Unem: the energy transition must be managed to avoid repercussions on the production system

 In Fuels, NEWS & INTERVIEWS, Sustainable Mobility, Technical innovation

During the AGM, President Claudio Spinaci noted that fossil fuels still dominate growth in demand and expressed concern over a debate focusing only on the electrification of consumption

The true challenge is to manage the energy transition “without repercussions on the industrial system and the European production system”. This is what the President of Unem – Energy for Mobility Union, Claudio Spinaci, said during the AGM 2021. The President of Unem pointed out that the debate in Europe focuses solely on electrification of consumption and how the real problem of “decarbonised” sources is to increase other production: “We should increase research and development to increase renewable production,” he said.

The demand for energy “has begun to grow significantly and is largely covered by fossil fuels which still dominate the market and will continue to be so for several decades in the absence of alternative solutions to meet essential needs, especially in the poorest areas of the planet,” highlighted President Spinaci. As the recovery from the pandemic crisis moves forward, international energy demand has started to grow again – according to estimates by the International Energy Agency (IEA) – by 4.6% in 2021. 70% of this increase will be seen in emerging markets and developing economies. Fossil fuels continue to cover most of the demand for energy (80%): oil remains the first source, followed closely by coal. “While oil is still lagging behind somewhat, coal has already recovered what it lost in 2020. Renewable energy continue to expand but to a lesser extent than the increase in demand and now covers about 30% of electricity production,” Spinaci noted, before adding: “People who seek to overcome fossil fuels do not consider the risk of this exploding into a major energy crisis.”

From the point of view of demand for oil, by the fourth quarter of 2021 we should reach the same levels seen in 2019 at around one hundred million barrels per day. The IEA envisages that by 2026, world demand for oil will grow by about 7.6 million barrels per day. As regards investments in extraction and production, Western companies (International Oil Companies) have implemented more cuts than producer countries (National Oil Companies), while investments in research and development of new sources of crude oil and gas have also downsized. The centre of gravity in the oil refining world on the other hand continues moving to the Far East, creating a strategic energy security problem and the risk of a “strong relocation weakening Europe’s industrial stability without any environmental benefits,” Spinaci warned.

In Italy, demand for energy in 2020 fell back by 9.3% and the source that saw the most significant setback was oil, in being essentially linked with transport. “While other energy sources, in particular gas, already recovered in the first months of 2021 much of what they lost in 2020, oil still is still lagging behind,” Spinaci pointed out. Estimates by ENEA suggest that demand for energy in Italy in 2021 will rise by 4%, recovering about two-thirds of what was lost last year. “In the fuel sector, we expect alignment with 2019 consumption levels as early as July. As regards jet fuel consumption, growth is estimated compared to 2020 but consumption will still be lower compared to 2019. Full demand for jet fuel will be able to return to pre-Covid levels no earlier than 2024-2025, according to all forecasting institutes,” explained the President of Unem, while asking for a neutral regulatory system which does not exclude refining from the transition process and a discussion table with the Ministry of Ecological Transition.

The exploitation rate for refineries in Italy since 2020 is about ten points below the historical-average posted in recent years. Spinaci also focused on the price of fuel, specifying that Italians pay seven to ten cents more for fuel because of tax and duties, since the industrial price is permanently lower than what other European countries pay and therefore “we are still faced by the phenomenon of illegality”. President Spinaci therefore called for the extension to all transport of certain control methods, such as GPS, and full strategic recognition for the fuel sector in the National Recovery and Resilience Plan (Pnrr).