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Connie Hedegaard

European Commissioner for Climate Action

Keynote speech

ACEA annual event

Brussels, 2 February 2011

Ladies and Gentlemen,

Let me start by saying: What challenging times we live in!

Economically, financially, demographically, environmentally – there are numerous challenges for you as business people, for me as a politician, for all of us as citizens.

Every day, luckily, we see improvements in our economy. Today I understand, that for Europe as a whole, we got new figures, indicating that unemployment has been stabilised now for the first time in a long period and every day seems to bring further good news.

I am absolutely sure that we will manage the way out of the economic crisis. We will find a way to manage the financial crisis. We live in a modern, global world and we will find international solutions to our problems. But I would say that concerning the environmental challenges, the resource challenges and the climate challenges, finding solutions will be a bit more difficult.

Why is that? Because these challenges can not be "fixed" in the short term. For that, the challenges are simply too big – and the interdependency in the global world in which we live is also so big that without us working together it is very difficult to solve these challenges.

Also, in the media environment we live in, it is a special challenge also for politicians how to tackle the long term issues when you never know when the media will ask you to come up with a solution to everything almost the very same day they hear of the problems. This demand for quick fixes, for quick solutions – you also feel it as business people – that makes it a special challenge how to deal with these long term issues.

So far, it has always been the case that the next generation could expect better living conditions than their parents' generation. Now, for the first time, this is being challenged. For many reasons, one of them being that we will be 9 billion people on planet Earth when my children will be my age. The need for growth and the ability to live with one another make it particularly demanding.

For me, being rooted in the tradition of European Christian-Democratic parties – the tradition of Conservatism – this is a special challenge. Because one of the core values of this political philosophy is that we must always try to take care to leave the world as a better place than the one we inherited.

I think, in order to do so, in this complex, globalised, interdependent world, we need to be better at not only thinking of tomorrow and of next year's budget – or bottom line in your world – but also in the longer term. That is surely challenging!

How can we unite the need for acting now and satisfying the immediate needs of our citizens, voters, customers and at the same time do what we know will be necessary in order to create the needed more sustainable growth patterns of the future?

This is the challenge.

Well, I know we can not solve all these questions on this Wednesday night in Brussels, but just to try to put things into perspective why at the same time as we are struggling with the crisis and imminent challenges we also have to address the more long term challenges.

Of course: if you think that there is no challenge or that resource efficiency is not going to be the major challenge, then we can just continue business as usual. But I believe that many of you – most of you – all of you – will agree, that if we look out throughout the century then we have to make a transition in the way we create our growth.

So if this is the analysis then it is not just morally imperative, but also common sense and first of foremost good and sound economics to start making this transition sooner rather than later.

That is why the Commission this spring will come forward with not only a low carbon strategy for 2050 but also with an energy efficiency action plan with specific tools and a white paper on transport. We are not looking at these issues separately, but we are looking at this in a cross-cutting way and are trying to come up with tools and means that will make it possible for you and the governments to deliver.

With regard to transport, an important asset of what modern people understand as modern life is MOBILITY. There is no way we can foresee a future without mobility, mobility for the individual. Mobility is freedom. We can also see it in the emerging economies, how a car is still a status symbol.

That is even true for a climate Commissioner. I have just got a new service car. It is Energy Class B. Only 137 grams of CO2 per kilometre and it runs around 20 kilometre on a litre. So thanks to the technical developments of your industry, it is possible to have relatively big cars that have a relatively low carbon footprint.

But we also know that cars are necessary for our modern economy. But we risk running into several problems, congestion being the first one. Congestion costs are estimated at around 1 % of our GDP, due to lost working hours and pollution and related health costs. We have 800 million cars now globally, and it is estimated that we will have 1,6 billion cars in 25 years. Therefore the mobility of the individual risks ending up in the immobility of the collective. That is one challenge, but there are of course also environmental challenges.

Transport is also a growing problem when combating climate change. CO2 emissions from road transport constitute a significant and growing share of EU CO2 output. It is the only sector that is emitting more than in 1990, with an increase by 34% between 1990 and 2008, thus offsetting to a large extent the emission reductions made in other sectors. This is not sustainable. Transport must make a substantial contribution to EU´s overall short term and long term targets.

EU transport today is 96 % oil powered. Most predictions see oil becoming scarcer in future decades, sourced increasingly from unstable parts of the world. Together with increasing demand from emerging economies, the oil priced can be expected to increase substantially – today above 100 $ barrel.

As we could recently read on the front page of the Financial Times – the IEA has estimated that last year the EU saw its import bill for oil rise with 70 billion dollars compared to the year before. 70 billion! That's the kind of expenses politicians are rarely discussing. And we know that this is just the beginning.

