When I was little, I dreamt of working at Italian oil giant Eni. My father used to work there and, for me, Eni was a magic world of trips on helicopters with my dad, to reach offshore platforms where kind men used to give me toys and candies. No wonder I wanted to work there! Then I grew up, came to the UK and joined AWAW… things have clearly changed. [Not as many kind men here? – RH]
However, the recent announcement of Eni’s 2018-2021 strategic plan has rekindled my interest in the company.
When Eni’s chief executive Claudio Descalzi presented the state-owned utility’s four-year plan last week, Italian media praised the commitment to renewables shown by the world’s 14th largest oil company. But a closer look reveals that Eni is only taking early steps in the renewables sector and there is still a long way to go before it could achieve a proper green transition. Let’s look at its involvement in renewables so far.
In 2015, Eni founded a division called ‘energy solutions’ with goals to cut emissions, develop renewables projects, and promote use of gas. It has so far built only 63MW of renewable energy capacity.
The oil firm got involved in renewables again in 2016 when it signed an agreement with General Electric to develop large renewables projects in Italy, with onshore wind its preference. We haven’t yet heard any more about this, but the first joint project of the partnership should be announced this year.
And finally, last year Eni signed a two-year framework agreement with Norwegian oil company Statoil – now Equinor – to identify and develop new projects in order to integrate renewable energy solutions in the existing oil and gas fields.
But Eni’s 2018-2021 strategic plan is its most significant commitment to renewables so far. The Italian firm is set to invest €1.2bn to develop 1GW of new wind and solar capacity by 2021. This includes 700MW of new wind and solar projects in emerging markets where the Eni is already well-established, with a particular focus on Africa, and up to 220MW of new capacity in Italy. The firm aims to bring its renewable energy portfolio to 5GW by 2025, although oil and gas will remain its core business.
In fact, the €1.2bn investment in renewables is part of a €32bn plan, of which more than 80% will be dedicated to its fossil fuels extraction business. In particular, Eni is set to invest €3.5bn to drill up to 115 new oil fields in 25 countries. This is far more ambitious than its plan for renewables – and shows that energy transition is still a long way off. As people get more savvy about greenwashing, Eni would be well-advised to not over-promise on its green plans.
It is not the first to seek to strike this balance. We have seen other oil companies, including Engie, Shell, Statoil and Total looking with more interest at investments in renewables over the last decade, while keeping their business focus on fossil fuels.
And yet, Eni’s commitment to renewable energy is also very limited if compared to those other major players. Why is that?
Well, Eni’s oil drilling operations, in particular in the neighbouring African regions, are vital for Italy. The state-owned company has been drilling in Africa since 1950 and its activity there is key to satisfy Italy’s energy needs. Italy imports 86% of its energy, and oil and gas account for around 65% of the Italian energy mix. The country could not cope with a reduction of Eni’s oil and gas fields.
The 700MW of wind and solar projects that Eni plans to build in emerging markets, including in Africa, could represent a turning point for the company’s renewables business.
The oil firm is well-established in Africa and a renewable energy investment in the region would take advantage of its knowledge of the territory. It has potential but, for Eni, a major shift to renewables is still a long way off – and isn’t yet big enough to reignite that child-like sense of wonder I once had.
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