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European Commissioner for Climate Action
Empowering consumers in the green economy
Consumer International 19th World Congress
Hong Kong, 4 May 2011
Ladies and Gentlemen,
Thank you for inviting me to the Consumer International World Congress. Thank you to Hong Kong and Chief Executive Mr Donald Chang and to Mr Anthony Cheung, chairman of Hong Kong Consumer Council for hosting. And thank you for putting climate and environment on top of the agenda of this conference. This is both timely and encouraging.
Consumers and consumer organisations do play a crucial role in fighting climate change. Governments can set a framework with their policies; set targets, define standards, give incentives to make companies going green. Business and industries together with researchers can provide the solutions. But in the end, the consumers have the power of the purse to decide whether they buy green products or not. So the support by consumer organisations will be key for implementing our climate policies in the next decades.
Growing population and climate change
Climate change is here and so is still more people on the Planet. When my grandmother was born, there were not even 2 billion people living on this planet. When I was born we were more than 3 billion. When my children are my age, world population will have grown to staggering 9 billion. And at the same time more people are better off. This is of course good. At the same time it is also a challenge. Why? Because the resources on this planet, like water, like food and like energy, are limited.
If we continue to use our resources like we do now, we are exhausting the planet's reserves at an increasingly rapid pace. Let me give you a few examples: Every day 24.000 football fields of forests are being burned or trapped. This affects our climate in terms of less precipitation. According to the United Nations, our water supply will satisfy only 60% of the world demand in 20 years. And the last example: Today's fishing fleets harvest nearly seven times the catch from 1950; 80% of our fish stocks are fully or even over-exploited with no further room for expansion.
Of course, we live very different life styles in different parts of the world. Per capita, we in Europe, every year emit around 10 tonnes of greenhouse gases and use twice as much energy as the global average. But the European emissions are decreasing. The per capita emission in the US is 19 tonnes. While in China it is 6 tonnes per year and steeply increasing.
Further more, as the world's population is growing, more than a billion new people will enter middle class by 2050. If they adopt the same consumption patterns as their fellows from industrialised countries, the global use of resources will be multiplied by 15. Or, put in another way: we would need at least two and a half planets to accommodate all these needs.
And by the way; nearly half of all global consumers now live in developing countries. This means that the traditional concept of rich and poor no longer applies to countries. To a much higher extent it applies to groups within countries. We definitely need a global approach to sustainable consumption. As you can hear, not “only” because of the climate, but also because of climate change.
Climate scientists by their hundreds are warning that by the end of this century we are heading for a global temperature increase of most likely 4°C and in the worst case even more than 6°C. This would lead to an increasing number of severe floods, droughts, forest fires, storms – in short, violent weather, increasing sea levels, more unpredictability.
Alas, this is no distant, future threat. We are witnessing more and more extreme weather events already now. Think about the extreme floodings in Pakistan and Brazil last year; and the dramatic flooding in Australia at the beginning of this year. We also saw examples of other extremes like the forest fires in Russia, a once in a hundred years drought in the Amazon and the worst drought since decades in parts of China and India.
The consequences of these dramatic events are not only felt in the region itself, but by consumers all over the world, as food prices are soaring. When rice harvests fail, or when Russia, due to the heat wave and forest fires, stops her export of wheat. Globally, we pay almost 40% more for our food today compared to last year.
Need for sustainable growth model & EU low-carbon roadmap
Of course, I am not saying that all these developments are only due to climate change. But climate change will make all these tendencies even worse. Climate change is a threat multiplier. All these events are compelling reasons for making the transition to a sustainable growth and consumption model. Let us call it a green growth model. It is a model that reduces our ecological footprint; it is a model that emits less greenhouse gases; and it is a model that uses less energy and raw materials. But it is also a model that can create new sources of growth and jobs.
Therefore, even for those who are not convinced we have a problem with climate change, it is win-win policy to improve our livelihoods. To use resources more efficiently. Better air quality, better health, cleaner water and so on. Fighting climate change is all about that as well.
At the beginning of March, the European Commission presented its vision on the low-carbon future. Our analysis shows that the EU can reduce its emissions by 80% by the middle of this century, through domestic measures alone and with existing technologies. All economic sectors will need to pull their weight in meeting this goal. But also consumers can contribute. For example by insulating their buildings or installing solar panels or requiring electricity produced by renewable energy sources. Or by changing their fuel powered cars for electric ones; or by turning to energy-efficient heating systems and appliances. There are many things we can do – and that will pay off. Also economically.
