Unem: “The real challenge is to generate more renewable energy at competitive prices”
Interview with Claudio Spinaci, President of Unem – Unione Energie per la Mobilità
Claudio Spinaci, President of Unione energie per la mobilità (Unem) – the association that groups and represents Italy’s main companies in processing, logistics and distribution of petroleum products, low carbon energy products and research and development of innovative products – looks back over the year about to end and then analyses the opportunities and critical issues affecting the energy transition and national and European measures developed up to this point, while also emphasising the importance of upholding the principle of technological neutrality.
A year after the outbreak of the pandemic, oil consumption is recovering thanks to the resumption of industrial, commercial and tourism activities. In your opinion, how will 2021 close, not the least in the in light of recent energy product price rises?
“Oil consumption is certainly recovering, but we are still below pre-Covid levels. Some products are recovering faster, while others are still suffering the long-terms effects of the pandemic. The former include petrol and diesel fuels which in recent months have progressively recovered ground, moving very close to 2019 values, not only given the resumption of production and commercial activities but also because of greater use of private vehicles for routine needs and free time purposes, as confirmed by a recent Legambiente survey which shows that 88% of people use private vehicles for their mobility needs. The latter segment includes aircraft fuel which, on the other hand, is still posting volumes more than 60% lower than in 2019. Our own estimates suggest that 2021 should close with an overall volume of around 55 million tonnes, thereby recovering about half of what was lost during the pandemic. As for energy price rises, I fear that this is only an initial sign of the effects of policies lacking the necessary sustainability checks and in many ways a paradigm of what the future could hold in store for us if we do not manage a transition – that will still need fossil fuels for many years to come – with considerable care and attention. If demand increases and supply decreases, prices are evidently bound to rise. It’s a simple law of the market.”
The “Fit for 55” package has been debated for months in Europe. What are the critical issues and risks for the industrial system that might arise from this initiative, that does not consider the importance of technological neutrality?
“That is precisely the point. Over and above the fine objective of cutting CO2 emissions by 55%, the European package completely neglects the principle of technological neutrality by pushing in only one direction, namely the complete electrification of all consumption, including mobility. In truth, the real challenge is not this but rather to produce more energy from renewable sources at competitive prices. We must therefore increase resources for research and development into all available technologies precisely in compliance with technological neutrality, which should be the cardinal principle of all European policies. The public debate, on the other hand, is all about how to increase demand for electricity, whatever the cost. In other words, we are committed to consuming something we do not yet know how to generate in sufficient quantities or at sustainable prices. That being the case, I believe it is more than legitimate to ask whether European climate and energy policies protect us from unpleasant surprises or expose us to risks that policy-makers have not sufficiently assessed in their overall complexity. Speaking of mobility, one of the most critical aspects is without doubt the proposal to amend the CO2 emission standards regulation for road transport (cars and vans) which envisages even lower exhaust emission limits than those in force today (95 g/km) of 55% by 2030 and 100% by 2035. Continuing to calculate emissions only at exhaust points and not over the entire life cycle means applying technically erroneous calculation system which does not correctly consider the effective emissions of climate-altering agents. In doing so, it affects the comparison between different technologies and, even more seriously, encourages significant risks of relocation of entire strategic supply chains without concrete advantages in terms of reducing global climate-altering emissions. Let me outline an example: today, biofuels – in terms of energy – represent 10% of the fuels marketed for consumption, but the CO2 saved in the production stage is not counted and this prevents exploiting a product whose role is central to the decarbonisation process. This also applies to low carbon liquid fuels (LCLF) which will play a fundamental role in achieving carbon neutrality in all transport sectors, especially in the “hard-to-abate” ones, since over their life cycle they give rise to a cut in CO2 compared to the corresponding fossil product which varies in relation to the raw material used but which with e-fuels may even be higher than 90%. In other words, any car powered by LCLF should be considered to have almost zero emissions. We hope for an adjustment in the direction taken here during the package approval process.”
The energy transition is one of the pillars of the overall Recovery and Resilience Plan (RRP), focusing significantly on energy production and distribution, with an emphasis on the use of renewable sources and the development of the hydrogen supply chain. Could you tell us what opportunities and critical issues are involved for the oil sector within the scope of this Plan and what initiatives is UNEM pursuing?
“Our sector is undergoing far-reaching transformation with a focus on the future and that is why action concerning EU legislation at this stage is essential in order to accompany the supply chain along the route towards decarbonisation. Refineries will progressively change their production structure, with an increasing focus on the production of low carbon fuels. Petroleum as a raw material will be replaced by feedstocks having biological or carbon neutral origin, integrated with circular economy technologies (Waste to Oil, Waste to Chemicals). In this regard, I believe that we have launched important work in collaboration with Innovhub (experimental stations for industry) and Milan Polytechnic University for a feasibility study concerning the construction of demo plant producing synthetic fuels to be better able to evaluate production processes and chemical-physical characteristics to use them in experimental on-road tests. The first stage should be completed by the end of the year before moving on to the second phase as soon as possible, i.e. to build a pilot plant. It is evident that such transformation needs institutional support in order to identify shared and pragmatic transition scenarios free of without ideological preclusions, thereby allowing the various industrial sectors involved to invest, develop and transform. Without this sharing, the entire sector will undergo a rapid structural involution causing serious damage to the security of supply in the country and the economy of local areas.”