Brussels, 10 October 2002

Thank you Madam Vice President, and thank you again, (Ladies and) gentlemen for your attention.

Madam de Palacio has presented to you our concerns in the European Union over Global climate change, energy security and transport. We are committed to achieving sustainable development.

We re-stated our commitment in Johannesburg and are embarking on a comprehensive range of measures. This includes research on the most promising technologies that can play an important role in achieving sustainable development.

Over the past ten years, fuel cells and hydrogen have moved almost to the top of the agenda, and are attracting great attention worldwide. I myself glimpsed the future when on the European "car free" day I rode in a fuel cell bus. I could not help but notice the enormous public interest it created here in Brussels.

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Some commentators argue that hydrogen and fuel cells can solve all Europe's and even the world's - sustainability problems. Yet current trends in the financial markets certainly do not seem to indicate that. What should we make of it?

Fuel cell technologies are expected to play a key role in a future economy in which electricity and hydrogen become principal and interchangeable energy carriers.

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Europe's society deserves the best. Therefore we seek to develop and deliver world class technology meeting ambitious objectives for sustainability.

Clearly we must reconcile optimism, with realism we must damp out speculation and seek to get a balanced view of the potential for fuel cells and hydrogen. We are looking to sustained, rational effort to deliver working solutions in the medium to long term

Our research programmes have demonstrated the very high potential of fuel cells for pollution free, fuel flexible, energy efficient power generation and propulsion. However we still have to prove they can be engineered to deliver efficiency, durability over a commercial lifetime, at a cost that customers can accept.

A recent report from the United Nations on "Climate Change estimates that if current trends persist, ANNUAL losses due to natural disasters will come close to $150 billion in the next decade. In future these losses may not always be insurable and so they could become direct business costs

This is comparable to the cost of installing a hydrogen infrastructure throughout Europe that could help mitigate the effects of global climate change.

We have to look much deeper into the cost and benefits that fuel cells and hydrogen may bring. If positive, we must strive to accelerate their development and commercialisation.

When will we be able to have hydrogen fuelled fuel cell buses and stationary applications competitive with the conventional technologies?

What do we need for this to happen?

Could hydrogen and fuel cells become the "bridge to sustainable energy"?

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These are some of the key questions we hope this High Level Group will address.

Situation worldwide on fuel cells and hydrogen

The US, Canada and Japan have a number of important on-going initiatives stimulating hydrogen and fuel cell technology acquisition and deployment, and their firms have a major share of this embryonic industry.

Successful partnerships and strong government/industry alliances are already firmly established in these countries.

The HLG should reflect about the mechanisms to establish in Europe similar partnerships and alliances and to co-operate with our partners in US, Canada, Japan and other industrialised countries.

At the same time we need to explore the opportunities for technology transfer to developing nations as the bulk of the increase of greenhouse gases is forecast there.

EU research effort on fuel cell and hydrogen technologies is considerable but this is fragmented and almost certainly lacking critical mass to achieve global leadership.

At present, the total EU public funding for research in this area is estimated one-third of that in US and one quarter of that in Japan.

Need for much more RTD on hydrogen and fuel cells

Fuel cell technology has already reached a degree of maturity. Progress in fuel cell vehicles has been particularly astonishing in the last 10 years as could be seen from prototypes at the Paris automobile show last month. Stationary fuel cells for small and larger scale electricity generation are also proving to be efficient and clean energy systems.

However, the main drawback of all types of fuel cells is still their high cost.

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More effort is needed to get more reliable, durable, high-performance, and low-cost fuel cell components and systems for all kind of applications before they can compete with present-day conventional technologies.

An appropriate hydrogen infrastructure must be developed as this does not exist today. This will include establishment of hydrogen production and storage facilities, as well as hydrogen distribution and delivery systems.

Technological advances must be accompanied by socio-economic research related to safety, public acceptance, education and training programmes, policy measures, codes and standards.

And that all means focused, structured research, making the best use of limited resources

Need for structuring research

A world-leading and structured research base is a pre-requisite to securing industrial leadership in any new technology.

One of the main problems in the EU is the fragmentation and lack of harmonisation of the research resources of the different Member Sates.

ERA should increase the impact of EU research efforts and to improve our competitiveness position vis a vis US and Japan by strengthening the coherence of research activities and policies conducted in the EU

The new FP6 will allow better co-ordination of the research efforts at national, regional and European levels.

HLG an opportunity for developing a FC and H2 strategy

Thus, I see the HLG as an opportunity to build common vision for hydrogen and fuel cells in Europe.

Allow me to emphasise that the Commission does not seek to "own" this initiative. We rather want to facilitate and to act in partnership with all of you.

Similar initiatives launched in Aeronautics and in the pharmaceuticals industry have proved very successful and contributed to major co-ordinated research and development activities.

Your advice will certainly be fed into our Framework Programmes and other policy initiatives. Our expectation (and challenge to you) is that this HLG will define the vision of what is needed to develop and exploit these promising technologies.

What are the barriers - whether they be technical, legal, or socio-economic - to creating a "win- win" situation for industry and Europe's citizens in moving towards Sustainable Energy Systems?

What technologies are required, how long will it take to develop them , and how can we create the right framework for commercialisation, and - yes- still make a profit in the process!

Where should EC resources best be used and how can the EC Framework Programmes be better integrated with the National Programmes and how we can tap into the innovation pool that is provided by the SMEs?

Our hope is that the vision report that we ask you to develop could become the standard reference document for communicating to politicians at all levels, to industry and researchers that we need structured RTD effort, focus, concentration and political will, if Europe is to lead the way to Sustainable Energy.

I am counting on you to come forward with your ideas and proposals on how we can work together to make of hydrogen and fuel cells a bridge to sustainable energy.

Thank you very much for participation and for your attention.

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DN: SPEECH/02/471 Date: 10/10/2002