we should do our utmost to guarantee it.

I will not stop for long on this crucial point: the problem definition is crystal clear and I am sure that my colleague Andris Piebalgs will expand on it later. I would only like to express my belief that Europe has to take the lead in the on-going global energy revolution.

[Policy context – Environment and sustainable development]

Ladies and Gentlemen,

Europe has also made a decision to be among the world’s path setters in sustainable development and environmental protection.

We have to ensure that the environmental legacy bestowed by our era on generations to come, caters for their well-being. This is an enormous responsibility and I would like history to credit early 21st century Europe, together with its international partners, with doing its best to protect planet Earth.

Through an integrated approach the Commission wants to even strengthen the inter-play between the three main political policy objectives: competitiveness, security of supply and sustainable development. We have therefore set up a High Level Group on Competitiveness, Energy and Environment to study these issues in more detail. At its kick-off meeting on 28 February the High Level Group has inter alia decided to establish an Ad hoc Working Group on renewable energy as of June 2006. I am sure that this Alliance, particular through the Biomass-to-liquid process, will be a point of reference in the context of these works.

[Policy principles: Balanced and cost-effective]

Let me also share with you some policy principles on which I believe the successful promotion of alternative fuels should be based. You will not be surprised to hear me stressing careful calculation and argue for a balance to be struck between our various policy objectives. In other words: We should not sign a blank cheque to promote alternative fuels.

In my opinion, the cost implications of our fuels policy need to be assessed carefully. In view of our Lisbon Agenda objectives we should strive to maximise the security and environmental benefits of every Euro we spend on alternative energies and ensure that costs are spread fairly across different sectors of the economy.

For me, the practical implication of the cost-effective approach is that we need to use market-based instruments to promote alternative fuels and effectively combine supply- and demand-side measures to achieve their full potential.

Also in this context, this initiative leads into the right direction particularly given that the quality-performance of synthetic fuels is at least equal to, or superior, to conventional fuels.

[Policy principles: Forward-looking]

Ladies and Gentlemen,

We also have to think about the longer-term. Europe’s long-term fuel strategy is likely to be based on several different fuels.

I see a clear progression in terms of the development of different fuels and engine technologies.

Currently Gas-to-Liquid fuels are available on a limited basis and 1st- generation biofuels are the main transport fuel available. I see them as playing a part in helping to achieve our policy objectives, and the Commission has set up a policy framework to encourage their development.

However, I believe that this is only an intermediate step and I hope to see a wide-scale market introduction of synthetic fuels soon. This is what the Alliance will be working towards and ultimately its success will be measured by the speed and extent of the market penetration of synthetic fuels.

In the long-term, it is also my hope that Europe will be able to use its experience with these fuels as a stepping stone towards a wider use of renewably-produced hydrogen.

We should not lose sight of the long-term perspective.

[Policy principles: Integrated Approach]

As already briefly mentioned, I firmly believe that an integrated approach is the most effective means of achieving our environmental aims in the road transport sector. This is another reason why I am so glad to see this joint initiative between the car industry and the oil industry. Both should play a central role in the integrated approach and advances in both vehicle technology and alternative fuels should be part of this approach.

However, this cannot occur without effective co-operation between the two industries. I hope that the spirit of co-operation present here today will also be translated into an agreement and the implementation of the integrated approach.

[Comments on Synthetic Fuels]

Before I conclude let me specifically comment on Synthetic Fuels:

From what I know about the characteristics of different synthetic fuels, it appears that the Biomass-to-Liquid fuels offer the greatest potential in terms CO2 benefits.

This is also in line with the conclusions of the CARS 21 High Level Group and the recommendations of the recently adopted EU Biofuels Strategy. They both recommend that the development and market introduction of 2nd generation biofuels should be given as much support as possible. Community research funding is also placing an increased stress on the promotion of research into such fuels through the creation of a dedicated Biofuels Technology Platform.

This said, however, I do not wish to take anything away from the potential offered by the Gas-to-Liquid fuels, which I understand to be technologically more mature. These offer significant benefits in terms of NOx, CO and Particulate Matter emissions. I would urge the Alliance members to look into the possibility of further reducing CO2 emissions from Gas-to-Liquid fuels by combining their production with CO2 capture and sequestration;

[Conclusion]

Ladies and Gentlemen,

In conclusion I would like to emphasise that having aims and undertaking concrete actions to achieve them are two sides of the same medal. We should remember that although critical analysis is important, in the end, progress is accomplished by those who deliver results.

The European car- and oil industries have already done much: the car industry is Europe’s leader in manufacturing Research and Development with over 20 billion Euro investment per annum. Cars have never been cleaner and more fuel-efficient than today. The quality of fuels we use in our cars has never been better than it is today.

By your joint initiative you are showing that despite your previous successes you are not content to rest on your laurels. You are ever-striving for improvement and innovation. You are working towards inventing and perfecting new ways to power our cars and our economy.

Politically it now has to be reflected on how to provide the right framework conditions to help pave the way for alternative fuels into the market and ensure that they are available to consumers. In this context, the blending of alternative fuels with customary diesel and petrol could be the right option to show the way.

Much remains to be done and many challenges remain. Challenges are the price you pay for progress.

A 20th century business leader once said: “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

You have created and articulated your vision. I wish you all the best in owning it and driving it to completion.

Thank you.


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