The revolution of renewables is ready to go. And it can help kick-start growth. Italian industry has the creativity needed to make the leap, infrastructures evolve, Italy's geographical position is advantageous. But for a real leap forward, in line with the new challenging 2030 objectives, a clear long-term industrial policy strategy and coordination of European industrial projects are needed. These are the lights and shadows of an energy transition with enormous potential that Valeria Termini tells us about in this interview with FIRSTonline. Termini has recently concluded his seven-year term as commissioner of the Energy Authority (Arera) e vice president of the Council of European Energy Regulators (Ceer) and returned to the Roma Tre University where she teaches Political Economy. You have just published the book "The renewable world" and you are one of the leading Italian scholars on the subject of energy. How will the economy, politics and geopolitical relations change with the new energy revolution? How long will the transition from fossil fuels last? And is the electric car just around the corner? We asked her, here's what she told us.
2019 opened with a slowdown in the economy: Europe slows down and Italy risks a new recession. Are renewable sources a driving force capable of restarting growth?
"Yes. The energy revolution is certainly a driving force for growth, but first of all we must bear in mind that we are speaking of a long-term process and not of a conjunctural option capable of leading to rapid changes in the cycle. This is true in general but it is even more true for Italy today. The new renewable sources are also a considerable opportunity for us, but a clear industrial policy strategy is essential: the country's strengths on which to focus must be identified and long-term objectives that allow companies to plan the necessary investments in the networks, in components, in cutting-edge technological research to bring about change. Otherwise, the risk is that the change will only translate into higher imports, which perhaps benefit from our incentives, as happened with Chinese and then German solar panels in recent years".
Italy has already made great strides towards clean energy, you talk about it in your book. But now there are the new European objectives for 2030. In the political narrative on renewables everything seems easy and within reach, a myth to dispel?
“Sun, wind, water are resources that Italy is naturally endowed with. And this is certainly an advantage. But the electricity production model driven by renewables is a widespread generation model, distributed throughout the territory and this represents a 180-degree reversal compared to the industrial model we have experienced so far, characterized by a few large power plants that reached homes and businesses. Changing requires investment and a lot of work, for example on the digitization of networks. Therefore, a long-term strategy is essential. Quite the opposite of what is being done: we proceed with impromptu interventions that stop the industrial initiative. Yet creativity is not lacking in Italian industry”.
Does it mean that companies are ahead of politics?
“I mean that there is a widespread ability of Italian industry to grow renewables and that the definition of a strategic industrial policy framework for the sector would act as a driving force. I will give some examples of what I like to define as "frontier components" of companies scattered throughout the territory. The first concerns energy efficiency. We have a company from Pomezia, Convert, which has developed a steel tracker to allow photovoltaic panels to move and track sun exposure, like sunflowers. It is an Italian patent that is growing globally to be used for example in the deserts of Chile. Another company in Puglia is a center of excellence for the IoT (internet of things) and for the advancement of home automation. Again, Smre, from Umbria, which was partly acquired by the American giant Solar Energy for its advanced technologies for electric mobility. Finally, to mention a large group, Prysmian – the former Pirelli cavi- recently won a contract to secure electricity grids in the Washington region. And I could go on. Naturally, the more well-known commitment of large energy companies active in Africa with large and small local plants for the production of electricity from renewables is added to these.”
Since you referred to impromptu interventions, how do you evaluate the stop to drilling recently decided by the government? Doesn't it risk turning into a boomerang and increasing our already high dependence on foreign countries?
“The recent case of the postponement of permits to search and prospect for hydrocarbons in the Adriatic, hastily included in the Simplifications decree, is part of the lack of that strategic framework I mentioned earlier. It is an act of insane self-harm because it blocks everything for 18 months without however indicating what will happen next, what industrial direction it will follow. Oil today covers 34% of Italians' energy consumption (66 million Toe), more than 90% of import. Do you want to reduce Italy's dependence on foreign sources by extracting it at home or do you want to focus on other sources? Among other things, it is perhaps not entirely known that Slovenia, Montenegro, Croatia and Albania are preparing to sell exploration and drilling rights in the Adriatic to American and Chinese companies: it is easy to imagine what the outcome will be. It's paradoxical.
