VW boss Diess and Enel CEO Starace (r.)
“Instead of promoting future technologies in a simplified manner, the EU is tripping itself through bureaucratic hurdles.”
Düsseldorf Europe’s industry is demanding more speed and support in the restructuring of transport and energy supply. Too many decisions in favor of the European Union’s (EU) Green Deal “still took a long time due to the vote,” said Volkswagen Group CEO Herbert Diess in a joint Handelsblatt interview with Francesco Starace, CEO of the Italian electricity company Enel.
The VW boss called for clear guidelines from the EU for the expansion of renewable energies and the charging infrastructure for electromobility. He also brings billions in aid: “When I look at the ambitious climate and reconstruction program of US President Biden, the EU should urgently think about topping up its own reconstruction fund,” said Diess.
Enel boss Francesco Starace sees the greatest difficulties in lengthy bureaucratic processes and approval procedures in the EU. “We have a major disadvantage in Europe compared to the USA,” he added.
In order to promote the green restructuring in the EU, the company bosses are looking to join forces with politics. Together with eight other CEOs from large European companies, they founded the “CEO Alliance”, which is supposed to advance important infrastructure projects. “Europe must become more independent in important economic areas,” emphasized Herbert Diess. That is why the Commission is well advised to seek close coordination with companies in industry and future dialogues – such as with the “CEO Alliance”.
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Volkswagen and Enel are also working on their own joint projects. In Italy they want to expand the charging network for electric cars. They also want to replace old diesel buses with new electric buses in a pilot project for local public transport in ten European cities, including Hamburg.
“But we also need a European industrial policy that promotes the use of e-buses. If nothing changes, many urban bus operators will simply continue to order diesel buses for convenience, ”says VW boss Diess.
Read the full interview here:
Mr. Diess, Mr. Starace, you two exchange ideas intensively about the future of the energy industry and the mobility of tomorrow. How did that come about? Starace: We met a few years ago at the World Economic Forum in Davos during a discussion about the energy of the future. I approached Herbert Diess at the time because I wanted to understand why there was a representative from the automotive industry in our group.
How did this result in an intensive exchange? Diess: It was already clear then that electric mobility would come quickly, much faster than most people thought. For this we need line and charging networks as well as electricity. That can only succeed if the two industries work closely together. That’s why I asked Francesco Starace if we wanted to set up a charging network together. Starace: At first I wasn’t quite as optimistic as Herbert Diess about the time frame for this development. But it is exactly as we sometimes experience with predictions about the future of the energy transition: It is going faster than expected.
What exactly does the planned cooperation between Enel and Volkswagen look like? Starace: When we plan our charging networks, we don’t do it alone, we also listen to the perspective of the automotive sector. In particular, we need to understand exactly what type of electric cars will hit the market and how their technology will evolve. The charging infrastructure is now provided, but it must then be able to be used and further developed for many years. That is why it is fundamentally important for us to be familiar with the next generation of cars at an early stage and to know how to adapt to them, so that electrification is the only way to reduce CO2 emissions in cars in a really sustainable way. But something also needs to change in energy generation: our cars will not get cleaner with electricity from coal-fired power plants; that can only be done with renewable energy.
This is not a new finding. Is the conversion of electricity generation to renewables really going fast enough? Diess: A lot has already happened in Scandinavia. The same applies to Spain and southern Italy. Unfortunately, Germany is only in the middle, in Poland electricity is mainly produced with coal. The electric car cannot yet make use of its climate advantages. The turnaround in mobility can only be successful if there is also a turnaround in energy generation. This also includes a high-performance distribution network that brings electricity from solar power plants in southern Europe to Germany.
But these networks do not yet exist for the most part. Starace: I see the biggest difficulties in the bureaucracy and the approval procedures. Here in Europe we have a major disadvantage compared to the USA. Such processes are much easier and faster there. I remember how a few years ago we inaugurated a wind farm in the USA with a capacity of 200 megawatts, which took eight months to approve and nine months to build. In France we were allowed to build 197 megawatts – but spread over six years.
Do you think that Europe can even tackle a major project like the green conversion of mobility? The EU is currently not that good at solving complex problems, so it will be a feat of strength, of course. That is why the Green Deal is indispensable, and it is also a great opportunity for the EU. We have teamed up with the CEOs of other European corporations and founded the “CEO Alliance” to support politicians in the implementation of major projects. If every industry has its own ideas, it won’t work.
Vita Francesco Starace
Do you think that politics cannot do it alone? Diess: The will can be felt in all European institutions. In particular, the Commission with President Ursula von der Leyen and Vice-President Frans Timmermans is working systematically on the Green Deal. The institutions even drive each other. But some decisions still take a very long time in Europe due to the vote. A more ambitious European framework and specifications for the member states would sometimes be desirable, for example in the expansion of charging infrastructure or renewable energies. And when I look at the ambitious climate and reconstruction program of US President Joe Biden, the EU should urgently think about topping up its own reconstruction fund as well.
