Good morning Ladies and Gentlemen
We all know about the huge increase in demand for energy. The world’s population is increasing rapidly - and electricity demand is expected to double between now and 2025, boosted particularly by economic growth in Asia. We also know about the issue of climate change, or global warming. It concerns all of us and it is being widely reported in the media. As illustrated by Al Gore’s movie, it is an issue that really needs attention, action, now.
This issue is now at the top of the political agenda. Politicians have voiced their concerns and have shown commitment by signing the Kyoto protocol. They are increasingly taking action by creating legislation.
This October the EU published its Action Plan for energy efficiency with its 20% target for energy efficiency by 2020. Philips fully supports this plan and is enthusiastically committed to playing a leading role in its successful implementation.
Today I want to run through some examples of the potential of energy efficient lighting and announce a number of new initiatives. These have the potential to make a significant contribution to both the new EU action plan and Kyoto commitments in the struggle against climate change.
Before I do so I would like to briefly sketch the background and concentrate on Lighting. Why lighting you may ask? Simply because it uses a lot of electricity. The international energy agency has calculated that worldwide – electrical lighting uses 19% of all electricity produced.
There are two fundamental points to make when talking about lighting in Europe.
Firstly, about two thirds of all lighting currently installed in Europe is based on old, less energy efficient technology – developed before the 1970’s. Secondly - during the last decade there has been a revolution in lighting technology, especially in energy efficient solutions.
The full potential of this switch over in Europe is significant. It not only would save energy and CO2 emissions, it would also save significant costs – a triple win situation.
Let me give you some figures. Assuming a very conservative 20% saving in lighting energy consumption means running cost savings - or a business potential - worth 14 billion euros per year. This is the equivalent of 59 million tons of CO2, or the output of 67 power stations. But the saving potential of modern lighting is more than 20% - more like 30-40% on average which means lighting can contribute more than the average in savings.
And new lighting technologies not only offer energy savings, they also provide a higher quality of light. Our strategy is therefore logically to encourage and indeed speed up the switch over from this older lighting technology to the latest technology available on the market today.
The reality of the potential savings becomes more real and meaningful if we look at some examples of the main areas where lighting is used.
Take for instance office lighting. Most of us here today probably spend time working in an office. Research shows that more than 75% of all Europe’s office lighting is based on old lighting technology, originally developed during the 1950’s. This is wasting more than 2 billion euros per year in unnecessary energy consumption and does not comply with current quality norms, which also raises productivity and well-being issues.
The new energy efficient technologies include the use of lighting controls, which turn the lights off automatically when nobody is present and adjust light levels in the office when natural daylight is present. We all know about these technologies but they are no longer the complex technical solutions they once used to be. Today simple plug and play systems are available such as our new Actilume system, which can easily save up to 75% of energy consumed. Today only about 1% of our offices or schools use controls of any sort.
Let’s look at road and street lighting
A good part of Europe’s street lighting systems date from the 1960’s. They are also very energy inefficient. Now is the opportunity for European municipalities to tackle this issue collectively – we can see already examples in many cities, such as Madrid, London, Stockholm and here in Brussels.
Just one example here - the Northern German City of Vechta is now upgrading its street lighting from the older less energy efficient mercury lamps to a state of the art CosmoPolis system. The verified energy savings amounted to 50% whilst the quality of light increased enormously.
The same kind of energy efficiency story can also be told for retail, industrial, and hotel lighting amongst others.
The point is that the technology exists today to create a win, win, win situation: saving cost, energy, and the environment. We simply need to switch over to it. And for those who help finance the initial investment costs, it is indeed a huge business opportunity.
So what has Philips been doing to encourage this switch?
Philips has a long track record in energy efficient lighting. For years we have been spending a large part of our R&D budget on energy efficiency and this year it is more than half of the total spend. 26 years ago we invented the energy saving compact fluorescent light bulb and this was only the tip of the iceberg. Since the early 1980’s dramatic improvements have been achieved in energy efficiency, switching speed and light quality.
The solutions are there. However, the switch is not yet happening massively. This is why we have a range of activities in place. Our communications programs aim to raise awareness of the triple win situation. You may have seen our current TV advertising campaign linking energy efficient lighting with the struggle against climate change.
In addition, we have developed the Philips Lighting Academy, which offers courses in local languages in all major European countries with energy efficiency as a key theme.
But we are not there yet, we need to do more to make the switch happen.