That is why we have to try to find a smart ways of dealing with this problem without harming mobility. I will mention just a few examples, without going into details, as you all know they exist: better linkages between public and private transport, more intelligent traffic management systems and many other concrete measures.

The CO2 emission performance standards for passenger cars with its short and long term targets have already proven an efficient tool in reducing CO2 emissions. 2009 saw one of the biggest economic challenges the automotive industry has ever experienced with global sales plummeting, and plants cutting production across the EU. But it was also the year in which average specific emissions from new passenger cars fell by their biggest ever margin, by 5.1%, or 7.9 grams CO2/km compared to 2008.

The European automotive industry has clearly demonstrated its capacity to respond to the challenges defined in the EU legislation, even in difficult times. Preliminary emissions data for 2010 indicate that the rate of reduction is maintained. The list of new and advanced CO2 reducing vehicle technologies being developed and put on the market is long and impressive. With the worst of the economic crisis behind us, I am convinced that the automotive industry will be in a position to meet the EU CO2 targets of 130g CO2/km in 2015.

By taking the lead in developing fuel efficient vehicles, EU car makers will be able to realise the advantages of being the first to move into the emerging low-carbon marketplace.

Before Christmas, the European Parliament and the Council reached an agreement on emission performance standards for vans. This is an important step forward in curbing transport emissions.

I welcome this compromise, which will make vans less polluting and will contribute to our overall ambition to cut emissions from transport. With the agreed 2020 target, it will stimulate innovation in industry, enabling manufacturers to take full advantage of the transition to a low-carbon economy. It will also generate important fuel-savings for consumers.

Experience shows that the emissions targets set out in the EU legislation on CO2 emissions act as important drivers for investing in and developing energy efficient vehicles.

Looking ahead, the challenge will be to maintain the current rate of good progress. It is clear that in the short to medium term the internal combustion engines will dominate and their performance should continue to be improved.

However, in the medium to long term it will be necessary to look into and provide the right incentives for investing in and developing alternative propulsion technologies for ultra-low carbon vehicles. These are key issues that the Transport White Paper and the 2050 Low Carbon Roadmap will address.

These will also be important elements of the up-coming review of the Regulations on CO2 from cars and vans – to be completed in 2013.

The review will focus on the modalities for reaching the 2020 targets. The review will also consider the need for a new long term target for 2025. These dates may seem far away but in terms of planning, we are well aware that these dates are only between 1 and 2 model cycles away. It is therefore time to start the discussions so that we can ensure industry the lead time and planning certainty that is needed. While I recognise that these targets may be challenging, I note that there are already models on the market that achieve the 95 grams CO2/km and 25% of the new cars registered in 2009 emitted less than 120 grams CO2/km!

Finally, I will also mention heavy duty vehicles as they account for a significant part of CO2 emissions from transport in the EU. Estimates indicate that heavy duty vehicles are the second-biggest transport source, larger than both international aviation and shipping. The need for a strategy addressing heavy duty vehicles is becoming increasingly recognised not only in the EU – where the Commission in its Strategy on Clean and Energy Efficient vehicles has announced its intention to develop such a strategy – but also in the US and Japan where fuel consumption from trucks is now being regulated. Crucially, the vehicle industry itself has recognised that policy action on CO2 emissions from heavy-duty vehicles is necessary.

I know there are key obstacles, such as the lack of a measurement methodology to quantify the fuel consumption and the CO2 emissions from whole heavy duty vehicles that have to be addressed before establishing legislation or other instruments. European trucks are the most fuel-efficient ones and we should establish a measurement method that is recognised globally and that allows this technology leadership to be visible. The Commission is currently working closely together with ACEA to develop such a method and we expect to see results by the end of this year.

Account must of course also be taken of the specificities of this sector. The Commission is aware that trucks are not just big cars, as many of you have already been so kind to point out to us! We are aware of that argument. We know it and we are currently gathering further information on these specificities and will as a next step start to evaluate potential policy instruments. Clearly, stakeholder input will be essential in this process.

We have the "CARS 21" High Level Group established again and I hope we will have a good cooperation. Because this is a fine forum for exchange: you know what we are thinking, you can give input to us as a sector. We always want to listen and not only to listen, but also try to find solutions that will be ambitious. This is our role as a regulator, even if the solutions are sometimes more ambitious than you would like them to be.

So I hope very much that we can continue a good dialogue on these issues and that we can cooperate on these solutions. I know that this will be difficult, but the challenges ahead, which I mentioned in the beginning, are enormous. But I really do believe that it is not only necessary to tackle them, but that that it is also possible. If we have a good dialogue then we can find intelligent solutions and enhance the chances that we leave a world to future generations that is better than the one we have inherited from our parents.

Thank you!

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