Vita Herbert Diess
It’s always easy to call out for politics. What can industry contribute? Diess: In the CEO Alliance, we have so far been concerned with the decarbonization of heavy goods traffic and ship transport. Other projects focus on reducing CO2 in the building sector or the production of battery cells.
What does that mean in concrete terms? Diess: We are talking about cross-sector solutions and public-private partnerships: For heavy goods vehicles, 1,000 special charging stations would be enough to enable a north-south corridor. In battery production, we still have gaps in the value chain that we want to close. In the next step, we want to store specific projects with budgets. Europe needs to become more independent in important areas of the economy. For this, however, the state aid law in the EU would also have to be revised.
With what aim? Diess: The means of the reconstruction fund are to be allocated according to the well-known rules of aid. That excludes many regions in Western Europe, especially in Spain and Italy. Eastern Europe with its production regions is preferred. Instead of promoting future technologies in a simplified manner, the EU is tripping itself through bureaucratic hurdles.
What does the green conversion actually mean for your industry? Diess: The task is enormous. Decarbonising the economy is not just an issue for the automotive industry. There is much greater potential in sustainable buildings. Cars only make up about five or six percent of the energy they need. Electric cars will even make the grid more stable because excess electricity can be temporarily stored in the batteries. In the future, electricity for driving may even be available free of charge, because the owner generates a much greater benefit by storing it.
VW then takes over the coordination for the storage of electricity in millions of e-cars and becomes the electricity provider. Mr. Starace, is there a new competitor emerging? Starace: The energy sector is a growing market. As an energy company, we know that this creates space for competition. But even if Herbert Diess might not like to hear that: For us, electric cars are above all batteries on four wheels. Most of the time you stand in a parking lot. During this time, they can be used as energy storage. We ran tests in different countries in real time and they worked perfectly. So Volkswagen’s approach is perfectly fine. I don’t think VW will start laying millions of kilometers of copper cables. I still expect Enel to start building cars. But there are overlaps.
Can you imagine paying VW to store the electricity? Starace: Of course that is conceivable. We would either pay Volkswagen or the owner of the car. To do this, however, we have to digitize the network. And that’s what we do too.Diess: Italy is much further ahead than Germany when it comes to digitizing the network. This also includes the ability to recognize the car when it is connected to the network by cable. This digitalization of the network is absolutely indispensable for the automotive industry.
You mentioned your joint project to expand the charging infrastructure. What is planned in detail? Diess: The range of e-cars remains the most important issue for our customers. So we have to find an answer to that. Tesla has already set up a pretty good charging network in Europe. We are on. This is especially true for southern Europe. In the future, Enel can of course help us not only in Italy, but also in other southern European countries.
How many stations are VW and Enel planning together, and how much do you want to invest? Starace: We are at too early a stage to give details here. I apologize.
More than a few thousand charging points in Italy? Starace: Yes, more than a few thousand, that’s clear.
And there should be other joint projects in the future? Diess: We all agree that local public transport must be electrified – and that brings us to the subject of buses. To do this, you need the appropriate product, the electric bus, and of course a charging network that provides the larger amounts of energy. Our subsidiaries MAN and Scania have such e-buses. Starace: Within the CEO Alliance, we are already supporting Scania in setting up a charging network for e-trucks. The amount of electricity required for this is large, much larger than for a car. In Europe there are around 700,000 buses, around 40 percent of which are in use in cities.
How many electric buses are there in Europe today? Starace: Around 4000. In China, 400,000 of the 700,000 buses are electric, which is a huge difference. If we’re not careful, China will be the only manufacturer of e-buses in a few years. We have to be able to do that in Europe too.
Could the VW Group produce enough electric buses? Diess: That would be feasible by 2025. But we also need a European industrial policy that promotes the use of e-buses. If nothing changes, many urban bus operators will simply continue to order diesel buses for convenience – although e-buses are simply better and more comfortable, they offer a better quality of life.
How can that be changed? Starace: Politicians would have to set a quota: It could be stipulated that at least 20 percent of buses must have an electric drive from 2025 onwards. After that, every city would see its advantages.
That all sounds very theoretical. Starace: We want to show that it is possible and are working together with VW and other companies in the CEO Alliance on a plan for ten e-bus pilot cities in Europe.
Let us guess: Wolfsburg will be there? Diess: Hamburg will be there, we are already well represented. Wolfsburg, too, maybe. Above all, it is cities that have already started electrification. Incidentally, the average age of many buses is more than ten years. A renewal is pending in many places – why not electric right away?
The EU’s climate targets are very ambitious. Do you consider them achievable? Diess: The beginning has been made, the goals are clear. Now we need a precise plan, which I don’t see yet. Political decisions are currently not properly synchronized. My main concern is the bureaucracy in Europe. We have to overcome that, otherwise we have no chance. Starace: I can only agree. Mr. Diess, Mr. Starace, thank you very much for the interview.
More: “Bidirectional charging”: How Volkswagen wants to earn money from storing electricity