The energy sector is immersed in a total transformation of its traditional business model. From fossil fuels to green energies (solar, wind and hydrogen, among others), although the transition does not seem to please everyone equally. “Fossil fuels that still drive the world economy are primarily responsible for climate change,” Antonio Guterres, Secretary General of the United Nations, noted earlier this year. Some statements that came days before the large oil companies in the sector announced historic profits in 2022 due to the energy crisis derived from the War in Ukraine. These figures once again put the companies that produce fossil fuels at the center of the debate. “This is not like a button that you turn fossil fuels ‘off’ and turn renewable electricity ‘on’,” says Clara Rey, Repsol’s director of sustainability. This industrial chemical engineer is in charge of ensuring that the Spanish company does not deviate an inch from the marked path to comply with its decarbonization path that ends in 2050. She knows that the focus of regulators, investors and other agents is on her field of action environmental, but “we must not forget the ‘S’ of social, there we talk about people and not numbers”. Rey receives us in her office, in her house for thirty years.
-Three decades at Repsol, practically your entire professional life, how has the company evolved in terms of sustainability?
-The evolution is tremendous and has been in step with the evolution of society in this regard. It is also true that the company already had an awareness of caring for the environment. We have evolved with the times and, furthermore, being pioneers in it. We were the first company in the sector to adhere to the Kyoto Protocol in 1997. We also adhered to the Paris Agreement and then we have been the first company to publicly set in 2019 to be net zero emissions. If we talk about other aspects like this, what has to do with human rights and relations with communities, it has also been historical. This company has thought that sustainability, although it was not called that at the time and it was environment or corporate social responsibility, had to be that social license to operate.
-Last year you made the leap to directing in this area… what is the most complicated thing?
-The most complicated? I would tell you the acronyms (laughs). Seriously speaking, the most complicated thing is the reporting and the establishment of the ESG criteria, because the social demand in these matters is evolving very quickly. There are many attempts to standardize, but it is not easy to do so because a company’s behavior in this matter depends a lot on what it does or what its global reach is. We have to attend to countless reporting frameworks and each one asks you for indicators in a certain way. In addition, you also have to satisfy what your interest groups are asking of you and, then, you have the regulation that also sets their line.
-“We are the first energy company to establish the goal of zero emissions for 2050”, at what point are you?
-We have a decarbonization path with a series of intermediate control points. The first thing we did is a carbon intensity indicator that measures the CO2 emissions of our products, both in production and what our customers consume, divided by the energy we generate and make available to people. We have to make that reach zero and we do it by generating more and more renewable energy. We have several intermediate points. The first is in 2025, where we have to reduce 15% compared to the base year, which is 2016. In 2030, 28%; in 2040, 55% and zero in 2050. This is our roadmap and, right now, we are complying with it. So we have those control points and right now we are on the right track. We have a series of levers that we are also putting into practice based on their technological proximity, because technology is key for us to succeed in this challenge. The first step is to be more efficient to reduce emissions, then it is to transform our refineries so that they go from being crude oil refineries to multi-energy hubs and treat all types of waste. We have to modify them, but not only to produce advanced biofuels, but also to produce electrified renewable hydrogen. In addition, we are promoting the development of technologies such as geothermal energy or the capture and use of CO2, because we not only need to stop emitting, we also need to capture the CO2 that is already in the atmosphere.
-How mature are these technologies? Do they represent an alternative to fossil fuels?
-The improvement in efficiency and the reduction of emissions from our current assets are fully mature. Advanced biofuels made from waste are also very mature. This year we are starting up a plant for this. The hydrogen? Well, it is a product that is less technologically mature, so there are different technologies, some of them have to be made more efficient and others have to be developed. In the end, all these technologies must be given a chance, we always talk about technological neutrality. The problem of the energy transition is very complex and it is impossible to cover it with a single solution and we have to count on all the technologies, with all the potential solutions, because the needs are very diverse. A person who lives alone in Madrid does not need the same as a family of five members who lives in a town in Cáceres. Their mobility needs are not the same, their needs in their home are not the same either. Hydrogen is not going to solve everything, electrification is not going to solve everything.
«The problem of the energy transition is complex and cannot be addressed with a single solution»
-So, what will Repsol’s business be in 2050?
-It will be a company that will supply energy to its customers as it does now.
But what kind of energy?
