Covid-19 was like a war and left Italy to deal with the rubble and the desire to rebuild. To do this, however, "a jolt is needed and it is necessary to get out of the illusion that things can resolve themselves". In other words: "A shock is needed or the country risks ending up in a crisis – not V, U, W or L as has been hypothesized – but a tube crisis, without bottom and point of rebound”. Marco Brun, president and managing director of Shell Italia, speaks like a flood, determined to get involved with a proposal that can create the breaking point necessary to restart. Extraordinary commissioners on individual projects and sectors; common political will for change; clarity of objectives and tools to achieve them: here, in this interview with FIRSTonline, is his analysis of the Italian troubles and the shock-cure to get GDP back in motion, investment and employment. Starting with Energy, a sector in which 110 billion are at stake ready to be spent according to the latest estimates by Confindustria Energia.
After Covid we are on the ground. What is blocking the restart in the sector in which you operate, Energy?
“There are four key problems to face, in my opinion: the regulatory complexity, the slowness of the bureaucracy, the uncertainty regarding the administrative times for the realization of the projects which, even when they are foreseen, are not respected. And above all the failure to respect the decisions taken but which are not carried out due to fears of unpopularity. It takes an average of 100 years to complete a project worth over 16 million in Italy, eight of which can be attributed to pure bureaucratic inertia. If we recovered those, the attractiveness of investors, including foreign ones, for the country would increase. My group, for example, looks to Italy as one of the few countries in which to do massive investments in photovoltaics. Industrial projects from 50 MegaWatt up. Even if blessed by all, in words, they cannot be carried forward for the reasons we have mentioned.
This is why, like Shell Italia, we have drawn up a document to try to make people know and understand what are the starting points for restarting one of the most driving sectors for the economy, Energy. But the discussion can be extended to other key sectors such as Telecommunications, Infrastructures, Transport. Structural problems, unresolved for years, add up to the detriment of the pandemic crisis. A truly explosive mixture and time is up: the energy transition is advancing at a gallop and will impose very demanding challenges".
The Simplifications decree was approved with the formula "subject to agreements", the definitive text after a week is not yet known. What possibilities can it offer?
“I think it should go beyond a mere regulatory-legislative vision problems or we won't get out of it. I mean that we have considerable urgencies ahead of us and very tight deadlines. Here we need a revolution and to achieve it with legislative reforms, although necessary, it takes years. For this reason I propose to proceed with recourse to one or more extraordinary commissioners: the reconstruction of the Genoa Bridge, after the collapse of the Morandi, demonstrates the level of excellence and efficiency that can be put in place. We extend this experience to key sectors and, at the same time, carry out the useful regulatory-legislative reforms. To do this, let's be clear, some indispensable conditions are needed ".
Which?
“I'm going back to the post-war experience: even then there was no lack of political opposition and social contrasts. But it was possible to find an alignment on common objectives and on the will to achieve them, precisely by rebuilding. Instead, I see that today it is not possible to take the shot from particular to the common good. And time is wasted introducing small measures. The political debate is limited to the controversy whether or not it is appropriate to accept European funding. More is needed."
Has the Simplification Decree disappointed you as manager of an important multinational that has been operating in Italy for years? And what openings can the “subject to understandings” or the possibility of text adjustments open?
“The Simplifications Decree responds in a very partial way to the needs that I have outlined up to now and the political decision-maker must implement much more: the will to change, defined objectives, tools – even extraordinary ones – to achieve them. The adjustments to the text, left open by the approval "subject to agreements" are certainly a vehicle. Others can be found as long as a decision is made by the end of the year".
Energy, telecommunications, infrastructure, transport: extraordinary commissioners in these sectors would end up having the powers of ministers. Does it seem politically feasible to you?
“It becomes so if efforts are concentrated on specific sub-sectors, focusing on projects identified for the greatest urgency and relevance. I think for example of the photovoltaic for Energy or 5G in the case of Telecommunications or at ports in that of Transport. Certainly a governance must be defined for the commissioners and for the projects. For the latter, we suggest setting up committees that allow for an open discussion between political decision-makers and companies to facilitate the works deemed most necessary. For the commissioners, it must be defined whether they must answer directly to Palazzo Chigi or to the individual ministries. It's not complicated, basically it's a question of defining who does what and by when, as happens in everyday life".
Let's go back to Energy, where to start again and what is the position of Shell Italia?
“The first point to start from is the upstream. As Shell we are in the two deposits of Val d'Agri and red Tempa in Basilicata. These are the two largest oil fields in continental Europe, today they are about to produce 150.000 barrels/day but in any other European country they would produce from 300 to 400 thousand. They can easily be strengthened, providing resources to the national GDP, alleviating employment and guaranteeing royalties and taxes that the State could allocate to green projects and the circular economy. Own the energy transition requires unlocking the upstream now: in 10-20 years it may not make any sense. So why waste resources? The share of national needs could easily go from 10 to 30 per cent, reducing the oil bill.
The other two sectors in which we operate are Gas&Power, supplying companies with electricity including low carbon, a real bridge towards the transition, and lubricants essential for the efficiency of wind turbines, for example. Without neglecting electric mobility and electric storage, after the acquisition of Sonnen. A separate focus deserves photovoltaics”.
In what sense?
“Like Shell Italy we have new projects in the works for 1 Gigawatt in the next 5 years. Consider that the Italian National Plan plans to bring photovoltaic capacity from 20 to 50 GigaWatt by 2030. For a leap forward of these proportions the panels on the roofs are not enough and instead large systems are needed on the ground, but these are held back by politicians hesitant about the possible downsizing of agricultural land. Specifically, 2020 MW were authorized in 500: 480 on agricultural land, of which 240 contested by the council of ministers and instead we need certainties and fast procedures. With this step, we have calculated that in 2030 we will have no more than 6 additional GW installed instead of the 30 GW indicated by the National Plan".
The impact of Covid was also felt on oil and an OPEC meeting is scheduled for the week to review the production cuts. What predictions do you feel like making on the trend of oil prices?
"Oil prices will be affected by how long and deep the consumption crisis generated by the pandemic will be. However, we are aware, like Shell but I would say by now throughout the world, that the energy transition has started. It will be long, complex, will require huge investments and will change business and consumption models, making the coexistence of different energy sources indispensable. But we have to be resilient and don't take the excuse of low oil prices to slow down the ride. On the contrary, we must find the tools to accelerate it. And I would like to close with two good news”.
Which?
"The first concerns the Italian government's awareness of the need to work on CO2 capture. The choice of the Ravenna Campus is good news, Italian industrial excellence, for the use of exhausted deposits in the Adriatic for the purpose of carbon storage.
The other concerns Eni. The choice of the organizational reorganization with two divisions reporting directly to the CEO Claudio Descalzi - one for fossil activities, the other for renewables and green chemistry - was a courageous choice ahead of its time, innovative compared to its competitors. Shell Group has announced the Reshape project to the market but will give indications on how we will reorganize at the end of the year".
