Energy CEO calls Europe’s ‘foolish’ dependence on natural gas

Enels Francesco Starace photographed during the World Economic Forum in Switzerland on May 24, 2022. During an interview with CNBC on Friday, Starace said that dependence on gas was “stupid”.

Jason Alden | Bloomberg | Getty Images

The CEO of Italian energy company Enel told CNBC on Friday that Europe̵[ads1]7;s reliance on natural gas was “foolish” and argued that reducing reliance on fossil fuels represented a better option in the long run.

“I think we finally understood how addicted we were to gas, how foolish this addiction is, and how we can fix this,” said Francesco Starace, speaking to CNBC’s Steve Sedgwick.

During an interview at the Ambrosetti Forum in Italy, Starace was told that in some people’s view, oil and gas would be the key to energy for the next 25 years, a claim he disputed.

“I totally disagree, because this is a view that comes from, say, 15 years ago,” he said. “Was it wrong at the time? No, it wasn’t. Now it’s wrong.”

“The economy can work much better, and rely much less on fossil fuels than people think,” he went on to add. “It will take maybe another two years for everyone to understand that – but we’re there.”

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Despite this optimism about the future, today’s reality on the ground is enormously challenging.

The current situation in Europe, where many countries are trying to wean themselves off Russian energy following the Kremlin’s invasion of Ukraine, illustrates the crucial role fossil fuels still play in society.

With the colder months approaching, European nations have been looking to build up gas storage in a bid to ensure security of supply.

Looking ahead, Enel’s Starace expressed confidence that Europe had prepared for the coming winter.

“In terms of storage, Europe … did the right thing,” he said, noting that most countries were “quite full.”

“Now the question is what happens if gas is completely cut off from Russia,” Starace continued. “Well we’re almost there, the cut is actually almost there.”

“We have a view, and there are many studies that show that with some victims, [such as] two notches with the temperature down, and some attention to gas consumption … Europe can make it through the winter.”

“The question is when we get to spring [of] 2023 with totally depleted reserves, and gas is still not flowing, he said.

“Is Europe able to re-establish storage, with all the backup of liquid gasifiers and energy coming from other parts of the world? I think that’s going to be the big challenge.”

Enel Group – whose main shareholder is the Italian Ministry of Economy and Finance – has said it will exit gas production by 2040. It also plans to exit the retail gas market by 2040.

European concerns

Starace’s comments came on the same day as the EU’s climate chief, Frans Timmermans, hammered home the urgency of the situation facing European economies in the face of rising energy prices and concerns about supply.

“We need to do everything we can to address this energy crisis and make sure we do everything we can to reduce prices so that our citizens can still afford to heat their homes this winter,” Timmermans, who spoke to CNBC’s Silvia Amaro at an event in Bali, Indonesia, said.

He also stressed the importance of member states being “in a position to address the issue of windfall profits, if necessary.”

“So we will try everything to make sure our energy markets work, and work in a way that addresses the problems we have to deal with.”

Timmermans was asked if “doing everything” meant that the EU agreed in the short term to introduce caps on the prices of gas and electricity.

“Well, nothing is off the table right now,” he replied. “We are preparing for all this, but we have to make sure that what we do does not cause more harm than it helps us solve the problem.”

“So we have to be extremely careful. It took us 30 years to build the energy markets, so we have to make sure we address today’s problem without creating long-term problems.”

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