Claudio Descalzi “Recovery Plan, Eni is at stake, we need a strong and competent direction” – Corriere.it

Claudio Descalzi, you are the CEO of Eni. A company like yours is naturally involved in Recovery Plan. How difficult is it to prepare?
“The Recovery Plan it is comparable to a strategic plan, and in a few months we had to accelerate and align many projects and many technologies, especially selecting the mature ones, with a real impact on decarbonisation. The investments made in new technologies in recent years and our computing capacity have helped us to accelerate these processes. Also the National Recovery Plan it involves an acceleration, composition and integration of different projects made by different companies, which must be implemented quickly. We take into account that a company takes months to implement a strategic plan, and Recovery is a national strategic plan. If not years ».

How did Italy get prepared for the Recovery fund?
«I think that the various components of the Italian industry are ready, but everything must be aggregated in a national plan, and I am optimistic about how the government is working. As far as we are concerned, we have worked six years to build technologies capable of reducing the CO2 component in all our operations, to transform part of our business, investing over four billion euros. So we see a path made by mature projects that are completed and that will lead us to carbon neutrality in Europe respecting the 2050 target. Some decarbonised 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 decarbonised products will need ».

How sustainable are they economically?
“We have seen how many incentives have rightly been dedicated to renewables, but what poor penetration they have had in proportion and how they have impacted the energy market. All this implies that in coordinating the various projects there must be a strong and competent coordination center, an effective administration, the best heads who have experience of the market, products, technologies and innovation. They will be the ones to tell which projects should enter, with the aim of satisfying not only the criteria of innovation, but also of economic sustainability, energy security and environmental impact. A fair balance must be found 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 done, paying, within a few months?
«No, because the market has its times. Today in electricity generation, coal still accounts for 37% worldwide, and causes 72% of emissions. Around 1850 it weighed 5% of energy sources and it took sixty years to reach 60%. Oil failed to reach that level and gas rose 24% in the same time. The penetration of energy systems takes a long time, the market commands and infrastructures cannot be scrapped, precisely because they are the result of decades of investments ».

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 for objectives to be achieved. They can be stated, not achieved. Eni can achieve the European objectives for 2030 because it first built the tools to do so. And Italy is on a path that will allow it to achieve these goals. In general, I am not saying that they are unattainable and the climate emergency justifies challenging objectives. But the time and speed required of all sectors have a cost ».

What do you mean?
«That carrying out these projects means investing, subsidizing, supporting: if, for example, energy-intensive plants have to run on hydrogen, they must be helped to change production processes. It is a mosaic. It’s okay to set goals, but a goal without an underlying analytic construction becomes an aspiration ».

Should citizens be made to understand that reducing emissions involves higher costs?
“Citizenship has already suffered because subsidies for renewables, although fair, have largely gone into the tariff. Now to avoid major subsidies and an additional cost to society we must try to avoid new investments in infrastructure by keeping much of the existing one alive, and focusing on CO2 capture. A careful analysis of new technologies must be made, so that the the great innovations of today do not become the devaluations of tomorrow. And remember that energy security must be ensured during the transition. Europe will soon import 90% of its energy consumption. So the efforts on wind power and all renewables are fine. We must ensure that all technologies, on a different time scale, can coexist 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 indicated four areas. There is a part that concerns the capture of CO2, to give continuity to infrastructures and 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 on mobility: Hvo-biodiesel and bio jet, electric power, hydrogen and gas replacement with biogas. We will invest 350 million euros, potentially also from the Recovery fund, to redo the service stations in this sense. Finally, there is the growth of renewables 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 Come From the Recovery Fund?
“We are talking about investments of billions. 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, only in the induced and indirect impact, we would create between 70,000 and 100,000 new jobs a year ».

The topic of hydrogen has recently emerged: different visions seem to emerge among the Italian players, but wouldn’t a dialogue be better between you?
«Of course there is dialogue. But as Eni we are focused on our energy plan and the hydrogen issue, for us, is one of the components of the whole transformation process. Today in the retail sector we have nine million customers and we are counting on reaching twenty: we are not a pure utility, we work on the entire industrial value chain: Eni’s chemistry will be green, but it will always be there. Refining will be organic, but it will remain. Then there will be the circular economy. We are also genetically different from other Oil & Gas companies. Having said that, of course I feel very often with everyone. And there are no differences ».

He will admit that there can be some competition when a tens of billions portfolio is at stake.
«There is no competition: this is a plan for Italy and we all play in the same team. We are aware of this and we feel the responsibility. We are looking for all possible synergies so that teamwork will lead us to the common goal ».
Almost 80 billion of European funds to 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 actually getting the funds, then having them in good time. But I believe that Italy has enough time to organize itself and define the processes that will allow them to be grounded. From what I see from speaking to all components of the government, there is the utmost attention and focus. It all depends on the organization. I believe that we want to avoid bureaucratic delays or excessive administrative procedures, lawful and understandable in an ordinary situation but not in a critical moment like this ».

Would a commissioner help?
«People are important, if they are smart, but you need a strong organization: people with different skills in the sectors where you invest, and a continuous follow up on projects, times and costs. Much could be left to the companies that develop them, accustomed to dealing with the market and with complex projects ».

How did you welcome the political change in the United States?
“I look at the market. The outcome of the elections gave a positive impulse to the market trend because it was perceived as a factor of stability. In such a volatile and complex world, investors need more predictable horizons. Pandemic aside, they need as few conflicts as possible, because each of them puts investments at risk. Every trade war, every tweet, every word over the top rocks the market. In twenty days Eni’s stock gained 43%, and do you know why? For our results for the quarter, yes, and then for the vaccines and the US elections. That is, for prospects of greater stability ».

Are a recognized price of CO2, or even a carbon tax, the key to opening the energy transition?
“Yup. If the European ETS system, the emission permits, were extended to the world, we would have a great increase in investments 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, respecting the developing countries which are also those that produce less emissions ”.

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