December 7, 2008 Good afternoon Ladies and Gentlemen, It’s a great honor to be with you this afternoon on behalf of Philips. Climate crisis. Energy crisis. Global economic crisis. After a year like this one, it can seem like crises are overwhelming us. And these three are all interconnected. When we try to tackle one, we impact the others. So are we facing a triple threat? A combined global challenge of unprecedented proportions? Assessments like the Stern Review remind us of the stark economic consequences of inaction. We must move forward. And there are many politicians, scientists, thinkers and industrialists with inspiring visions of how we can. Like Peter Head of Arup, an engineer who believes creating sustainable cities is not only desirable, but possible. Or Jeremy Rifkin, an economist who believes we’re on the brink of a Third Industrial Revolution. A revolution that will lead to a greener, more equitable world for everyone. At Philips, we share these positive perspectives. Yes, the crises exist. But we can “reframe” these crises as opportunities, as Rifkin puts it.We not only think it’s possible; it’s essential. And we’re acting on it.That’s why later I’m going to introduce the next step in Philips’ Green Switch program. In a similar way to replacing energy inefficient incandescent lamps in our homes, this initiative aims for a ‘green switch’ to energy efficient lighting. But this time, in our cities and non-residential buildings. It’s a huge opportunity to cut emissions and energy usage that we have barely begun to tap. In fact, making the green switch in our urban environments is an opportunity for a triple win: you and I, as end-users of lighting, get lower costs and better quality light. the environment benefits from lower energy usage and lower emissions. and the economy wins from lower costs and greater competitiveness.
So what’s so exciting about lighting? Let me explain. Lighting accounts for 19% of the world’s electricity consumption. That’s a huge amount and a huge opportunity to cut emissions and our electricity bills! What’s more, the beauty of switching to energy efficient lighting is that we can make cuts today. In terms of climate change mitigation, that is the biggest win of all. Because the sooner we start reducing CO2 emissions, the more chance we have of leaving behind a habitable planet for future generations. The IPCC’s 450 stabilization case aims for greenhouse gas concentrations stabilizing at 450 ppm CO2 equivalent. This is its most ambitious scenario, but some commentators believe even this is not enough. And even the 450 scenario requires rapid and radical change. It demands cuts in CO2 emissions of 50% to 80% by 2050, with CO2 concentrations peaking by 2015. To have any chance of doing this, we will certainly need renewables, and probably measures like carbon capture and storage. But these will take time. We need to buy time now. Energy efficient lighting gives us one way to do this. Plus, when we make the switch, we make financial savings as well. Look at the Vattenfall / McKinsey cost curve for greenhouse gas abatement. The measures on the left have negative cost. That’s to say they don’t cost money to do; they make money. And lighting systems are down there among the best opportunities, along with other building-related actions. It’s simple and it’s quantified. If we install energy efficient lighting in our cities and buildings, there are wins for society as a whole – environmental and financial. So how do we get there? How do we drive this positive change? Global cap and trade is part of the equation. Well-designed cap and trade programs can yield significant emissions reductions. They are also a market-based tool, which makes them good for business and helps ensure they’re acted upon. What’s more, cap and trade can act both top-down and bottom-up. But it is not the only approach open to us. Sectoral approaches based on agreements within specific industrial sectors or activities can help speed change. Often, it’s easier to reach agreements on a sectoral level than to achieve bi-lateral or global cap and trade deals. Sectoral approaches also help establish level playing fields – enabling emerging and developing countries to contribute to climate action on an equal footing with developed countries. Such approaches are emerging. But we need to go faster and further. We need to develop and deploy industry-based efficiency standards – because these are what will really drive such change. We have some. The European Eco-design of Energy-using Products Directive, for instance. It’s not a very elegant name, but the goal is attractive – to encourage design of products that deliver improved environmental performance throughout their lifecycle. For buildings, there is a host of standards – mandatory and voluntary. In the USA, some have been adopted federally, like the International Energy Conservation Code. Others like LEED, the Leadership in Energy and Environmental Design program, are voluntary but widely followed. In Europe, there’s European