All in all, the EU would need to raise investments by 1.5% of its GDP. This would take the EU back to the investment level before the economic crisis. But these additional investments would be largely or even entirely paid back by energy savings. According to our analysis, all European consumers and companies could collectively reduce their energy consumption by 30% by 2050. The EU could also cut its imports of oil and gas from abroad by half – and thus also become less dependent on imported fossil fuel.
The cheapest way of achieving this is energy efficiency. Those of us who consume a lot of energy should always look for ways to use less. There is no cheaper energy than the energy we don’t use.
That's also why we in the EU have set ourselves a target of improving energy efficiency by 20% as one of the three headline targets for 2020. And improving the energy efficiency and carbon intensity of the economy is also one of the key elements of China's new 5-year plan.
The money we save on energy could instead be spent on developing climate-friendly technologies and appliances; or smart infrastructure. This could generate new sources of growth and jobs. In Europe, we hope to see up to 3 million new green jobs by 2020. In the Korean green growth plan up to 1 million jobs are foreseen by 2020. And in China, the recently adopted 5 year plan speaks of boosting the new technology sectors. The seven priority Chinese industries will move from a share of 3% of GDP today, to 15% by 2020.
Environmental industries are already hiring more people. Across Europe, environmental industries directly employ around 3.4 million people. And a US study has found that every dollar invested in renewable sources of energy generates 3-5 times more jobs than a dollar invested in fossil fuel energy sources.
It makes economic sense
So a green economy can support growth, income and jobs. Don’t you think that is why companies all over the world already jumped on the low-carbon train: it makes economic sense; it allows them to cut costs by using less energy and other valuable materials. It serves their bottom lines well.
Germany's Siemens now gets almost one third of its turnover from environmental technologies and products. Among other things it has made itself the world's leading supplier of offshore wind turbines.
The world’s largest retailer, Walmart, wants to cut emissions from its shops by 20% in the next decade and use only renewable energy. Among other measures, Walmart introduced hybrid trucks and reduced the amount of plastic bags by 16%.
And Nike collects used sport shoes, to recycle them and re-use the materials for new sporting shoes. Through this measure and a range of other energy reducing measures in its factories and offices, Nike has brought down its emissions by millions of tonnes.
And this is happening all over the world – not only in northern Europe or northern America – regions that were the cradle of many environmental policies and technologies. As a European Commissioner, I am happy to say that Europe, continues to be a frontrunner in environmental technologies and services. But I am also happy to see that other regions are increasingly seizing these opportunities. Companies and governments have entered a global low-carbon race.
China's battery producer BYD has become one of the world's leaders in developing batteries for electric vehicles. China has become the world's number one producer of solar panels. According to a study by the American PEW-institute, last year saw a record amount of nearly 250 billion dollars invested in clean energy technologies globally, 30% more than the year before. China attracted almost 40% of these investments; and also India was among the countries that most successfully attracted private investments in clean technologies.
As already hinted at: this is an important evolution, as nearly half of the world's middle class consumers now live in developing countries, including 240 million in China and 120 million in India. In the next decades, we will see a vastly bigger market for clean technologies.
Role of consumers
So where is the consumer in all of this? Consumers play a crucial role in defining our consumption patterns and can in that way also contribute to the fight against climate change. They have a key influence over what direction we go with our economies.
On global level, more than 70% of greenhouse gas emissions are related to household consumption. People cause CO2 emissions as they heat, cool, cook and light their houses. This absorbs 11% of global energy. In Europe, buildings alone are responsible for 40% of the total emissions. But consumers can limit emissions by insulating their homes and buying more energy-efficient appliances or heating and cooling systems.
People also emit CO2 as they travel to work or go on holiday. Do they go by car, by train or by plane? Or do they use bike to work? Do they have a real choice? Do governments also provide good public transport? The car you drive – is it a SUV, or a hybrid car? A hybrid car only emits half as much CO2 as a car with a combustion engine. Transport is responsible for a quarter of the EU's emissions.
People can also reduce their CO2 emissions as they go shopping. Do they buy local vegetables, or vegetables that are flown in from overseas? Do they eat meat every day? There is 10 times more energy needed for producing meat and dairy than for local fruits and vegetables. Many consumers do have a choice and they can make a conscious choice.
Let me give you another example from the ocean: in year 2000, the world’s fishing fleets burned about 43 million tons of fuel to catch 80 million tons of fish. This means that we use 12 times more energy to catch fish than the energy people get from eating fish. So when you buy fish: check where your fish comes from and how it was caught. And remember that some species like squids and clams are less endangered and less energy intensive to catch.