-It will be a decarbonized energy and, probably, it will be a mix that will include renewable electrical energy, of course, but it will also be advanced biofuels and it will be synthetic fuels, and it will be hydrogen for certain applications and for certain uses, and it will probably be mobility platforms and They will be distributed generation systems in which users generate their own energy and consume it. In the end, what we will continue to supply will be energy, but it will be a different energy.
-As a society, are we prepared for the energy transition? Can decarbonization be accelerated or not yet?
-More than speeding up, what you have to do is make it smart and taking safe steps. That’s what’s going to help us speed it up. Lately in Europe, we are seeing that things are not going well at all, because we have supply and price crises. A lot of emphasis is being placed on decarbonisation and not on price and security of supply. To accelerate the energy transition, we must do it safely and what we have to do is open our minds. This is not like a button that you turn fossil fuels ‘off’ and turn renewable electricity ‘on’, that in the end what it generates is shortages and what it generates is supply problems, high prices and in the end who The most disadvantaged are the most disadvantaged classes. However, if it is approached without ideological prejudices and with technological judgment, we can decarbonize faster. But this does not happen to eliminate fossil fuels today, but rather we have to improve efficiency.
-Let’s say that a citizen picks up the newspaper and reads that during this 2022 the income of the oil companies, of the energy companies have been historical in the results and the first quarter the same. How can you explain that he is going to stop doing a business that makes him a lot of money?
-Taking actions. Let’s see, I think the best way to explain it to them is by taking action. In 2022, when there was such a brutal increase in energy prices, we anticipated the discounts made by the Government. This is, let’s say, the first sign of commitment that Repsol has given to society. The second is our strategic plan that was launched on the 21st, which has a time horizon until the 25th, and which already includes all that investment plan that will allow us to meet our objectives until 2030.
-He spoke of hydrogen as a more distant future and focused on biofuels. What are the barriers to the non-availability of the latter?
-The first has been the regulatory uncertainty very clearly, because logically they are processes that require technological development and a very relevant investment. So, not having a horizon to say “well, this is going to continue beyond 2035” has been a very clear barrier in the production of advanced biofuels from waste. It is important to emphasize waste, because it is not about manufacturing biofuels that compete with crops that are destined for human or animal food. Then there is the technological challenge to manufacture these products and to be able to use more and more diverse waste and to be able to increase the amount of raw material available that we have in our territory. In the case of synthetic fuels, efuels, the challenge lies in having competitive renewable hydrogen production and also competitive atmospheric CO2 capture technologies. It is a strong investment that must be made and for which we have to visualize a long-term return. There are very relevant levers that promote these developments and that, in addition, the regulator should also take into account that it is how we promote the competitiveness of our industrial fabric, how we maintain quality employment.
-You were talking about advanced biofuels from waste, the people of Madrid can take used cooking oil to their service stations. For when in all of Spain?
-It is a pilot project, because it is about organizing a reverse logistics system. In any case, in the clean points there are places for the collection of used oil. In addition, not only do you have to think about homes, the restaurant and hospitality sector is very relevant.
«Fossil fuels cannot be ended at once, that would generate price crises and shortages»
-If we talk about biofuels it is inevitable to think about aviation and SAF (Sustainable Aviation Fuel). Why isn’t it already an alternative to kerosene? If you ask the sector they say they are ready… What’s wrong?
-There is not so much SAF, because we do not have advanced biofuels. This has not been developed before because the future of these fuels is not entirely clear. Right now, you feed a refinery with crude oil and obtain a series of products from propane to asphalt. Having a SAF-only plant is much more expensive than having a plant that has a mix of products, because the raw materials, especially in the case of waste, are very heterogeneous. It will help the development of these fuels that the legislation is clarified and that a car that runs on an advanced biofuel or with a synthetic one is considered exactly as neutral in emissions as an electric car.
-I mentioned at the beginning that in this area there are many acronyms, one of the most frequently mentioned is ESG (Environmental, Social and Governance, in English). Of each of the letters, which is the most difficult to manage?
-I would say that they are just as important and just as complicated, but the magnifying glass is put on E. It is true that we have to have very intense and in-depth conversations with investors so that they understand what we are talking about and the numbers we are giving. But managing people for me is the most delicate, because there you are dealing with people, they are not numbers. Governance, I think, is probably the easiest point, because we have it embedded in our DNA. We are a company that historically has been very committed to having standards and complying with them.
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