Performance of Buildings Directive. But while the directive does the right things in creating minimum standards and setting a common methodology for calculating energy performance, implementation is slow. Almost everywhere it’s a similar picture. Moreover, standards are often complex and apply only to single buildings. We believe simpler initiatives would also help – and I’ll explain ours later. For now, I want to concentrate on how energy efficient lighting gives us the power to make a difference today. In Lighting, quite simply, there is no need to wait – either for new technologies or new legislation. Actually, it’s something of a coincidence that I’m giving this speech on the 7th of December. Because it was exactly two years ago today, on the 7th December 2006 that Philips made a call to phase out energy-inefficient incandescent light bulbs. This call particularly targets the 25% of lighting electricity consumption that happens in our homes. It’s a call that has been subsequently taken up around the world. In the USA, our efforts led to the creation of the Lighting Efficiency Coalition. This brings together manufacturers and energy efficiency advocates. And in September this year, we were honored to receive the Chairman’s Award from the Alliance to Save Energy for this work. We are privileged to have the ASE President Kateri Chalahn with us at this event today. Crucially, this call to action is bearing fruit. Tomorrow, the EU is likely to announce that the sale of incandescent lamps will be phased out by 2012. In the USA, there is already legislation on the books. The Energy Independence & Security Act signed into law in 2007 bans the sale of incandescent lamps from the end of 2013. And many other countries around the world are following suit. All this represents a remarkable transition that we hope will provide an example and inspiration for other such energy transitions. Of course, in lighting, the great thing is the ease of change for end-users. Changing an incandescent light bulb for an energy saving lamp really is a simple switch. It’s also relatively low cost. And because energy-efficient lighting consumes less electricity it contributes towards all kinds of key goals. It helps towards emissions reduction and reaching climate change targets. It also reduces dependence on energy supplies. At a time when costs, availability and security of supply are all increasingly uncertain, this is a real advantage. And everyone can make a difference. That’s why we’re calling on city authorities and buildings owners and managers to seize the opportunities. I urge all of you here today to get started. You have it within your power to benefit the planet, your environment, and your finances – and Philips is ready to help, as I’ll explain shortly. If you want an idea of the size of the opportunities, here are the figures. As you can see, cities are responsible for 70% of total global energy consumption. And buildings for 40% of that global total. More specifically, in terms of electricity used for lighting, public and commercial buildings represent 60% of the global total, and street lighting 15%. These are big numbers. But look what happens if you replace existing technologies with energy efficient ones. Globally, if we put energy efficient lighting in our non-residential buildings we could achieve savings of 62 billion Euros. We’d also make emissions savings of 330 million tons of CO2. That’s a non-negligible proportion of the savings we need to reach the IPCC’s 450 stabilization case and it’s something we can do today. If these numbers seem remote; think of it this way. Traditional fluorescent lamps are already far more efficient than their incandescent counterparts. But if you replace a single traditional T8 fluorescent tube in your office or factory with an energy saving TL5, you can make further energy savings of 10 to 15 %. In your city, your office block, your factory, your school – through a simple switch to energy efficient lighting, you can make a difference. And when each of us acts, the combined effect is huge. There’s also a compound effect if you do more than just changing your lamps. We call it a systems approach. It works like this. First, if you add new gear – that’s the electronics that drive the lamps – you’ll make some additional savings. Then if you replace entire luminaires – that’s the complete light fitting, with the lamp, the reflector and the housing – you add yet more. Finally, if you add daylight and presence controls to your system, so lights are switched off or dimmed automatically when they’re not required, you can achieve savings of 60 to 70%. These figures work whether we’re talking about public lighting or indoor lighting. So whether you are running a city or an office building – this is an opportunity for you. I want to stress that this change has to be in all buildings. It’s great to create highly energy efficient new buildings. But the real target should be the existing building stock. If we don’t focus on renovation, we are missing out on 99% of