Keynote speech at the opening of the "Metropolitan Solutions Conference 2012"
Hannover, 23 April 2012
Good morning. I'd like to thank Hannover Messe for inviting me to speak today.
I also want to congratulate the organisers for choosing Metropolitan Solutions as a guiding theme for this conference and exhibition. Because it is clear that making our cities both low-carbon and resilient to climate change is a crucial dimension of the climate challenge we face in Europe and worldwide. The good news is that addressing this challenge is opening new business and job opportunities.
Today, urbanisation is a global megatrend. Urban areas are responsible for 60-80% of global energy consumption and CO2 emissions. Four out of five Europeans already live in cities. 90% of the world’s future urban population growth will take place in developing countries.
Of course, cities are not only emission powerhouses that contribute to climate change. As huge population centres, they are also particularly vulnerable to its impacts. When cities suffer extreme heat or flooding, millions of people are affected. Just think of Bangkok last year.
Europe is leading global action to prevent climate change from reaching severe and irreversible proportions. There is a wealth of scientific evidence that such levels will be reached if we allow global warming to exceed 2° Celsius above the pre-industrial temperature.
The EU was the first region in the world to adopt binding climate and energy targets for the year 2020. These are the 20-20-20 targets I expect most of you have heard about: a 20% cut in greenhouse gas emissions, a 20% market share for renewable energy and a 20% increase in energy efficiency. And we are offering to increase our emissions reduction to 30% by 2020 if other major economies commit to take on their fair share of cuts too.
Germany has led the way by committing to go further still and cut its own emissions by 40% by the end of this decade.
Europe took these initiatives to set an example to our partners in the rest of the world and convince them to join us in taking action. And our strategy has started paying off. The Durban climate conference at the end of last year reached agreement to launch United Nations negotiations on a new global climate treaty involving all major economies, as well as to look at ways to achieve more ambitious worldwide emission cuts before 2020. This is an important breakthrough and Europe will be pushing hard to get strong international decisions from this new process.
But let's be frank: we have also taken this leadership role because it is in our economic interest. The EU's leaders recognise the benefits that shifting towards a low-carbon economy based on innovative green technologies can have, in terms of stimulating the economy and creating new jobs.
They see the advantages Europe can reap from being among the first movers in this direction. But we face strong competition from China and the US in particular. It is vital that Europe stays in the vanguard of eco-innovation if we are to keep a substantial share of the huge global market for environmental technologies and of the employment it is creating. For that, we need strong domestic targets.
Improving energy efficiency will play a major role in cutting our emissions in 2020 and beyond. The biggest potential for energy savings is in buildings and the second largest in transport. So more energy efficient buildings and greener transport systems will be key elements of the sustainable cities of the future.
Upgrading energy efficiency has a cost but it usually pays for itself over time through reduced energy consumption. It has been estimated that each European household could save up to €1000 if all existing and forthcoming measures to save energy were fully implemented. Forty per cent of all windows in Europe still have only single glazing!
Implementing all the energy efficiency measures available would also create or preserve up to 2 million jobs, particularly in the construction sector, and especially in small and medium-sized firms. By definition, this is work that can only be done here in Europe, guaranteeing jobs that cannot be exported to third countries.
Local transport systems and infrastructure are of course for each city to determine for itself. But at European level, steady progress is now being made each year when it comes to improving the fuel efficiency and reducing the average CO2 emissions of new cars. This is thanks to the concrete CO2 targets for 2015 and 2020 we have brought in through legislation.
Sometimes being greener and smarter doesn't even cost anything up front – or very little. Recently I visited a company which had tasked one of its smart young engineers with the goal of reducing energy consumption by 5%. When he was done they had saved 35%...and what they were most surprised about was that the first 15% didn’t even require major investments. And this company wasn't even a newcomer to sustainability questions: it had been certified under EMAS – the EU Eco-management and audit scheme - for 15 years!
Multiple examples across the EU show that the move towards a green, low-carbon economy is well under way and yielding tangible benefits. Europe's "eco-industries" sector is already larger than our aerospace and defence sectors. Employment in the eco-industries grew by an average of 2.7% annually in 2000-2008, with the total number of jobs increasing from 2.4 million in 2000 to 3.0 million in 2008. Despite the crisis it is forecast to reach 3.4 million this year.
Solar, wind and biomass technologies have progressed most rapidly of all. Europe's renewable energy sector added 320,000 jobs between 2005 and 2009, and it is estimated that meeting our 20% renewables target by 2020 will bring just over 400,000 more. In all, the employment potential from developing the renewable energy sector is estimated at three million jobs by 2020 [and here in Germany alone, employment in the renewable energy sector is forecast to rise from 400,000 today to 600,000 by 2020.