Do you use plastic bags or re-usable shopping bags? The average plastic carrier bag is used for five minutes, but takes 500 years to decompose.
And how much food do you throw away? An EU study shows that households throw away 89 million tonnes of food per year; that's about a quarter of what we buy. And 60% of that food waste could be avoided. This is indeed also a moral responsibility.
Not all, but most consumers have a choice. Through small daily actions – conscious or not so conscious - the world's consumers have a crucial impact on climate and environmental change. We, as consumers, can influence businesses and governments to provide better policies and offer more sustainable products and services – or we can unconsciously encourage them to continue an unsustainable business as usual.
Actually, cutting emissions does not necessarily imply a worsening of living standard. Our European experience shows that it is possible to decouple emissions and economic growth. Since 1990, greenhouse gas emissions in the EU have gone down by 13%, whereas our economy has grown by more than 40% in the same period and manufacturing went up by more than a third. The trick is developing smarter technologies, or appliances that are more energy-efficient, need less raw materials and emit less greenhouse gases throughout their life cycle.
Think about computers. The first computers took up the space of a whole room and consumed lots of energy. Now people have tiny laptops with batteries that last for hours.
Or think about light bulbs. Incandescent light bulbs are now being phased out in Europe. Low energy bulbs emit less than one fifth of the classical light bulbs. And the energy savings for a consumer who install the most efficient light bulbs in his house amounts to 300 Euros (430 US dollars) per year.
Cars are another example. In 2007 we introduced binding targets for car manufacturers in Europe: by 2015, the average CO2 emissions of their fleets must be below 120 grams per kilometre – which is around a quarter below 2006 levels. Ever since, emissions have been going steadily down. And the list of new and advanced CO2 reducing technologies for cars being developed and put on the market is long and impressive. The products are there. Let’s go for another life style where it’s cool to use less, cool to downsize.
Lack of information
I could continue with all the good examples: Heat pumps, solar panels etc. It would not and should not hide the fact it is still only a minority of consumers that buys green products.
One of the main causes is lack of information. Or lack of transparent and easy accessible information. Consumers often don’t know what is truly green. If you look at advertisements, you could believe almost all products are green. But which ones truly are?
A survey done by Consumers International in 2007 shows that only 10% of the interviewees trusted the information given by companies. So here lies an important task for consumers’ organisations (and governments) to provide credible information and educate consumers, so as to empower and motivate them to embrace a more climate conscious lifestyle.
The UK government, for instance, has published a Green Claims Guide, which helps consumers to identify misleading claims and real green products. In Denmark, the Consumer’s Ombudsman has set up criteria against green washing.
And the eco-labels and energy-efficiency labels for energy-using products which were introduced by different governments all over the world are another valuable instrument. The energy labels give consumers precise information on the energy consumption of the product they are purchasing. The good labels also provide the consumer with a point of reference.
That’s what I like about the energy label we have in Europe for instance, where A+++ is the most-efficient and G is the least-efficient. The letters correspond to certain energy efficiency criteria which are fixed by law. We use these labels for fridges, televisions, washing machines and dishwashers.
The US and Europe also have a common energy label for office equipment, like computers, printers and copiers, which is called the Energy Star label.
The Japanese top-runner system for energy-using products is slightly different: it regularly compares products and gives them a weighted ranking. This is indicated by the stars on the label. This is an advice and shame policy, whereas the European policy is based on targets.
Whichever system we might choose, energy efficiency labels do work. They are an incentive for producers to improve their appliances' energy performances. Let me give you an example. The EU introduced energy labels for fridges in 1995. Back then, only 2% of the fridge and freezer-combinations were in the energy class A; today more than 90% are in the A-class and above. In practice, it means that a consumer, who 14 years ago bought the most efficient fridge instead of a G-class, has saved around 1000 Euros (almost 1500 US dollars) on his electricity bill over the life-time of his fridge. A survey showed that 85% of the consumers interviewed ranked energy efficiency above price as a purchasing criterion.
We saw the same thing happening with the car tyre labelling which we recently introduced in Europe. The labels, which look a bit like the energy labels, indicate the fuel efficiency, wet grip and rolling noise performances of tyres. The labelling has pushed industry into putting new, more efficient tyre types on the European market – and that will certainly also have a spill-over effect on other markets. By 2020, the initiative is expected to trigger fuel savings more than the annual oil consumption of Hungary. That is an example of how you, through better information and enhanced visibility, send a signal to producers that changes things.