the opportunities to make savings! The situation is critical. Our research shows that 80% of existing lighting technology in non-residential buildings is out of date and inefficient. And only 1% of buildings are equipped with controls to detect daylight or the presence of people. So the opportunities are big. The rate of change isn’t. In Europe, many countries still have not implemented the Directive on Buildings Performance. And in its original form, the Directive itself had some critical shortcomings. One of the biggest was that it applied only to new buildings, and to renovations of existing buildings above 1000 square meters. Also, its application to renovation of existing buildings was purely voluntary. So we are pleased that the Directive is being recast to strengthen its impact. It is encouraging to see that the 1000 square meter criterion is being removed. Nonetheless, generally there are still insufficient incentives to renovate the existing building stock. Nor is Europe unique in this. The pace of change needs to increase everywhere. By our calculations, the current rate of renovation in offices is about 6-7% per year. In city lighting, it’s just 3%. At this pace, it will take 30 years before we reap the environmental and economic benefits. Ironically, the technologies will keep improving, but by failing to renovate, we won’t exploit their potential. Certainly, at the current rate, we won’t buy the time we need for the 450 stabilization case! So how can we move from talk to action? How can we turn challenges into opportunities, and opportunities into wins? Philips has just announced one immediate action. In July 2009, we will phase out electromagnetic operating gear in our luminaires, as well as older, less efficient versions, of our TL fluorescent technologies. This is ahead of the EU legislation’s legislation on energy-efficiency – including the phase-out of incandescent bulbs – which will only come into force in 2010. For us, this kind of voluntary move is a concrete way in which we can help drive energy efficiency and gain time in the race to stabilize atmospheric greenhouse gas concentrations. On top of this, in January next year, we will be launching an initiative to accelerate renovation of existing city and non-residential lighting installations. It will help make energy efficient lighting accessible to public buildings, offices, factories, schools, shops – anywhere it’s needed. It will also provide practical support to sectoral initiatives like the European Energy Performance in Buildings Directive as they start to gain momentum. Our initiative consists of three elements: firstly, assessment tools to calculate the energy performance of your current installation and the costs of a new one secondly, a complete portfolio of energy efficient products and system solutions. thirdly, we are putting in place financial support, because we recognize that both initial and renovation cost can be a genuine barrier to change.
We put assessment tools first, because you need to begin by quantifying the potential. Energy benchmarking lets you generate a breakdown of your specific energy saving potential in terms of kilowatt hours, costs and CO2 savings. This kind of analysis is also a great way to raise awareness among the people who will be directly affected by the change – the people who live in your city or use your buildings. Imagine motivating your staff or students in school by involving them in your plans. And don’t forget, energy efficient lighting is not about making sacrifices. The quality of light won’t go down. In fact, the latest energy efficient lighting will provide a significant quality boost. Your city or buildings will become appealing, better places to be. The final element in the program is finance. Over its lifetime, energy efficient lighting delivers financial savings. There is no doubt about that. Especially at times of rising energy prices, the Total Cost of Ownership is attractive as this street lighting example shows. But the initial costs and costs of renovation are higher than simple replacement. We understand this. We also know that if we are to encourage renovation, we have to make it as easy as possible – financially as well as technically. That’s why Philips is currently working with leading banks and finance companies to create financial solutions to complement our lighting solutions. We also believe that governments have role to play here. Business can deliver technologies and financial solutions, but if governments also provide economic stimuli the effect will be multiplied. The global economic crisis should not divert us from this. In fact, it should spur us on. With a triple win available – social, environmental and economic – we urge governments to act. So finally, let me share some examples of the all-round wins that energy efficient lighting in non-residential buildings and cities can deliver. Firstly, the Rundbau in Cologne, Germany – one of the city’s most famous landmarks. Its owners – the Gerling insurance company – have