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European Commission

Siim Kallas

Vice-President and Commissioner for transport

Future fuels: a clean and green opportunity for European transport

European Conference on Future Transport Fuels 2012/Brussels

29 November 2012

Ladies and gentlemen

I am delighted to be here with you to discuss how clean power can help transform European transport into a more sustainable model to benefit people, business and the environment.

We are preparing a Clean Power for Transport Package with a Communication on a European alternative fuels strategy, a Directive focusing on infrastructure and standards and an accompanying document describing an action plan for the development of Liquefied Natural Gas (LNG) in shipping.

Alternative fuels is picking up – I can confirm the broad interests of manufacturers and the success of innovative projects presented yesterday in the TEN-T Days.

Developing innovative and cleaner alternative fuels is an obvious way to make Europe's economy more resource-efficient and reduce transport’s overdependence on oil.

Fuels such as electricity, hydrogen, natural gas, biogas and liquid biofuels can be produced from low-carbon or carbon-free materials, and then deployed in energy-efficient vehicles.

Unfortunately, their full-scale deployment has been held back by three main barriers: the high cost of vehicles, poor consumer acceptance and a lack of infrastructure for recharging and refuelling.

Alternative fuels already exist. In many cases, but not yet all, the technology is mature. But there is a gap between successful demonstrations and the real market, which the private sector is unable to reach at the moment.

Consumers will only reach this market if they can buy these vehicles economically and if there is sufficient infrastructure to allow them to run. Without adequate infrastructure, this market will not succeed – despite the huge investments that have already been made.

At the moment, we are stuck in a vicious circle.

Investors are uncertain. They do not invest in alternative fuel infrastructure because there are not yet enough vehicles and vessels to use it.

In turn, these are not offered by manufacturers at competitive prices because there is not enough consumer demand. Consumers do not buy them because the dedicated infrastructure is lacking.

Take electric vehicles: while a large part of the infrastructure needed for their deployment – national electricity grids – does exist, the vehicle charging points have yet to be developed.

It’s true that EU citizens do not yet feel confident enough to switch to other technologies. But if the infrastructure were more widespread - not just in a few cities, but across the EU – they could be convinced that these technologies are mature for deployment and that it is time to invest in clean vehicles.

Today, Europe’s network to supply electricity, hydrogen and liquefied natural gas (LNG) in road and waterborne transport is simply not sufficient to enable market take-up of these fuels.

To create Europe-wide conditions to boost customer acceptance in this market, we need to set targets to build the necessary infrastructure and make it compatible everywhere.

To return to electric charging points. At present, based on public statements, the network of private and public charging points is expected to increase significantly only in France, with 4.4 million points by 2020. In the rest of the EU, only 600,000 points are likely to be deployed by then.

So, for electric vehicles, a minimum number of charging points should be required in each Member State by 2020. At least 10% of them should be publicly accessible. For hydrogen, we need a network to link existing fuelling stations and those planned along Europe’s main road transport corridors.

But this strategy is not only about electricity and hydrogen.

For LNG, the only fuel that will reasonably allow ships and waterborne transport to meet their emissions targets, market take-up is mostly in the planning stage.

Fuelling facilities are still very limited. They should be made available for waterborne vessels in Europe’s major sea, river and canal ports, and for road vehicles along the main motorways.

It is also very important to keep supporting research and innovation. Public-private partnerships such as Green Cars have been a success and should be continued.

Green eMotion, the EU demonstration project that is part of Green Cars, launched an electromobility marketplace prototype in different cities. This is a key step in ensuring the successful deployment of interoperable electric mobility solutions across Europe.

And we need to address new challenges. Take biofuels, where it is essential that we ensure commercial availability of advanced biofuels, in particular for aviation where it is the only feasible alternative.

If we are to create a true single market for alternative fuels and not a fragmented one, we will need common standards for infrastructure.

Even where international standards do exist, their implementation is voluntary. This discourages potential investors, vehicle manufacturers and consumers. Consumers have to use different adaptors, while investors and manufacturers have to pay retrofit costs to adopt new recharging and refuelling systems.

EU countries should also set up national policy plans for all alternative fuels. Some Member States have taken the lead in defining their national strategy, which now need to be complemented EU-wide to give the right incentives.

This long-term strategy will guide industry, investors and consumers forward.

Investments needed to build the minimum infrastructure will be about €10 billion up to 2020.

Just compare that with the EU’s bill for importing oil, which is €1 billion every day.

Since the idea is for this market to grow and finance itself, EU countries will have to use imaginative ways to implement the targets without involving public money. There are many possibilities: using building codes and car park authorisations to require minimum numbers of charging points in public places like supermarkets, hotels, cinemas or airports, for example.

This new customer base and market has, of course, great potential for European business and manufacturers.

Today the world market share of electric, LNG and hydrogen vehicles is very limited, but it is set to grow massively. The International Energy Agency estimates sales of electric vehicles alone could approach 7 million per year in 2020, rising to more than 17 million in 2025 and 33 million in 2030.

This is a good opportunity for EU car and transport equipment manufacturers to become world leaders in this fast emerging sector and raise their global competitiveness. In turn, that will stimulate economic growth in Europe and create more employment, particularly in small and medium-sized enterprises.

Our rivals around the world are not sitting still. Electric and hydrogen vehicles have strong national policy support in some Asian countries, for example.

Since infrastructure build-up takes decades to achieve, we need to plan and build as soon as we can. Experts tell me there may only be a short window of time before the competitiveness gap becomes too great for EU industry to bridge.

Ladies and gentlemen

By far the largest barrier to accelerating market build-up of future transport fuels is the uncertain level of demand – from manufacturers, investors and consumers. It is vital and urgent to give clear signals to all of them by creating the conditions that will end the vicious circle I mentioned earlier.

This is what our long-term strategy aims to achieve. We all gain: European consumers, industry and business, and of course the environment.

Let us work together to ensure that our transport industry is ready for these new challenges and stays a world leader in the years and decades ahead.

Thank you for your attention.

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