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In the last year, the gas naIn Europe, the price has risen by 535%. By comparison, the performance of the oil barrel, which has doubled, seems stable. Yet such a shock is usually dismissed as a passing phenomenon: last long and cold winter that required more intense supplies, little wind in the North Sea that slowed the production of renewables, the demand that restarts as the pandemic eases. Nevertheless Claudio Descalzi, CEO of Eni, he is not entirely convinced.
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Are there also structural elements behind the price explosion?
“The litmus test that these are not simply price increases linked to fleeting circumstances is that the price increase is not timely, it does not occur in a single region of the world. It is not only in the North Sea or in Europe. There is an even greater increase in Asia. There are huge increases in Argentina, Brazil, the United States. The US has a lot of gas, yet the price has more than doubled there too. So it can’t just be that in the North Sea there has been no wind recently and, instead of using 15% or 18% wind energy, for now it is being used at 7%. It is not only this ».
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Prices are said to rise as Russia restricts gas supplies.
“Russia may have an impact on Europe, but certainly not on the rest of the world. The reason is that upstream investments, those upstream of the energy supply chain for theto creation of new production capacity in the fields, had two phases of strong reduction. The first was caused by a very significant oversupply in 2014. It then went from $ 850 billion in annual global investment to $ 350 or $ 400 billion. Investments were subsequently kept low, for fear of a reoccurrence of oversupply. Then there was Covid, which lowered them further “.
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Is there really a structural imbalance between energy supply and demand in the world, with demand running faster and faster?
“Supply is no longer in line with rebounding demand. The easing of Covid has represented a spring that is now expanding and those who must ensure energy are unable to maintain production at the necessary pace, due to the decline in investments in recent years “.
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Does the energy transition have anything to do with it, with a view to reducing CO2 emissions?
«The compression of investments is also due to the fact that companies have put upstream investments in competition with those in the transition and development of renewables. We at Eni this year have earmarked almost two and a half billion euros for the development and acquisition of renewables. Since the resources are not infinite, choices must be made and priorities set. The right need to decarbonise is felt, but this impacts on investments in traditional sources and generates a decrease in their supply in the face of a demand that still requires them structurally. So here is the real reason: there have been fewer investments ».
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Are you questioning greenhouse gas reduction targets?
“Absolutely not and the investments we have made and are making show it. I firmly believe that we need to reduce emissions. We must stay below one and a half degrees of average increase in world temperatures compared to the pre-industrial era and we must do so on the basis of technological neutrality ».
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What does technological neutrality mean?
“That when we want to achieve such an important goal, we must use all the appropriate and” clean “means at our disposal. Renewables are fundamental, but there is also the capture of CO2 emissions and sequestration in exhausted fields, there are biorefineries, the circular economy – both of organic and inorganic materials – as well as technologies for future realization such as nuclear fusion. Otherwise it is as if one were to run a hundred meters, and the race towards decarbonisation must be very rapid, with hands and feet tied. Can not run. The ideologism on technologies is the enemy of the achievement of the climate objective ».
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What are you worried about?
«Up to now we have been concerned with modifying the supply of energy carriers without modifying the demand which continues to be prevalent, in the sector of industry and mobility, for oil, gas and coal. This gap between supply and demand is the cause of the increase in prices “.
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But how does the question change, in your opinion?
“With laws, incentives and implementing rules. If biofuels are to be used instead of regular gasoline, regulations are needed. If you have to use green or blue hydrogen which has a higher cost than that produced by the simple transformation of methane, then you need to compensate for the difference in production costs. It is not enough to give objectives, to 2030 or 2050. We must build the connective tissue of infrastructures, of demand, of supply, of norms, of laws. A very profound analysis must be made ».
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Don’t you find that the demand for energy can only go up? It is already above pre-Covid levels even though the global economy is still below.
“The demand for energy will rise, also because humanity is growing. The expected 25-year increase of more than two billion people will be concentrated in Africa and Asia. There is the most important energy gap: African energy consumption is about 4% of that of the world, but the population is 17%. This gap is the measure of poverty. But when the development comes, the demand for energy will increase dramatically. So it will be in China, in India, in all of Asia in general ».
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Did you speak earlier of “ideologism”? In what and by whom?
“We are witnessing a pendulum effect. There is the impression that large corporations have done what they have wanted all these years, so it is concluded that to be able to block emissions, corporations must be blocked. So it swings to the other extreme. But let’s ask ourselves what effects the attacks on large oil & gas companies have. Today these majors are very careful. We are transparent about environmental impacts, with detailed sustainability reports, ambitious targets, capital and technologies to pursue them. If we big ones are pushed or forced by the market to sell our activities to small local and private companies, – these production processes will continue but will be much less controllable. They will continue, because the energy will be needed anyway. But there will be no use of technology or attention to sustainability, because we will have sold to companies that do not have the same transparency obligations. The environmental impact can only get worse ».
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When you talk about technological neutrality for the transition, do you include the new generation modular mini-plants? It is hard to bring this issue into the debate.
«In Italy, yes, it is difficult. France is asking to use nuclear and gas and so is the United States. Here in Italy there was a referendum in the mid-1980s and nuclear power was excluded. The latest generation is completely different, even if it is always fissioned. But in a country where it is difficult to install a photovoltaic panel, how can you build a nuclear power plant? To be competitive we need to streamline procedures, find a pact with the territory in order to develop industrial activities and be aware that industrialization done in the correct and transparent way that creates development and work is positive for the whole society. This must be done with clear ESG objectives (of sustainability, ed), making sure not to leave anyone behind and not to create pockets of privileged or excluded people from growth ».
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