Working together for a just transition

Europe needs an open and transparent reflection on the costs of the energy transition to ensure that it can be done not only as fast as possible, but also as fairly as possible.
Caption: Josu Jon Imaz, Chief Executive Officer at Repsol | Source: Repsol

By Josu Jon Imaz

Josu Jon Imaz is Chief Executive Officer at Repsol

16 Sep 2021

Industry is key to getting European society back on the path to prosperity after the pandemic and achieving a lower emissions future. Covid lockdowns have shown that industry is crucial in times of crisis. It supplies society with essential goods, and creates stable, high-quality jobs, generating wealth in the area where it's based.

We must ensure we emerge from this crisis with more industry and more quality employment, not less. This will also allow us to guarantee an energy transition that is both socially and geographically just.

It is vital that the European Union and the member states create balanced decarbonisation frameworks that promote reindustrialisation, ensuring a level playing field for companies and different technologies to participate in the recovery and on the road to zero net emissions. Of course, Europe's Next Generation funds are also an important tool to reach this goal.

Europe needs to think strategically about the role of its industry in the future within the global framework. Recently, CO2 prices reached €60/t, causing enormous damage to the industry’s competitiveness. We have seen electricity prices skyrocketing in an unjustified manner, with great impact on inflation and vulnerable sectors of the economy and society.

“We’ve seen electricity prices skyrocketing, with great impact on inflation and vulnerable sectors of the economy and society. The European Commission must act”

I believe that the European Commission must act to prevent investor speculation on allowances, and thus on the price of CO2. Europe needs an open and transparent reflection on the costs of the energy transition to ensure that it can be done not only as fast as possible, but also as fairly and cheaply as possible, without penalising the consumer nor European industrial jobs.

A particular challenge for European industry is competition with other regions where companies don’t meet the same environmental and human rights standards. We shouldn't promote policies that lead to the closing of our steel or aluminium plants and the loss of local jobs when that just means that these products will be manufactured elsewhere in less efficient and more polluting factories.

When the EU imports these products, we cannot wash our conscience of those CO2 emissions. Therefore, carbon leakage protection should be strengthened in the upcoming revision of the ETS and the proposal for a European Border Adjustment Mechanism. The latter will be necessary for the ETS to work in the long run.

Similarly, when we import batteries for EVs produced with high carbon emissions in China, we cannot just start measuring emissions within our borders and only look at what comes out of the tailpipe. It’s cheating at solitaire. Emissions are global, the CO2 molecules in our atmosphere are the same whether emitted in Asia or Europe, so we must consider the life-cycle emissions of our products.

Keeping in mind that much of this regulation will only apply to European actors and European markets, to produce an efficient response European external action should also start calling for a more ambitious international pivot in the fight against climate change, matching its own efforts.

The industrial sector currently faces other important challenges. The need to increase competitiveness through automation and optimisation of industrial processes stands out among these, as does sustainability through energy efficiency, developing new products with lower environmental impact, and committing to circular economy.

At Repsol, we take these challenges seriously, but we also see them as opportunities to evolve and stay relevant to our customers and society in the future. To maintain the high competitiveness of our industrial complexes, we are transforming them into digitally driven multi-energy hubs, capable of manufacturing products with a low, zero, or even a negative carbon footprint. It’s one of the company's main strategic axes to reach its goal of zero net emissions by 2050. Achieving this not only requires investments in infrastructure, but also boosting R+D and scaling the use of advanced digital tools throughout the value chain, as well as galvanising employment, bridging the training gap to create high-skill jobs, and attracting and retaining talent in Europe.

Energy transition cannot be a synonym for electrification. Europe needs to promote different low-carbon solutions that allow European companies, such as Repsol, to maintain their leadership and avoid the outsourcing of the development of new energy solutions like advanced biofuels, synthetic fuels, and renewable hydrogen that can help us overcome the decarbonisation challenges in sectors where electrification is currently unviable, including heavy industry and long-haul, air, and maritime transport.

All technological solutions for decarbonisation are valid and complementary, and incentivising them all will accelerate the energy transition. The challenge is to commit to those that contribute to reaching our goals in the most cost-effective way, generating opportunities for us to advance.

“Emissions are global, the CO2 molecules in our atmosphere are the same whether emitted in Asia or Europe, so we must consider the life-cycle emissions of our products”

There is also a need for an empowering regulation to guarantee the competitiveness of renewable hydrogen as soon as possible – a strategic pillar for Repsol’s net zero emissions by 2050 aim. Our company currently operates the largest hydrogen plant in Europe and has the expertise, experience, and technological projects to play a leading role in renewable hydrogen in Europe and be at the forefront of the growing market in the Iberian Peninsula. This can serve current industrial needs as well as new uses in mobility, heating, and energy storage.

We have a target of 550 MW equivalent of installed capacity by 2025, and we are working with different technologies to reach this goal, including electrolysers and the use of biogas from organic waste instead of natural gas. We are also developing a proprietary technology – photoelectrocatalysis – that will be able to use solar energy to turn water directly into hydrogen without the intermediate step of electrolysis. This project recently received EU funding, and a pilot plant at our Puertollano industrial complex will be operative in 2023. We expect this technology to be commercially viable by 2030.


This content was commissioned by Repsol and produced by Dods

 


This article reflects the views of the author and not the views of The Parliament Magazine or of the Dods Group

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