Speech by EU Commissioner Piebalgs- Secure Energy Supplies for the Future

Speech by Andris Piebalgs, Energy Commissioner, Conference on "Synthetic Fuels". Brussels, 7 March 2006

Ladies and Gentlemen,

I am very happy to be able to participate at the conclusion of the conference to launch the Alliance for Synthetic Fuels in Europe. Congratulations to the DaimlerChrysler, Renault, Sasol Chevron, Shell and Volkswagen for taken this initiative. I welcome the formation of the Alliance, which I believe can make a contribution to secure future European energy supplies. Useful, supportive and in line with a much needed European Energy Policy, asked for by the European Council and a Green paper to that purpose will be presented this week.

European Energy Policy (Green Paper or Strategy)

The reason why a European Energy Policy is needed is because secure and affordable supplies can no longer be taken for granted. Increased import dependence, higher energy prices and environmental constraints are issues of the utmost importance to all Member-states and therefore an European response is logical. The need for an integrated energy approach was recognised by the European Council last year and I am proud to announce that a coherent strategy paper on Secure, Competitive and Sustainable Energy for Europe will be presented this week.

The three main objectives of an European energy policy are mentioned in the title of strategy.

• The security of supply focussing on improvement of the EU's energy situation.
• Ensuring that European energy policies are competitive and bring benefits to the economy and the consumers.
• Thirdly the sustainability includes the reduction of the environmental impact of energy production and use in the EU.

These core objectives will require measures on the supply side and the demand side of the energy market, both to reduce energy use and to develop new energy sources and diversify the mix of energy supply.

The paper puts forward several suggestions and options that could lay the basis of a more integrated European energy policy. To mention a couple of examples:

• A coherent European external energy policy with a view of effectively co-ordinating Community and national instruments.
• An agreed objective to limit the EU's growing dependence on imported fuels, in particular oil and gas.
• An agreed list of priorities for the construction of new infrastructure necessary for the security of energy supplies.
• Common security standards to protect essential energy infrastructure and improving the network security.
• An action plan on energy efficiency and a road map for renewable energy sources.

There are more suggestions listed and I would like to take this opportunity to invite contributions from the Alliance to the discussion that will be opened by the presentation of the forthcoming strategy paper.

Transport: driving towards sustainable mobility

Sustainability is key to our energy policies but essential for our transport and mobility policies as well. Sustainability asks for the following.

• Less consumption. As we are all aware, the transport sector is potentially vulnerable due to the fact that it relies nearly entirely on oil as an energy source. It is clear that we need to increase significantly supplies from alternatives sources as a matter of urgency.
• Organisation of transport and transport systems, making the best use of research and development and investments as in projects like Galileo.
• Intensifying research in areas such as hybrid technology and new power sources like hydrogen, a promising opportunity as an energy carrier for the longer term.
• Sustainability includes the partially replacement of oil by biofuels and synthetic fuels as well.

"First-generation" biofuels are already making an important contribution to improving Europe's security of energy supply and reducing greenhouse gas emissions from transport; "second-generation" fuels of the kind that you are working towards have even greater potential.

Synthetic fuels, with their versatility of drawing on a wide range of renewable as well as fossil raw materials, can clearly play an important role in opening up the motor fuel market to a variety of primary energy sources.

The production and use of these fuels will therefore be fully in support of the European Commission's objective of substituting oil as a motor fuel by the increased use of alternative fuels.

The need to replace oil is also clearly recognised by the CARS 21 initiative launched by the Commission. The replacement is needed for several reasons and the most important ones are security of supply and the environmental impact of transport.

There is an increasing awareness of the problems of carbon dioxide emissions from transport, and the link to climate change. And air quality, particularly in urban areas, continues to breach European standards, with a significant source of air pollutants from the transport sector.

Synthetic fuels can make an important contribution by providing new possibilities of integrating fuel and vehicle design. The CARS-21 High Level Group of Commission, Member States, industry and NGOs has, in its report of December last year, acknowledged the large potential of alternative fuels for reducing CO₂ emissions from road transport. It recommended to promote increased use of biofuels and identified second-generation biofuels as particularly promising. I strongly hope that developments of this type will reach the market and deliver urgently needed improvements in vehicle energy efficiency, and reductions in greenhouse gas and pollutant emissions.

Biofuels, natural gas and hydrogen

As already highlighted the Commission has identified biofuels, natural gas and hydrogen as the main alternatives to oil in the future. Let me say a few words on our policies in these areas, focusing on biofuels in particular:

Firstly, the important subject of biomass. The rapid development of large-scale biomass plants will be particularly important if we are to increase our alternative fuel production capacity. The Commission has already made its objectives clear in this respect in the Biomass Action Plan which was adopted in December 2005, and the biofuels strategy adopted last month.

Second-generation biofuels can considerably widen the feedstock options and provide for a far larger potential of market share than the 5.75% currently envisaged for 2010 in the Biofuels Directive. Estimates from biomass derived fuels are around 15% in 2020, according to the Alternative fuels Contact Group. Again with these fuels there can be considerable environmental benefits, with the potential for significant greenhouse gas emission savings. We need to look carefully at the case for modifying the fuel quality directive and the diesel standard in order to draw maximum advantage from both first and second generation biofuels.

The Commission has identified increased funding for research and development of second generation biofuels as a priority for the Seventh Research and Development Framework programme. In particular we believe that the rapid construction of commercial-scale plants for the production of Biomass-To-Liquid fuels will be very important.

Again, the Commission would be interested in discussing with the Alliance how this can be supported and developed.

In the future, Biomass-To-Liquid fuel plants could be combined with the development of hydrogen production from biomass. The Report from the Alternative Fuels Contact Group set up by the Commission identified this combination as a promising way to a cost-effective and large-scale production of hydrogen from a renewable source. Integrated projects funded under the Seventh Research and Development Framework Programme could include such a facility.

Conclusion

In conclusion, I believe that synthetic fuels can play an important part in the future of Europe's energy policies, and help to secure sustainable energy supplies, in particular for the transport sector. But long term and vigorous action across the whole Union is needed in order to be successful and therefore we can not afford delays and we have to act now.

I would like to thank you all for your commitment, foresight and willingness to work together to help develop our energy futures. The launch of the Alliance today gives me increased confidence that we will see a broad market introduction of synthetic fuels in Europe, and a cleaner and more secure energy future for all our citizens.

I wish you every success. Thank you for you kind attention.

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