Claudio Descalzi, you are the CEO of Eni. A company like yours is obviously involved in the Recovery Plan. How difficult is the preparation?
“The recovery plan is similar to a strategic plan, and in a few months we had to accelerate and align many projects and many technologies, especially by selecting the mature ones, with a real impact on decarbonisation. The investments that have been made in new technologies in recent years and our computing capacity have helped us to speed up these processes. The Recovery Plan at the national level also includes the acceleration, composition and integration of different projects from different companies, which must be implemented quickly. We keep in mind that it takes a company months to execute a strategic plan, and Recovery is a national strategic plan. If not years ».
How has Italy prepared for the recovery fund?
“I think the different components of the Italian industry are ready, but everything needs to be put together in a national plan, and I’m optimistic about how the government works. As far as we are concerned, we have worked for six years to build technologies capable of reducing the CO2 component in all of our operations, to transform part of our business, investing more than four billion euros. So we see a path taken by mature projects that have been completed that will lead us to carbon neutrality in Europe while respecting the 2050 target. Some carbon-free products still have no market, they have no demand. The recovery fund is part of the equation. But then we need to understand what incentives the resulting carbon-free products will need ».
How sustainable are they economically?
“We’ve seen how many incentives have rightly been spent on renewables, but what poor penetration they’ve had in proportion and how they’ve impacted the energy market. All this implies that in the coordination of the different projects there must be a strong and competent coordination center, an effective administration, the best heads who have experience with the market, products, technologies and innovation. They will be the ones to tell which projects to put in place, with the aim of meeting not only the criteria of innovation, but also in terms of economic sustainability, energy security and environmental impact. A reasonable balance must be struck between the subsidy that rewards the penetration of new products, while respecting the market principle of supply and demand ”.
Are you saying that the reduction of CO2 emissions cannot be achieved against payment within a few months?
“No, because the market has its time. In electricity generation, coal still accounts for 37% worldwide and causes 72% of emissions. By 1850 it weighed 5% of the energy resources and took sixty years to reach 60%. Oil did not reach that level and gas rose 24% over the same time. The penetration of energy systems takes a lot of time, the market commands and infrastructures cannot be scrapped, precisely because they are the result of decades of investment ”.
The European Union has tight deadlines, with a 55% reduction in net emissions by 2030. Instead, you say that transitions have organic times..
“Without planning that takes complexity into account, it is difficult to achieve goals. They can be stated, not reached. Eni can achieve the European targets for 2030 because it first built the tools for this. And Italy is on a path that will enable it to achieve these goals. Overall, I am not saying that they are unattainable and that the climate emergency justifies challenging targets. But the time and speed required by all sectors comes at a price ”.
What do you mean?
“That carrying out these projects means investing, subsidizing, supporting: if, for example, energy-intensive power stations have to run on hydrogen, they need to be helped to change production processes. It’s a mosaic. It is okay to set goals, but a goal with no underlying analytic construct becomes a goal ».
Do citizens need to understand that reducing emissions means higher costs?
“Citizenship has already suffered because renewable energy subsidies, while reasonable, have largely been incorporated into the tariff. To avoid large subsidies and additional costs to society, we must try to avoid new investments in infrastructure by keeping much of the existing ones alive and by focusing on CO2 capture. today’s great innovations will not become tomorrow’s devaluations. And don’t forget that energy security must be guaranteed during the transition. Europe will soon import 90% of its energy consumption. So the wind power and all renewable energy efforts are fine. We must ensure that all technologies, on a different time scale, can co-exist with the aim of reducing CO2 emissions ”.
Has it given the government a picture of what Eni can do with the Recovery Fund?
“I have identified four areas. There is a part that concerns the capture of CO2, to give continuity to the infrastructure and to safeguard the economy and employment in Italy. These include CO2 sequestration in depleted fields, its mineralization, biofixation from microalgae and other mature technologies. In addition, there is an area around mobility: Hvo biodiesel and biogas, electric power, hydrogen and gas replacement with biogas. We are investing 350 million euros, possibly also from the Recovery Fund, to rebuild the petrol stations in this sense. Finally, there is the growth of renewable energy sources on our land and of Cdp, a technology developed with the Polytechnic of Turin to produce wave energy and the whole chapter on the circular economy ».
How much can it get from the recovery fund?
“We are talking about billions of investments. The goal of these four areas is to reduce emissions by 6.5 million tons per year. And in the six years of development of the projects, we would create, in induced and indirect impact alone, between 70,000 and 100,000 new jobs per year ».
The topic of hydrogen has recently come to the fore: there seem to be different visions among the Italian players, but wouldn’t a dialogue between you two be better?
“Of course there is dialogue. But as Eni we are focused on our energy plan and the hydrogen issue is one of the components of the whole transformation process for us. Today we have nine million customers in the retail sector and we plan to reach twenty: we are not a pure utility company, we work on the whole industrial value chain: Eni’s chemistry will be green, but it will always be there. Refining will be organic, but it will stay. Then there is the circular economy. We are also genetically different from other oil and gas companies. That said, I naturally feel very often with everyone. And there are no differences ».
He will admit that there may be some competition when tens of billions of wallets are at stake.
“There is no competition: this is a plan for Italy and we all play on the same team. We are aware of this and feel the responsibility. We look for all possible synergies so that teamwork leads us to the common goal ».
Nearly 80 billion in European funds for Italy go to the “Green New Deal”.
Are we able to engage them effectively and within a tight deadline?
“The challenge is this. The first is to actually get the money and then have it on time. But I believe Italy has enough time to organize and define the processes by which they can be founded. From what I see when I speak to all parts of the government, there is the greatest attention and focus. It all depends on the organization. I believe we want to avoid bureaucratic delays or excessive administrative procedures, which are legal and understandable in an ordinary situation, but not at a critical time like this ”.
Would a commissioner help?
“People are important if they are smart, but you need a strong organization: people with different competences in the sectors in which you invest, and a continuous follow-up of projects, times and costs. Much can be left to the companies that develop them, who are used to dealing with the market and complex projects ».
How did you welcome the political change in the United States?
“I look at the market. The election results gave a positive impetus to the market trend as it was seen as a factor of stability. In such a volatile and complex world, investors need more predictable horizons. In addition to pandemic, they need as few conflicts as possible, as each of them jeopardizes investment. Every trade war, every tweet, every exaggerated word rocks the market. In 20 days, Eni’s shares were up 43%, and do you know why? For our results for the quarter, yes, and then for the vaccines and the US election. That is, for prospects of greater stability ».
Is a recognized price of CO2, or even a CO2 tax, the key to opening the energy transition?
If the European ETS system, the emissions permits, were extended to the world, we would have a great increase in investment in technologies to reduce emissions and create more virtuous energy production cycles on a global level. Europe is doing a lot, but the world must follow us and that the rules are the same for everyone, with respect for developing countries that also produce less emissions ”.