Energy Transition in Times of Coronavirus: A Challenge and an Opportunity

By Pierroberto Folgiero, CEO of NextChem

Special to The Digest

It is clear to everyone today that the coronavirus outbreak will produce a relevant crisis at a global level, triggering a serious economic slowdown and it seems likely that the economic downturn will have as an immediate effect a drop in carbon dioxide emissions. In Italy in the first quarter of 2020 the estimate of this drop is around 5-7% in comparison with the same period of 2019, while some analysis show that in China CO2 emissions reduction is much higher.

In the next period to come, industry will tend to give priority to low cost feedstocks and there’s the risk for the attention to the climate impact to be lower than in the past. But this drop in GHG emissions is meaningless in the long term: once the effects of coronavirus crisis will be over, the world will obviously have to face again with the increase of the planet temperature and the consequences on climate changes. Cutting emissions is not something we have to make today for today. It is something that should attain at a long-vision programme. And this is exactly what needs to be discussed today.

Why we must have a long-term view

Several experts are saying this crisis should be seen as an historic opportunity to steer the world in a more sustainable direction.

The challenge today is to plan an industrial recovery which must be rapid but durable at the same time and prepare the industry to reduce risks and economic losses deriving from pollution and climate changes, with their effects impacting on many sector industries. These risks are tangible, not intangible, and are progressively considered a negative value by investment funds. Coronavirus is demonstrating how fragile our system is and what happens to the world when a systemic risk materializes.

Private capitals will be more and more attracted by forward-looking sustainable investments on innovative green technologies which are the key of future resilient economies, rather than from a static keeping of the status-quo. Innovation is the long-term lever of any economic growth. Today, real innovation is focused on those technologies which are capable to create long-lasting value in a future-proof and truly sustainable world.

So, no doubt we must look at tomorrow, but our tomorrow cannot be the next three months or the next three years; our tomorrow must be at least the next 30 years: it is the moment now for long-sighted planning envisaging a long-term investment cycle that will solve critical environmental problems in the decades to come. This is an historical momentum in which politicians may perform as effective policy makers.

Why Governments’ stimulus should facilitate the energy transition

The green innovations have to be introduced today as a mean for recovering the economies affected by the Covid-19 shock. We cannot lose this golden opportunity. Countries’ stimulus packages in the next future should therefore prioritize the support to capital-intensive investments for industrial green and low carbon technologies.

Public stimulus should not only help in the short time, but must be aimed at creating the conditions for realizing those industrial infrastructures and relevant projects which should solve structural country problems (for example new plants for waste recovery and recycling and for the production of renewable fuels for transport and industrial use), help traditional industries in their shift to low carbon technologies and boost a green recovery of traditional brownfield industrial sites.

Fatih Birol, executive director of the International Energy Agency, would like clean energy to be at the “heart of the stimulus plans to counter the coronavirus crisis”, and this is the position of a growing number of economists, experts and also business leaders. This is also the goal of the recently formed European Alliance for a Green Recovery, connecting tens of opinion leaders, Institutions and CEOs from overall Europe, as it is the mean of the recent Manifesto of the Italian Foundation for Sustainable Development (where we are among the Founders), and the message of the Symbola Foundation within its Climate Manifesto, that we also signed.

The debate whether the EU Green Deal should go on or be stopped is a non-sense, given that if we need to help the economy to come out from this black hole, we have better to do it in a green way rather than in a brown way.

What it should be done in concrete

Governments should more courageously promote sustainable investments which save natural resources while deploying at full swing the circular paradigm, to support concretely recycling technologies, to incentivize the production of goods from bio-based feedstocks for industrial and retail market, to promote the production of chemicals from scraps and waste. Effective measures should help industrial processes to be fed with more renewable sources, while capturing and recovering the CO2 already produced. Real tools should be introduced like tax premiums for those production processes that improve energy efficiency and carbon footprint and that make those industries more competitive because less exposed to future risks.

In other words it’s time to turn the phase of emotional mobilization into a concrete phase of “putting the hands in the mechanism”, to transform the already achieved Public Opinion consensus on green economy  into a set of new industrial policies which can boldly reshape the future. We need a regulatory framework that will create the pre-conditions for the progressively available Green Capitals to be employed. We need, for example, a sort of “preferential lane” for the permitting procedures of green and circular infrastructures and plants so to mitigate the risks of bureaucracy. We need a CO2 emissions stringent regulation able to procure the monetization of the avoided GHG in the profit & loss of a company.

The Energy Transition Recipe for Resilience

National economies should become as more resilient as possible to shocks like Coronavirus, as we have understood how much it is relevant for a country to be self-sustaining. Green chemistry can create a basket of local productions that should be available at country level to make the country itself independent as far as materials, products, energy are concerned.

Despite of the benefits of globalization, we should evaluate and enhance also the benefits of localization, trying to find the right balance for a clever management of resources. How? Improving circular economy to save natural resources, recovering as much as possible waste materials that are a treasure of precious chemicals and reducing, so far, our dependency from other geographies. Developing new green technologies in a ratio of proximity to bio-feedstocks – which are the real challenge for a future sustainable economy – and improving local economies at the same time. Reducing energy waste and carbon emissions with the application of low carbon technologies and industrial equipment sustainable upgrading.

Italy is the second manufacturing power of Europe despite of the fact that we have one of the highest costs of energy, also due to limited hydrocarbon natural resources. The transition to new form of energy combined with our knowhow and entrepreneurship can truly work as a game changer. Similarly, a leapfrog development in digitalization could be a disruptive solution to address and valorize the expensive Italian cost of labour.

NextChem experience and our recipe for resilience

NextChem, the green chemistry company of Maire Tecnimont Group, has developed solutions in all these directions. Our proprietary upcycling technology allows the perfect circularity closed loop of plastic waste, as it permits its transformation into high performance polymers which can substitute virgin plastics. Our bio-based technologies for green chemistry allow integration with existing plants to produce intermediates and biofuels from residual fats and waste oils. Our waste-to-chemicals technologies include the production of circular syngas, circular hydrogen, methanol and other precious chemical molecules from non-recyclable plastics and refuse derived fuel, with a double benefit, both on waste circularity and on CO2 cut, being also economically sustainable.

We are furthermore developing a Circular District Model which includes proprietary and licensed technologies in an integrated scheme, with significant operational synergies and high environmental benefits. This Circular District Model can be a distinctive solution for brownfield industrial sites which need to be decarbonized, or redeveloped within a greener footprint, for high-energy and fossil feedstock industries, as the steel, glass, waste management and the petrochemical ones.

An ingredient of this resilience is also the capability to digitalize all sectors of our economy as much as possible. Maire Tecnimont has been among the first adopters in its industry of the leading ICT technologies enabling full cloud and virtualization of industrial infrastructure in order to perform from remote almost all activities. This transformational program has allowed Maire Tecnimont to face the current situation with an adaptive approach.

A time for action

I think this is the time to share with the key decision makers at an institutional and business level a bold plan for an industrial recovery with positive impact on the economy, the society and the environment. Nobody will forget these dark times for their impact in terms of human lives, unemployment, companies’ suffering. But we have an opportunity to make these time remembered for the impulse for doing those things that our countries would have never done in normal times. Let’s move forward.