On the other hand Italy, thanks to its central position in the Mediterranean, could become a center for clearing gas from the markets and new resources of the Mediterranean and for export to Europe thanks to its gas pipelines and regasification plants for the liquid gas that arrives from the sea, thus accrediting itself as a diversified gas supplier in the EU at a time when gas is the essential fuel to accompany the transition towards renewables. We cannot give up an extraordinary political-economic asset vis-à-vis our European partners, just as Germany is advancing on its own with the doubling of the Nord Stream gas pipeline which connects it to Russia”.
You have hypothesized a path of at least 30 years for the energy transition, but it will not be the same in all areas of the planet. The energy revolution started from Europe: will it keep this supremacy?
“Certainly Europe is the region which, more than others, has thrown its heart over the obstacle in terms of renewables. The problem of the transition in the European Union is, in my opinion, the disproportion between the system of rules which proceeds rapidly towards the coordination and connection of the energy systems of the member countries and the industrial policy which is far from being unitary”.
For example?
“For example, the doubling of Nord Stream I mentioned from Germany is in direct contradiction with the European goal of reducing dependence on Russia. In concrete terms, the differences between countries and their different dependence on foreign countries – Poland has a lot of coal, France nuclear power, Italy imports 79% of the fossil fuels it needs – are stronger than common projects. Energy is the litmus test of Europe's ability to proceed with a common line in the face of giants such as the United States and China. And I don't think it is desirable to centralize interventions at all, mind you. Full freedom for businesses, but coordination and the launch of joint projects, yes, that is necessary".
Let's talk about cars: when will electric mobility arrive?
“For electric road transport, all the technological pieces are practically completed: the recharging infrastructures are under construction, the new materials for the batteries - cobalt, lithium, potassium - have been identified. The price of cobalt on the stock market increased by 340% from 2016 to 2018: a demonstration of the surge in demand. On the other hand, however, the cobalt itself, extracted in the Congo and mostly used by Chinese companies, poses a serious problem: the employment of children in the mines. So much so that there is talk of using Blockchain technology to track and block producers using resources from the offending mines. That said, the automotive industry is launched: Volkswagen has declared that it will invest 23 billion euros in potassium batteries by 2020, Tesla has opened plants for electric and hybrid vehicles in China, Volvo has made agreements with electric utilities to activate synergies in electric vehicles. We are on the threshold of a revolution and only the spark is missing for it to take off. And here we return to the starting point: political decisions and infrastructure are needed".
Renewable sources will lead to the abandonment of oil which characterized the development of the twentieth century and the tensions in the producing countries. Will they also bring with them a destabilization of the geopolitical balance?
“Renewables will also change the world in geopolitics. The main piece of this change, in my opinion, is determined today by US strategies. The first novelty is the discovery of shale gas and shale oil in the early 2000s which made the US independent in terms of energy and prompted President Trump to invest in fossil fuels to collect a domestic political dividend.
But it was precisely within the USA that the great contradiction opened up. While Trump and the federal government focus on fossil fuels and Trump cancels the COP 21 global climate agreement, American industry is investing in renewables and decarbonization, with mayors, states and public opinion increasingly sensitive to the environment. On the international level, however, Trump split the OPEC front with sanctions on Iran and causing Qatar to leave OPEC, with support for the embargo of Saudi Arabia, Bahrain, the Emirates, OPEC members, against Qatar for its close ties with Iran.
Trump's America, having become independent in fossil fuels, is then moving towards the prospect of exiting the Mediterranean area which has lost interest in his eyes from an oil point of view. These movements leave gaps that China and Russia tend to fill, China commercially, Russia military, while Europe is completely absent. Italy at the center of the Mediterranean has a strong interest in linking up with Europe to encourage joint action which it needs more than ever”.
At the end of this conversation, his wishes for the future, not just energy, in the face of the great changes we are witnessing.
“The very young today channel their protests about social unease and the inattention of politicians towards the future into the environmental issue. I hope they will be able, by growing politically, to build a new model of development and growth that can combine respect for the environment with the dignity of the person and with those social values that the community feels the need for”.
