Loyola de Palacio: New and original ways for Hydrogen to reach the market. High Level Group for Hydrogen and Fuel Cells Brussels, 10 October 2002

Brussels, 10 October 2002

Dear Commissioner,

Ladies and Gentlemen,

Welcome to the High Level Group for Hydrogen and Fuel Cell Technologies. Thanks for coming.

It's for me a great pleasure to participate in the first meeting of this High Level Group.

The Commission welcomes you in this room usually reserved for the formal meetings of the Commission's College as a way to show you that actually you are at the core of our Energy and Research Policy.

I will attach very much importance to the outcome of this group, it will be the heart of our forthcoming policy. We expect from you to identify the milestone on the path to fuel cell and hydrogen technology acquisition and deployment.

Two weeks ago I participated in the 8 th International Energy Forum in Osaka. In my speech, as on the mind of all the participants, were the past and the possibly forthcoming economics recessions caused by the fluctuation on the price of crude oil. The threat of market volatility should not be accepted such as inevitable. I proposed a range of possibilities ranging from increasing diversification of primary energy sources to improving the energy efficiency.

Today, I ask this "High Level Group" to help the European Union to find new and original ways to use the potential offered by Hydrogen and the Fuel Cell, in order to improve Europe's security of energy supply through the opening up of a wider choice of primary fuels.

Hydrogen has been called "tomorrow's energy" but the tomorrow is coming. The automotive industry has done great efforts. I had the opportunity to drive a Hydrogen car two years ago, and 30 hydrogen-buses will be soon travelling through the streets of several cities in Europe.

Energy policy context.

The challenges for the European Union's energy policy are huge: reconciling security of supply with a reduced environmental impact of energy use and in the same time keeping our economies competitive and growing. Hydrogen can contribute to meeting these challenges, and so we should support its quick, efficient and effective penetration into the market.

Let me briefly describe some of the activities, which are taking place at European Union level, in response to the energy challenges that we face on. After a broad and unprecedented debate on "Energy Green Paper" launched two years ago, the European Union has developed a new approach in energy policy, which recognises the clear link between energy supply and management of energy demand. This new approach, for the first time, puts energy demand management at the forefront of the energy policy. However, it also emphasises the need of a much wider diversification in energy supply, a resolute promotion of renewable and a fresh look at the nuclear option.

Hydrogen

But... Is hydrogen going to change the world, erasing all global energy problems? I would like to answer this question by being very realistic.

Hydrogen is not an energy source in itself but it is an efficient energy carrier that could be produced from a large range of primary sources, and being a carrier on the space such as the electricity. Unlike the electricity even across the time. This kind of energy could be storage and could provide us a powerful alternative to escape from natural limitations on the traditional energy sources. It could enhance the possibilities of renewable, fossil or nuclear fuels. Furthermore, the different ways of producing hydrogen are particularly suitable to a combination with zero emissions on CO2 and other greenhouse gases but also on nitrogen's oxide, sulphurs and other health harming pollutants.

There is no need to suffer from lung diseases to understand the importance of these facts, just go for a walk in cities such as Athens and you will feel it.

Hydrogen from Nuclear, Fossil and Renewable.

Water electrolysis is an easy way to get Hydrogen. The energy necessary to induce this process could be produced by a Nuclear power plant or by fossil fuels with CO2 capture and sequestration or by renewable sources. All of these production ways are equivalents from the point of view of the sustainable development.

The Renewable Electricity Directive sets a target of twenty two percent (22%) of electricity to be produced from renewable sources by the year 2010. This is an ambitious target and will require the exploitation of renewable not only close to the end-user but also at more distant locations.

For a non-negligible part of these twenty two percent (22%), it could be economically more viable to generate hydrogen as an energy carrier in order to bring the renewable energy to the final user instead of building a direct link to the electricity grid.

We have developed an array of advanced energy technologies, but there still remain considerable challenges in the development of the storage, transport and distribution infrastructures. One could even have the vision of creating a "Trans-European renewable energy network based on hydrogen as key carrier". The storage and refuelling network represent a major challenge because of the huge investments needed.

Fuel Cells

A Fuel Cell is the electrochemical device that oxides hydrogen without combustion. In a nutshell, two electrodes separated by an electrolyte. There are no moving parts. A process clean, quiet and highly efficient, that includes unmatched environmental performance; high quality power; fuel flexibility; modularity; scalability; flexible siting; ease maintenance and adaptability to specialised applications such as portable applications, generator for small electronic devices (laptop computers, GSM-phones).

Unlike solar and wind technologies, fuel cells operate continuously regardless of time of day or weather conditions. When the fuel cell is sited near the point of use, its wasted heat can be captured for useful purposes, the same way as traditional co-generation.

As stated in the terms of reference of this High Level Group, hydrogen is expected to play a major role in the provision of power for both stationary and transport applications. Through its character as energy storage, it will contribute to secure energy supply and will help to shift the energy world towards sustainable development, allowing a more efficient and cleaner energy production in places dislocated to the final energy consumer.

This is not only Europe's perception of the potential of hydrogen. In the United States and Japan we see clear developments towards programmes and strategic alliances around hydrogen and fuel cells. These movements are seeking to bring hydrogen to the market, pushing it towards commercialisation. It is at this level that I think we should concentrate our innovation efforts. The energy challenges require a solution, not only in the long term but today - a good example of this is the need to contribute to meeting the Kyoto Protocol commitments.

At the same time, of course we need longer-term strategies in order to integrate the European research agenda for Hydrogen aiming at further improvements such as reduction in costs, etc... My colleague, Mr Busquin, will give you further details.

Transport Applications.

In the European Union we are already undertaking substantial innovation efforts to foster market deployment of alternative motor fuels. Let me mention the Communication on Alternative Motor Fuels for Road Transport, published in November 2001. The European Commission has set the target of replacing twenty percent (20%) of conventional fuels in road transport by 2020 with alternative fuels. Besides biofuel and natural gas, the other alternative fuel that has the potential for a major contribution is hydrogen.

We are conscious of the challenge hydrogen brings to the energy and car industry, and also to all other implicated actors. The challenges are enormous. In order for hydrogen to reach a market of five percent (5%), around two point five million (2,5m) cars per year will need to enter the market in 2020.

The CUTE project is an example of how we are helping the market penetration process. It has been contracted earlier in 2002. Thirty (30) fuel cell buses will run for 3 years in 9 European cities.

They will not operate there under laboratory condition but as part of the normal public transport fleet that has to deliver the transport services needed everyday in these cities. The hydrogen used will be generated and supplied in different ways, which will allow direct comparison of pro's and con's of the various options. The careful assessment of these experiences will deliver a clearer picture of what policies are needed to accelerate the take-up of these technologies in the market place.

Conclusion

I have mentioned two examples of the use of hydrogen: to fuel vehicles and to transport renewable energies to the final consumer. However, I am confident that this High Level Group will help us to prepare a European strategy to advance the takeoff of fuel technology through research and development, early market assistance and infrastructure deployment.

In conclusion I am looking forward to this High Level Group's "new and original ways for hydrogen to reach the market".

Thank you very much.

DN: SPEECH/02/470 Date: 10/10/2002