May 2021 entered in the history of the oil and gas sector, the two substances that gave the impetus to the greatest economic and technological leap of human civilisation. On May 18, the International Energy Agency published a roadmap of the world economy by 2050. The document mentions drastic measures, such as banning the sale of gas boilers after 2025. Another measure is the suspension of the search for new hydrocarbon fields, because those already discovered are enough to produce substantial greenhouse gases emissions and stop hopes to reach the Paris Agreement. These measures are enough to provoke an uproar: the large oil & gas companies sketch, now taken aback by an agency that has always had an eye on them.
The clamour has not yet died down when; eight days later, the oil companies' "Black Wednesday" arrives. A Hague court ruling obliges Dutch giant Shell to raise greenhouse gas abatement targets. Meanwhile, on the other side of the Atlantic Ocean, a storm hits two other top companies in the sector. Chevron shareholders reject the emission reduction plan proposed by the company's top management because it is too timid. At ExxonMobil, the situation is even worse: a small company of environmental activists, who owns 0.02% of the shares, was able to bring to the board of the company two of its members, ousting two managers held responsible for the lack of a credible business plan for the decarbonisation of the company.
The motivations of the rebels within the US giants are very concrete: environmental immobility will create a strong economic damage to shareholders, and money is no joke. However, some argue that this move will not help the climate, because the state oil companies of undemocratic countries will compensate for everything that is taking place here. A valid argument, but useless in our settings: here, the courts and assemblies decide, not a dictator.
Unfortunately, the echoes of the May hurricane reached Italy very lightly. Yet the question concerns us closely. Once upon a time there were two fantastic companies. One was a world leader in the exploration of hydrocarbons, protagonist of memorable discoveries in every corner of the planet. Another operated one of the largest gas transportation networks in the world. All good until, out of the blue, they realised that their business has no future beyond the short term.
Their awakening was late: things had been manifesting for many years, but we preferred to haggle. When epochal crises erupt for an industrial sector, companies have two options: change radically or prolong the agony until death. Some proposals that the two Italian companies are making, such as the geological sequestration of CO2 in Ravenna or the use of gas pipelines to transport hydrogen / methane mixtures, go in the direction of agony. This is a problem for everyone, as the companies in question guarantee important dividends for the state budget and millions of people have invested hard-earned savings in their shares. After all, saving those destined to leave the market at any cost is useless. The fate of Kodak, Nokia and Blockbuster give us all a lesson.
The non-choices of our two companies are plastically represented by the logo of one of them. For years, all the competitors have launched a massive restyling of their image. Here, we still have a dragon that breathes fire. Very vintage and stylish , nothing to say. But if there is one thing that everyone has now understood, it is that the less we burn the better, when we produce energy. To acknowledge this and act accordingly, you need top management ready for the necessary changes, not clumsy attempts to continue on the old path.
It is a crucial moment for two large Italian companies, once at the forefront. Will the future of ENI and SNAM be a great opportunity or a colossal problem?
This article first appeared on Sapere and was translated from Italian. Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.
Nicola Armaroli is Research Director at the Italian National Research Council (CNR) and member of the Italian National Academy of Sciences. He studies the conversion of light into electricity and fuels and the transition of the global energy system. Nicola has delivered tens of invited lectures worldwide and published hundreds of scientific articles.