The head of the world’s second-largest utility has hit out at the EU’s energy policy, saying the bloc should have “aggressively” addressed its dependence on imported gas long ago.
Francesco Starace, chief executive of Italy’s Enel, urged member states to switch rapidly to other energy sources in order to sever ties with Russia, after President Vladimir Putin’s move to issue gas invoicing in roubles added to tensions over the war in Ukraine.
Mr Putin signed a decree last week demanding that nations deemed “unfriendly” must pay for gas deliveries in roubles from April, using an account in the Russian currency at Gazprombank, or face a halt in supplies.
Mr Starace, who has been at the helm of state-controlled Enel since 2014, said European nations should have started worrying about their energy dependency from third countries years ago.
“This is Russia’s turn but let’s not forget what happened in Libya 10 years ago,” he added. “Where gas is coming into Europe from is a problem.”
He said the EU should have managed its “dependence on fossil fuels, namely gas, in a better and more aggressive way”.
Mr Starace urged European nations to free themselves from “physical links” to other countries by building regasification plants and leasing floating ones to process seaborne liquefied natural gas, which would allow them to diversify supplies and cut ties to fixed pipelines.
He also called on them the accelerate the transition to other energy sources including renewables, while acknowledging this could not be done overnight.
“Burning gas to generate electricity is totally stupid . . . both from economic standpoint and from an environmental [one], gas is precious and it should be used where it is irreplaceable,” said Mr Starace.
“Of course these things require some time, so you need to do things in the order of importance,” he added. “And clearly you have first to survive and then try to reduce your dependence.”
Solar panel production
Enel, which has a market capitalisation of €62 billion and is one of the world’s largest renewable energy producers, plans to stop using fossil fuels to generate electricity by 2040.
It signed an agreement with the European Commission last week to ramp up solar panel production in Sicily within the EU’s Innovation Fund framework.
The EU hopes to build its renewables capacity to 600 terawatt hours by 2030, a timeline that has run into criticism from businesses and politicians across Europe because of the potential impact on jobs and a rise in costs linked to the transition.
But for Mr Starace, “the cost is when you buy gas, you burn it, and it’s finished . . . When you put your money into something that remains in your hands and keeps producing energy, that’s an investment.”
Gas, mostly Russian, makes up 40 per cent of Italy’s electricity generation mix.
Mr Starace insisted he was “not demonising Russia”, saying the problem would be the same with “any other place”.
Enel has €300 million exposure to Russia, where it employs 1,500 people at its three large combined-cycle thermoelectric power plants using gas to produce electricity for the domestic network and provide heating to three large cities.
Mr Starace was one of a group of chief executives to enervate the Rome government in January by attending a video conference with Mr Putin to discuss expanding business ties between the countries.
Mr Starace said he had not been expecting “this kind of escalation” at the time and that Enel was looking at leaving the country. “If we can sell [to a Russian party], then we will exit,” he added.
“Otherwise I think it will be very difficult for us to continue anyway, to guarantee the functioning of these units in the proper way.” – Copyright The Financial Times Limited 2022
