What motivated the decision to combine Energy Transition, Technology and Institutional Affairs under your management?
The energy transition is a complete transformation for Repsol. We believe that technology and capabilities are central to this process, aiding us in the significant challenge of mitigating global warming. Integrating institutional affairs is a sound move in regions like Europe where regulations, legislation, and policies are integral drivers of the energy transition, closely interacting with technology development and the financial feasibility of future investments.
We perceive a close relationship between technology and regulatory activities. Their integration ensures that we are not just innovating but also aligning our innovations with the existing and emerging legislative frameworks. This alignment equips us to navigate the complex, multifaceted pathways of the energy transition efficiently.
How significant are renewable energy assets in Repsol’s portfolio, and how are you expanding this segment of your business given your principal focus on oil and gas?
Our focus on renewables began in earnest post the Paris Agreement. We realized the necessity to decarbonize our energy mix, a task that extends beyond reducing emissions from our operations to addressing emissions from the use of our products. Renewable electricity generation, especially hydro, wind, and solar, has become a significant aspect of our portfolio, together with “renewable molecules” such as carbon neutral fuels or hydrogen.
We are committed to a balanced energy mix that evolves to become more decarbonized each year. Our objective is not to abandon oil and gas abruptly but to balance their production with a robust expansion into renewables.
This approach is integral to our transformation journey, ensuring that we are not just meeting the current global energy needs but are also prepared for the future demands of a world gravitating towards sustainable energy.
Do you see the approaching end of oil and gas, in light of the green transition?
All credible scenarios, even from the most climate-conscious entities, incorporate oil and gas in the energy mix up to 2050, although in declining quantities. Our strategy aligns with this outlook. We maintain a flat production of oil and gas throughout this decade, but we are also investing in renewables and low-carbon fuels to ensure our company’s growth and relevance.
The conversation about the green transition should be holistic. While we are conscious of the need to reduce emissions, we are also aware of the present and future energy needs, especially in hard-to-abate sectors and industries that are crucial to the world economy. Our strategy is dual-faceted – continuing with oil and gas production while also venturing extensively into renewables and the production of renewable molecules from alternative feedstocks, such as organic waste material or the combination of renewable hydrogen and captured CO2.
Can you tell us about Repsol’s involvement with Sustainable Aviation Fuel (SAF) and the development of that market?
The development of markets like SAF is significantly influenced by fiscal incentives or regulatory imperatives. In Europe, regulatory mandates require an increasing incorporation of SAF in aviation fuel mixes. By the end of this year, our new plant in Cartagena will be producing advanced biofuels, including a significant portion of SAF, responding to these regulatory signals.
SAF production is an example of how regulation and market demands intersect. Airlines are obliged or willing to pay a premium for decarbonization, and consumers will eventually bear these costs. Higher costs and prices are a reality often understated in public discourses about the energy transition but is essential for the evolution and maturing of markets for new, sustainable fuels like SAF.
Can you elaborate on Repsol’s partnership with Ryanair?
We have signed a long-term SAF supply agreement with Ryanair that will help them comply with their climate commitments This partnership is rooted in the broader industry shift towards SAF. Every airline will need to incorporate a percentage of SAF, but some companies like Ryanair have chosen to guarantee its supply in advance, I see it as a signal of climate commitment. We are collaborating with other airlines on SAF, also. However, there is a cost barrier, as SAF is still significantly more expensive than traditional jet fuel. The entire process, from collecting diverse organic waste to converting it into SAF, requires substantial investment. The price discrepancy between SAF and conventional jet fuel reflects these initial challenges of establishing a new, sustainable fuel ecosystem.
Do you agree with the International Energy Agency’s stance that COP 28 is an opportune time for oil and gas companies like Repsol to publicly commit to sustainability?
Absolutely, COP 28 presents an excellent platform for oil and gas companies to articulate their commitment to sustainability. In the past, discussions at events like COP focused primarily on renewables, often sidelining the oil and gas sector. However, it is essential to recognize that oil and gas currently power the world, and transitioning to alternative energy sources is a gradual process. Repsol is part of the Oil and Gas Climate Initiative, committed to reducing emissions and engaging in ongoing climate discussions.
Continuing this thought, the realization that national oil companies contribute significantly to oil and gas production, and hence emissions, brings a new perspective. It underscores the need for a collective commitment to decarbonization from both private and national companies. As the world watches developments at COP 28, Repsol is eager to demonstrate its evolving role in the global energy landscape, balancing traditional oil and gas production with significant strides in renewable energy initiatives.
How does Repsol respond to accusations of greenwashing, given its historical focus on oil and gas and current investments in renewables?
It is understood that extreme climate activists may hold unyielding perspectives on the elimination of oil and gas. However, such views are often unrealistic, given the current global dependency on these energy sources. For Repsol, actions speak louder than words. The company is transparent about its decarbonization goals and efforts, regularly communicating specific targets and achievements to investors and the wider community.
In addressing greenwashing concerns, Repsol emphasizes its tangible actions and investments in low-carbon initiatives. The company’s transformation from a traditional oil and gas entity to one significantly investing in low-carbon and renewable energy is evident. By being transparent about its actions and investments, Repsol aims to demonstrate its genuine commitment to the energy transition. This approach seeks to balance the company’s historical role with its evolving commitment to a sustainable energy future.
As a closing remark, what is your message to the public at COP 28 about Repsol’s and the oil and gas industry’s role in the green transition?
It is crucial to underscore that Repsol, like many in our industry, has been a reliable provider of the energy that the world and our clients require. Presently, a significant portion of this energy is oil and gas. We are rapidly advancing our transformation towards cleaner energy solutions. Regulations are instrumental in guiding economic activities towards newer, albeit more expensive, energy forms - a necessary shift to address climate change.
We take pride in our current contributions and are profoundly committed to our specific, outlined goals to expedite the decarbonization of our energy mix. COP 28 is a pivotal juncture, an opportunity for the oil and gas sector to collectively assert its role as part of the solution. Our ambition is not just articulated in words but will be validated by our actions and achievements, such as meeting our target of 6 gigawatts of renewable electricity by 2025. Our satisfaction with COP 28 will be measured by the recognition of our sector’s contributions to a faster global energy decarbonization and the visible leadership of Repsol and other peers.
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