Europe's climate and energy targets for 2020 can of course be only the first step. The fight against climate change is a challenge that will almost certainly last throughout this century and beyond. For 2050, the EU is committed to cutting our emissions by 80-95%, and last year the European Commission published a low-carbon roadmap setting out how this can be done cost-effectively.
Over the next 40 years, moving to a low-carbon economy will require additional annual investment equivalent to 1.5% of EU GDP, or around €270 billion, on top of the 19% of GDP that Europe currently invests each year. It sounds a lot in absolute terms, but to put it in perspective this increase would simply take us back to the investment levels we had before the current crisis.
The additional investment would be needed in particular for modernising electricity generation, building smart grids, upgrading transport equipment and improving the energy performance of buildings.
It is important to recognise that this increase would not be a net cost or a reduction in GDP but an investment in the European economy that will bring multiple benefits. It will provide ample opportunities to create new jobs as well as preserving existing ones in manufacturing industries such as transport and energy equipment which are facing increased competition in a rapidly globalising market. It will also greatly reduce Europe's energy bill and our dependency on fossil fuel imports, as well as air pollution and its associated health care costs.
What our Roadmap shows is that a low-carbon society in 2050 can be built by further developing technologies that already exist today and without the need for major changes in lifestyles.
But one thing we will need to change is the way we produce and use energy. Our analysis of what a cost-effective low-carbon economy in 2050 would look like shows that electricity will be a key energy source for end-users. We will use twice as much of it as today, but it will be virtually carbon-free, with half produced from renewable sources and the rest from a mix of nuclear and thermal power stations using carbon capture and storage technology.
We will live and work in well insulated and energy efficient homes and offices equipped with smart lighting, ventilation, heating and cooling systems, often powered by local production. Passive houses will be the standard – buildings will emit 90% less GHG that at the end of the 20th century. EU legislation already requires new buildings built from 2021 onwards to use almost zero energy.
In 2050 our energy for heating and cooking will come mostly from solar panels, heat pumps and biomass installations. Many buildings will produce surplus energy that is fed back into the grid. We will drive electric and plug-in hybrid cars. Our cities will have better public transport, and they will be cleaner and quieter.
Coming back to the present day, in parallel with starting to build the low-carbon society, we also have to strengthen Europe's resilience to the inevitable impacts of climate change by adapting to them. Vulnerabilities and risks related to flooding, heat waves and sea-level rise, for example, are increasing. The costs of inaction are high. It is clear that we need to start investing in adaptation measures now in order to prevent higher losses in the future.
With this in mind, the Commission has launched a project to support cities in developing and implementing climate adaptation strategies. This will feed into the Europe-wide adaptation strategy we plan to present next year.
The European Commission's objective is that urban development and climate action should go hand-in-hand. In this regard the EU is supporting cities in a variety of ways, from promoting networking and sharing of experience and best practices, to providing financial assistance.
One of our most high-profile initiatives is the Covenant of Mayors, under which cities commit to exceed – within their jurisdiction - the EU target of reducing GHG emissions 20% by 2020. So far almost 3,800 cities with a total population of just over 160 million people have signed up. To participants the EU provides a platform for exchanging best practice, as well as other support tools including financing.
We have also launched the European Initiative on Smart Cities within the broader framework of our Strategic Energy Technology Plan. This initiative aims to foster the dissemination throughout Europe of the most efficient models and strategies for progressing towards a low-carbon economy by 2050, in particular in the areas of buildings, energy networks and transport.
Our contribution to climate action in cities is also financial, in particular through our regional development funding.
The Commission's budget proposal for the period 2014 to 2020 seeks to give future funding a much stronger climate focus. For the first time, it explicitly foresees that climate action would be 'mainstreamed' into all sectors. At least 20% of the EU budget would be earmarked for climate-related action. This would mean around €200 billion in climate-related expenditure out of a budget totalling roughly €1,000 billion for the period.
If approved by EU Member States and the European Parliament, this would be a major step forward for sustainable development that would benefit regions and cities. Our proposal would strengthen urban development policy.
Under regional development funding, climate objectives would be pursued through requirements to invest in energy efficiency and renewable energy, especially benefitting urban areas.
The €80bn EU research programme Horizon 2020 will help to identify innovative energy solutions and new concepts of mobility, with a strong focus on urban areas.
Ladies and gentlemen,
Cities are where most Europeans already live, and where more than half the global population have their home - a proportion that is set to continue rising steadily in the future.
To avoid irreversible and potentially devastating climate change we have to build a low-carbon society - and that means above all sustainable, low-carbon cities that make the best use of smart technologies. The Hannover Messe is a global showcase for the technologies of the future we are going to need.
Our roadmap shows that making the low-carbon transition by 2050 is entirely feasible and opens huge new opportunities for business and employment in Europe. I urge you all to seize these opportunities today!