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Speech: Making the most of alternative energy to drive transport forward

Commission Européenne - SPEECH/13/569   25/06/2013

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European Commission

Siim KALLAS

Vice-President of the European Commission

Making the most of alternative energy to drive transport forward

Sustainable Energy Week /Brussels

25 June 2013

Ladies and gentlemen

We all know that the world’s energy landscape and balance are changing quickly. Compared with many other countries, Europe is not blessed with abundant natural resources.

We are far from able to produce all the energy we need to cover demand.

Judging by the international oil and gas markets, we are not heading towards an age of cheap energy. But we do have a choice.

For example, we could carry on paying other countries to supply us. We already pay about €1 billion a day for oil imports, which causes a deficit in the EU’s trade balance of 2.5% of GDP. Frankly, this bill is massive and unnecessary.

Or - we can invest limited resources in our own sustainable and smart energy.

Just a few weeks ago, EU leaders agreed on the urgency of completing the internal energy market. This is how we can boost our competitiveness and respond to the challenge of high energy prices and costs.

They concluded that Europe must make better and more use of its own renewable energy sources and diversify its energy supplies. Some Member States rely on a single Russian supplier - often on a single supply route - for 80 to 100% of their gas consumption.

There are also some EU countries that are effectively an "energy island" because they do not have adequate infrastructure connections with the rest of the EU.

This is why investing in energy infrastructure, as well as innovation, was set as another EU priority.

Transport accounts for nearly a third of our final energy consumption. Roads take most of this: cars and trucks, in other words. Not only do we need to reduce the pollution they cause, we also need to reduce their consumption of oil-based fuels – and in transport generally.

For that, there has to be enough infrastructure to allow access to cleaner fuels.

This is the idea behind the Commission’s initiative to promote clean power in transport, by making sure that the right infrastructure gets built. It is our chance to create the conditions for a new market for alternative fuels to power transport.

Everyone gains – and not only consumers and the environment. It is a good commercial opportunity for EU manufacturers to lead, and raise their global competitiveness for all means of transport.

That will stimulate economic growth in Europe and create more employment. But we need to seize this chance now.

I cannot stress enough how important it is that Member States proceed quickly with approving the initiative. Time is of the essence. We have to act together, quickly - because the longer we wait, the more it will cost us in the longer term.

Experts tell me there may only be a short window of time before the competitiveness gap becomes too great for EU industry to bridge. We need to take the first steps now.

For transport as a whole, there is no “one fuel fits all” answer. Different means of travel will need different and appropriate options. Electricity, hydrogen, compressed and liquefied natural gas, liquid biofuels and synthetic fuels – we need them all.

Full-scale deployment of these fuels is held back by the high retail cost of vehicles, low consumer acceptance and a lack of infrastructure for recharging and refuelling.

Consumers will only reach this market if they can buy these vehicles economically and if there is sufficient infrastructure to allow them to run.

At the same time, manufacturers are not offering vehicles at competitive prices because there is not enough consumer demand.

And then, investors are uncertain. They do not invest in alternative fuel infrastructure because there are not - yet - enough vehicles and vessels to use it.

We can break this vicious circle by making sure the EU has at least minimum numbers of refuelling and recharging stations.

That is how demand can be kick-started. It is why I have proposed binding targets for EU countries to build the infrastructure that Europe so badly needs.

Without it, this market will never take off.

The infrastructure also has to be technically compatible everywhere. That doesn’t only mean the actual physical interface at the charging or refuelling point, where there are variations around Europe – it also means standardised ways to pay in all EU countries, for example.

To avoid having a fragmented market, a minimum number of electric charging points should be available in each EU country by 2020. Of these, at least 10% should be publicly accessible.

For hydrogen, we need a network to link existing fuelling stations and those planned along the main road corridors so hydrogen vehicles can move around the EU. These stations should also be compatible in all countries. The same goes for CNG in cars: we need minimum infrastructure with common standards.

The overall aim is to have enough charging and fuelling points so that investors and companies find it worthwhile to mass-produce vehicles at a reasonable price for a growing market where consumers have enough confidence to buy them.

And just a few words on liquefied natural gas, or LNG. This is no longer confined to pipelines but can now be supplied by tankers from global markets. We can also make more use of locally produced bio-methane.

Natural gas is probably the only globally available fuel that reasonably allows ships and waterborne transport to meet their emissions targets – and the EU’s new requirements for maximum sulphur content in marine fuels. These are 0.1% in Sulphur Emission Control Areas by 2015 and 0.5% in all EU waters by 2020.

Ships face a real challenge to get access to this fuel. The first large LNG ferry has been sailing between Turku and Stockholm since early this year. It has to be fuelled by a custom-made bunker barge in Stockholm, the first in EU shipping.

I use this example to illustrate that we do have this technology; we are already a world leader in this area. But it also illustrates how urgently Europe needs more LNG fuelling stations. This is why the Commission has proposed making them available for waterborne vessels in the EU’s major sea, river and canal ports, and for trucks along the main motorways.

Here, the idea is not for a "one size fits all" approach – each of these fuelling stations will have its own best suited local solution. It can also make sense to start locally with small and flexible infrastructure that can be expanded as demand increases.

Our proposed review of EU ports policy recognises the shift in shipping from oil products towards gas as a fuel, and the subsequent need for ports to offer significant facilities to access, store and provide gas to transport users.

I am confident that it will take less than 20 years before most ships will be able to use LNG, and also on intercontinental journeys.

Ladies and gentlemen

The greatest barrier to promoting future transport fuels is the uncertain level of demand – from manufacturers, investors and consumers. It is vital to give clear signals to all of them by creating the conditions that will end the vicious circle that I mentioned earlier.

If we are to secure an uninterrupted and affordable supply of energy, we need to make significant investments in new and intelligent infrastructure. That will be important for jobs, for sustainable growth and will enhance EU competitiveness.

It is what our long-term strategy aims to achieve, which will also have an enormous impact on the way we think of mobility in the future.

Everyone gains: European consumers, industry, business and 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 to come.

Thank you for your attention.


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