achieved a triple win in renovating this remarkable building: Gerling achieved this using a systems approach. Special 3-meter long versions of our Arano TL-5 luminaires helped ensure the lighting fitted seamlessly with the curved interior. And presence and daylight detectors further boosted the efficiency of the overall installation. So, in total, Gerling obtained energy savings of 70%. At Sainsbury’s in the UK, the challenge was to cut energy usage in their freezer cabinets, while displaying the products to best effect. In the past, lighting freezers efficiently was a particular challenge because lighting generates heat. However, our specially-developed LED solutions provide high quality light with very low energy usage and low heat dissipation – in other words, virtually no heat generation. As a result, Sainsbury’s has achieved direct energy savings of 75% on freezer lighting electricity consumption – and it is probably achieving further energy savings because the freezers’ cooling circuits don’t have to work so hard! LED lighting is based on the same technology behind the little lights in electronic equipment from computers to TVs. It’s highly energy efficient and as this example shows, stunningly versatile. The Flinstering, an award-winning restaurant in the Dutch city of Breda, replaced its energy-hungry halogen lighting with a mix of LEDs and other energy efficient technologies. The result is a fabulous designer atmosphere and a 70 % energy saving! Here’s a great example of energy efficiency in a new building – the British Gas headquarters in Mumbai, India. This building is LEED Platinum certified which means it reaches extremely high performance levels in energy efficiency. In lighting, it features a combination of Philips’ dynamic LEDs on the exterior, and energy efficient lamps and sophisticated controls inside. All of which give full rein to design creativity, while keeping energy consumption low. The light quality inside is also much closer to natural lighting, which we know boosts productivity and people’s general feeling of well-being. In city lighting, it’s a similar story. Energy-efficient lighting consumes less and delivers more. Here’s the Guillotière bridge in Lyon, France, a city recognized worldwide for its highly aesthetic urban lighting projects and its use of lighting as a city marketing tool. By replacing the existing lamps with Philips CosmoPolis, energy consumption for lighting the bridge dropped by about 50%. The lamps fitted in the bridge’s distinctive original masts, yet gave a brighter, higher quality light. In cities, this makes a big difference. Public spaces are not only more attractive; people also perceive them as safer, more appealing places to be. In the USA, Boston’s iconic Marriott Custom House Tower, the city’s first skyscraper, has also gone for a ‘green switch’ – replacing its out-dated incandescent lamps with Philips LEDs. It shows how our latest white LED sources create a fantastic nighttime look, with just a third of the previous energy consumption. Finally, let me briefly explain how far Philips’ involvement in city lighting can extend. In Rouen, France, we supply lighting to the city through a Public Private Partnership with Vinci, a world leader in infrastructure concessions and services. Philips’ role in this 18-year contract also covers design advice and guidance on lighting projects, technical support and warranties, and training for maintenance personnel. It is a clear demonstration of our commitment to supporting cities – not just for the short-term, but for the long-term. Our goal is to help both create and maintain sustainable environments with energy-efficiency and energy-efficient lighting at their heart. I began this presentation by talking about threats and opportunities. At Philips, we truly believe that the triple crises of climate change, energy security and the global economic downturn can be reframed as opportunities. And energy efficient lighting is one of those opportunities – an immediate, high-impact way to start reducing our energy usage and emissions right now. And it’s not a sacrifice. Energy efficient lighting in our streets and public and commercial buildings will make our urban environments better places to live and work. Energy efficient lighting is a catalyst for innovation; a driver for new sustainable, people-focused businesses. It will help us build knowledge for the next generation. In renovating our cities and buildings, we’ll develop the skills we need for the new sustainable economy. It will generate employment, and boost economic prosperity and growth. That’s why we urge city authorities, building owners and governments to join us in acting on this opportunity – to go after the triple win – for people, the environment and the economy. We have the tools and the technologies. And when you add the finance, we have all we need to make the switch. So if you are wondering whether we can make it happen. Our answer is clear and simple. Yes, we can!
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