We tried to do the same for cars in Europe. When manufacturers try to sell a car, they have to indicate how much fuel it consumes and how much CO2 it emits – also in their advertisements. But unlike the labels for household appliances, we have not been able to introduce one single label, partly due to protests by car industries that resisted against printing clear information on their nice car advertisements. As a result, we have many different systems in Europe. Here is a problem where consumer organisations can help us – the politicians and the regulators.
We must also help each other in keeping it simple. Today, there are myriad labels: eco-labels, energy-efficiency labels, different systems in different countries, not forgetting to mention a wide range of labels introduced by private sector. I understand that consumer organisations complain that it is getting difficult. Governments and private sector could certainly do a better effort in simplifying and harmonising labels – why not even across country borders.
Smart ways of providing information
Together, we should also explore new ways of providing valid information to consumers – making use of communication technologies.
A representative from the American electronics shop Best Buy told me that young people no longer only use the information they can find on the shop displays. When they consider buying a product, they simply use their smart phones and go on social networks to check their friends’ experiences with a particular product – not caring about the information provided in the shop. They don’t trust it.
This opens up for new, smart ways of informing consumers. One could for instance think of an eco-search facility, which displays product energy efficiency information online. ICT technologies could also be used to provide data on GHG emissions of products, at the time and point of sale. The data could for instance be saved in the bar codes of the products. This would also enable consumers to better monitor their personal carbon footprint.
The American website GoodGuide.com is a noteworthy private initiative. It gives online information about the health, environmental and social performances of over 100.000 products. And it also has an iPhone application.
British Gas is using ICT for gas meter reading: consumers can use their mobile phones to regularly transfer their meter data to the energy company. This allows adjusting the bills to the actual consumption. As a result, gas consumption has gone down 12% with British gas’ clients using this facility. That’s why the EU also wants to introduce smart meters, in order to better inform consumers about their energy consumption. By 2020, 80% of the European consumers should have smart electricity meters in their homes.
Providing complete and trustworthy information contributes to empowering consumers, so that they can make a deliberate choice – hopefully for green products.
Lack of availability
Personal action, however, can be expensive. Not everyone can afford to buy a new car. Not everyone can afford to install new geothermal or solar systems; not everyone can afford to retrofit their houses with new insulation. Lower prices would of course increase demand, and thereby increase action.
At the same time, if we consider the cost over a life time, there are huge savings to be made again. With the right information, the consumer has the incentive to make the right choice. Therefore, it is important to further develop the market for sustainable products. There is money to be made and money to be saved for everyone.
There again, ICT can be part of the solution: online shops offering green products could be further developed.
Retailers are doing efforts as well. Major European retailers like Tesco, Auchan, Carrefour and many others united in the European Commission's Retail Forum for sustainability, have voluntarily committed themselves to promoting more sustainable products and better informing consumers. Within the network they report on their commitments and exchange best practices.
Governments also play a crucial role in stimulating the development of well operating markets for green products. I already mentioned the labels, to better inform consumers about the products they buy. In addition, we could think of tax incentives, or increasing taxes on excessive food packaging. Governments should also give the good example and go for green public procurement. The European Commission, for example, has just proposed that public authorities should systematically apply high energy efficiency standards when they purchase ICT equipment, energy services or when they retrofit public buildings. And government can certainly also learn from each others' experiences and best practices.
Conclusion: change of mindset
So once we have tackled the availability and the information problem; there is only one final hurdle left – the most difficult one. That is how to convince consumers to systematically buy sustainable products and services. This requires a change of values.
Therefore, this conference and the actions of Consumers International and consumer organisations across the world are important. You must assure people that how and what they consume really has an impact on this planet and its climate. It really does make a difference. Every time they go shopping, take their car or turn on the heating at home. We need to convince people that it is worth taking action. To show responsibility by being part of the transition.
Business as usual is no longer an option when it comes to consumption. All people on this planet deserve a good life, and many of them demand a better life than today. At the same time, we are threatening the planet with our patterns of consumption. A better life for ourselves and for our children and grandchildren, means that we have to do things differently. We all depend on each other in this endeavour.
Therefore, we must use the power we have. As politicians, as business, as organisations, and as citizens, to make changes. We must understand that green is not just a slogan for environmentalists. It is a new way of organising our economies in order to provide good lives for 9 billion people on this planet.
Never, there has been a greater need for green consumer organisations empowering consumers to make our growth green.
I wish you a very successful World Conference.