“It is not an answer for us”: Enel CEO skeptical about using carbon seize

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The CEO of the Italian multinational energy company Enel has expressed doubts about the usefulness of carbon capture and storage, pointing out that the technology is not an air conditioning solution.

“We’ve tried and tried – and when I say ‘we’ I mean the power industry,” Francesco Starace told CNBC’s Karen Tso on Wednesday.

“You can imagine that we have tried very hard over the past 10 years – maybe more, 15 years – because if we had a reliable and economically interesting solution, why should we shut down all these coal-fired power plants? [when] could we decarbonise the system? “

The European Commission, the EU’s executive arm, has described carbon capture and storage as a set of technologies that focus on the “capture, transport and storage of CO2 emitted by power plants and industrial plants”.

The idea is to prevent CO2 from “reaching the atmosphere by storing it in appropriate underground geological formations”.

The Commission has stated that the use of carbon capture and storage is “important” when it comes to reducing greenhouse gas emissions. This assessment is based on the thesis that both industry and electricity generation will be largely dependent on fossil fuels in the coming years.

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However, Enels Starace seemed skeptical of the potential for carbon sequestration.

“The fact is, it doesn’t work, it hasn’t worked for us before,” he said. “And here is a rule of thumb: If a technology doesn’t really pick up in five years – and we’re talking about more than five, we’re talking about at least 15 – you’d better drop it.”

There are other climate solutions, said Starace. “Basically, you stop emitting carbon,” he said.

“I’m not saying it’s not worth trying again, but we won’t. Perhaps other industries can try harder and be successful. For us, that’s not the solution.”

Often seen as a beacon of hope in reducing global greenhouse gas emissions, carbon capture technology plays an important role in countries’ climate plans as well as in the net-zero strategies of some of the world’s largest oil and gas companies.

Proponents of these technologies believe that they can play an important and multifaceted role in achieving global energy and climate goals.

However, climate researchers, activists and environmentalists have long argued that carbon capture and storage technologies are prolonging the world’s dependence on fossil fuels and distracting from a much-needed shift towards renewable alternatives.

Shareholder Dividend Increase Plans

Starace spoke after Enel released a strategic plan for 2022-24 and outlined its goals for the years to come. Among other things, Enel will make direct investments of 170 billion euros ($ 190.7 billion) by 2030.

The direct investment in renewable energy that Enel will own is expected to reach 70 billion euros. Consolidated installed renewable capacity, or capacity directly owned by Enel, is projected to reach 129 gigawatts by 2030.

In addition, Enel, which is headquartered in Rome, said it had brought its net zero commitment – a target that applies to both direct and indirect emissions – forward to 2040 after it had previously been 2050.

In the field of fossil fuels, the group intends to phase out coal production by 2027 and gas production by 2040.

Enel also said that shareholders should receive “a fixed dividend per share between 2021 and 2024, which is set to increase by 13% to as high as EUR 0.43 / share”.

During his interview with CNBC, Starace was asked about Enel’s higher dividend forecast and the wider debate about how to invest in so-called “sin stocks” – in this case, major energy polluters – and still get good returns. especially on the dividend side.

“It’s about risk premiums,” he said. “And at the end of the day, I don’t see anything wrong with an increasingly risky business [being] … forced to increase dividends if you want to attract investors. “

“What we’re saying is that there is a breaking point where the risk becomes unbearable no matter what dividends you choose to pay out, and that’s approaching,” he said.

So in our case you have to get out of this risk, get out of the carbon footprint and also make sure that if you put the word ‘net’ before zero, that ‘net’ doesn’t become some kind of ploy to your yourselves Do not really decarbonise operations. “

“We say we will be carbon free, which means we will not be emitting carbon, and therefore we will [not] … have to plant trees to offset this carbon. “

However, Starace acknowledged that it would take trees over the next few centuries to remove the carbon left in the atmosphere due to historical emissions.

– CNBC’s Sam Meredith contributed to this article.

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