Long and winding roads

In this edition of our newsletter I discuss some possible Roads to Re-industrialisation in Europe. I have this strange notion that this is a subject that we should perhaps be reading and talking about every day rather than about some sordid murder on the other side of the world. I know, very naive of me.

Back in 2009 I wrote an enthusiastic column for EER in which I confessed my conversion to the faith of the Electric Vehicle. I said the electric car could be on the eve of a breakthrough, for three reasons. One, the big car manufacturers were getting on board. Two, consumers seemed to be ready for them thanks to high oil prices. Three, large European multinational energy (utility) companies were emerging that would have an interest in competing with the oil companies in supplying power for road transport.

Alright, chalk up one more failed prediction. The electric car revolution is nowhere in sight. The number of electric cars on the roads is negligible. Car manufacturers have made large losses on their electric models. Consumers are not jumping on the bandwagon. The Eons, Enels and Vattenfalls of this world have enough troubles of their own, while the breakup of the electricity market into production and infrastructure companies has not made the situation any easier.

Yet, as I wrote in this space last Monday, there are still compelling reasons to believe in the benefits that electric cars and indeed other alternatives to oil-fueled cars could bring to the European economy. Oil prices remain stubbornly high, and we are sending out hundreds of billions of euros each year to a few very rich families in the Middle East, for which we don't get much in return (a few football teams excepted). What if that money would be spent on our own industries? Europe desperately needs an industrial revival in something which it could become a global front-runner. This can only happen through radical innovation. What could be a more promising project than an overhaul of Europe's all-important car manufacturing industry?

So far one of the major obstacles to the success of the electric car has been the lack of infrastructure. This is the classic chicken-and-egg problem, which certainly will not be solved by the oil companies, which have no incentive to do so. They own the existing infrastructure after all. What is needed is new infrastructure, in particular charging points and refueling stations.

That is why the European Commission's "Clean Power for Transport Package", which it published on 24 January, is so important. In this package the Commission presents a highly ambitious plan to roll out a large-scale distribution network of charging points and LNG, hydrogen and CNG refueling stations. It contains a proposed Directive which lays down a "minimum infrastructure build-up for alternative fuels" which each Member State has to realize, including a minimum number of recharging points for electric vehicles. The idea is that the existence of such a network could trigger enough confidence among industry and consumers to start developing alternative cars.

Strangely enough, the Commission's proposals have, as far as I know, received little publicity, for such a potentially breakthrough project. I know, EU directives are not very sexy, but cars are, aren't they?

In any case, it will probably not come as a surprise to our regular readers that our Brussels correspondent Sonja van Renssen has written a great overview of how the EU is trying to reshape our future road transport fuel mix - and thereby providing a possible foundation for an industrial revival in one of the most crucial sectors of the European economy. Don't miss it.

Speaking about industrial revival, this week has seen a lot of discussion about two other long and winding roads that could (or could not) lead to such a destination, namely how to develop shale gas production in Europe and how to reform the EU Emission Trading Scheme (ETS). More on this below in this edition of our newsletter.

PS
I just read on Reuters that Estonia "has become the first nation in the world to install a nationwide system of fast chargers for electric vehicles." Maybe my faith will turn out to be vindicated after all!

(Respond? karel.beckman@europeanenergyreview.eu)