A major contribution could be made in the home sector. In line with clear signals from the market as well as governments, we think the time has come to collectively take up responsibility to contribute to a significant reduction of CO2 emission, in light of climate change.
Today we announce that we are calling for a joint action to replace incandescent light bulbs in Europe with energy efficient alternatives within ten years. The action is to tackle this issue collectively, with the lighting industry, NGO’s, energy suppliers and governments. A successful switch will help reach Kyoto commitments.
We believe the mechanism and forum to achieve this switch over within the EU is already in place, namely the eco design directive for energy using products.
We do not expect the switch to happen overnight. It will probably take several years for the industry to change from incandescent bulbs to alternative solutions in the quantities needed.
Let me put this in perspective. The ordinary household light bulb wastes a lot of energy. Theseincandescent light bulbs are little more than heating devices as 95% of the energy consumed is wasted as heat.
Today 80% of all light bulbs used in the home in the EU are still incandescent light bulbs. About 2 billion are currently being sold every year within the EU. The collective energy waste is very significant and equates to more than 3 billion euros in electricity costs and 20 million tons of CO2 per year.
Just to bring this down to a personal level: at today’s energy prices each energy saving light bulb – compared to an incandescent bulb - can save you up to 12 euros per year on your electricity bill, or 72 euros during a six year lifetime. In addition, due to its longer lifetime, you won’t need to buy five replacement incandescent light bulbs during this period. Now ask yourselves how many ordinary light bulbs you have in your home – and calculate the benefit.
There is an issue that slows down the adoption of energy saving compact fluorescent light bulbs. There is an EU tariff in place for these bulbs produced in Asia, keeping the price unnecessarily high. In addition, the waste charges of the WEEE directive do not help either. These need attention.
To underline the point that alternatives to the incandescent light bulb are available, I would like to announce a new revolutionary halogen light bulb for the home called the Edore. It provides a crisp high quality light, lasts three times longer and saves 50% in energy compared to the ordinary household bulb. It is a retrofit halogen bulb, which you can switch in your normal fitting. It will be available in the second half of 2007.
And during the next few years we expect to be able to announce more technology breakthroughs. LED technology will also have a big future impact in the home. We already have decorative LED light bulbs for the home, which can replace incandescent light bulbs where only a decorative effect is required both indoor and outdoor. These don’t just use less energy; they slot into existing light fittings and also provide the consumer with a new lighting experience, using colors. I should stress however, that the light output of these current LED light bulbs is not yet comparable to an incandescent lamp. Philips is investing heavily in this area too. Not only in in-organic LEDs produced by Philips Lighting Lumileds. We started Philips Lighting Lumileds as a joint venture with HP and we have now acquired full ownership. But we are also active in Organic LEDs. We formed a research consortium, under our initial leadership, together with companies like BASF, and OSRAM, and we aim for a European lead in this field as well.
The issue is clear, the solution is simple – just switch – why is it not happening faster? I would like to finish today by looking at some barriers and possible solutions.
We believe the EU’s Action plan for energy efficiency promises to address the remaining key road blocks.
The development of new financing incentives and energy pricing initiatives offers the potential to remove one of the largest barriers – that of higher initial investment costs - and I hope I have made clear today that the business opportunity for financial institutions or ESCO’s to repay investments out of energy savings is huge.
The introduction of new minimum energy performance standards is a very good measure.
The development of tax incentives to encourage new technologies or discourage older less efficient technologies is also very applicable to Lighting and of course the new legislation promised by the EU is also very important.
And finally we note the willingness by the Commission and the other EU institutions to demonstrate new energy efficient technologies in their own buildings. Today I would like to make an open offer from Philips to carry out - free of charge - a lighting audit of all EU related buildings in Brussels without any further commitments from their side. If energy savings can be made, we will certainly indicate these opportunities.
New lighting technology offers a triple win, - consumers and end users, the environment and business - all will gain and benefit. However, these gains also require a triple effort. The lighting industry has to replace old by new technologies, consumers and users should be aware of the benefits of newer technologies and the financial sector needs to offer more products to support this switch over. And from a political perspective it would help to have fast and successful implementations of new legislation, for example the Eco design Directive and the setting of ambitious mandatory energy efficiency targets.
I started by referring to our support for the new EU action plan for energy efficiency. This plan calls for a 20% reduction in energy consumption by 2020. We feel that there are even more opportunities than this. The Kyoto targets for lighting could easily be achieved! It just needs action and it needs action now, so let us take our responsibility and act.
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