Enel CEO: ‘Please Put Price on Carbon’

The head of Europe's largest utility said countries need to put a price on carbon in order to cut emissions of greenhouse gases and meet climate targets. Francesco Starace, CEO of Italy-based Enel, speaking Oct. 5 at the Reuters Impact virtual summit, said the world's larger economies need to lead on developing strategies and taking more action to reduce emissions to meet the targets set in the 2015 Paris agreement.

Please put a price on carbon," Starace said at the event, being held less than one month before the United Nations' COP26 conference on climate change begins in Glasgow, Scotland. Many analysts agree that putting a price on carbon-be it via a tax, emissions trading system, or cap-and-trade strategy-is needed to lessen emissions from the power generation sector and help cleaner energy resources better compete financially with legacy generation such as coal- and natural gas-fired power.

The World Bank earlier this year reported that only about 20% of global emissions were involved in a carbon-pricing scheme, and said most of those prices were not high enough to achieve the Paris agreement's target of a rise in global temperatures of less than 2C, or preferably just 1.5C, above pre-industrial levels.

Climate Change Conference

The COP26 event in Scotland will be the next gathering of representatives from about 200 countries that signed the Paris deal.

Put the price on carbon in your own territory ... and then worry about how that carbon price relates to the other carbon prices," Starace said Tuesday. But price it, because if you start with that then this will finally adjust."

Francesco Starace is CEO of Enel. Courtesy: Enel

Enel, among the world's largest companies when it comes to cleaner, or green" energy, has a goal to cut its carbon emissions by 80% by 2030. Its strategy includes increasing its clean energy generation capacity to 120 GW over the next several years, up from about 50 GW of capacity at the end of June this year. Enel's efforts in cleaner energy include deployment of virtual power plants and wind farms; two of the utility's projects in the U.S. received Top Plant awards from POWER this year.

End of Coal Mining

Frans Timmermans, climate commissioner for the European Union (EU), speaking Oct. 2 at a pre-COP26 meeting in Milan, Italy, said We're fighting for the survival of humanity" when it comes to addressing climate change. Timmermans said market forces would determine some actions; he said he expects coal mining will disappear as coal-fired power generation diminishes and mining becomes uneconomic.

I'd be highly surprised if there is still a significant coal mining industry after 2040," Timmermans said, while acknowledging that India and China, the world's leading coal producers, still rely on coal-fired power generation for much of their electricity. Both China and India have said they are working to reduce their carbon emissions.

We're in a very constructive dialogue with India and China, [and] there is a wish by both countries to be part of the success," Timmermans said.

Graham Ault, executive director at Smarter Grid Solutions, a Glasgow-based renewable energy company that also has offices in New York, earlier told POWER that with significant strides forward in policy commitments from China," along with work from the Biden administration and EU leaders on supporting cleaner energy resources, with focus turning to COP26 in Glasgow ... we expect the political world to heighten attention on zero-carbon energy.

We now expect attention to turn to the speed and quality of [a] clean and smart energy rollout as the evidence shows the best ways to deliver renewable energy into an optimal whole system,' " Ault said. This will include implementing investment, incentive, stimulus, market, and system change orders that reflect the growing climate urgency."

U.S. Envoy Kerry Optimistic

U.S. Climate Envoy John Kerry, also part of the meeting in Milan ahead of the upcoming 12-day summit in Glasgow, said Saturday he is optimistic that the world's major economies will come together to reduce emissions. Kerry said he expects enormous progress" on climate goals during the COP26 event, while also saying the largest countries must stretch to do more" when it comes to combating climate change.

The bottom line is, folks, as we stand here today, we believe we can make enormous progress in Glasgow, moving rapidly towards the new goals that the science is telling us we must achieve," Kerry said.

Starace on Tuesday said companies must invest in cleaner energy technologies today in order to have a chance to meet emissions reduction targets, rather than waiting for energy markets to force the issue. He said governments and banks should look at setting long-term pricing deals for energy to help avoid the large price fluctuations and market swings that have impacted prices, especially in Europe, over the past few weeks.

The fluctuations and surprises we observe today are exactly a demonstration of this," said Starace. They are short-term convulsions of a system that doesn't work anymore."

Kerry on Saturday said improvements are needed. He said an analysis of 191 pledges submitted by countries regarding emissions reduction efforts showed emissions would jump by 16% by 2030 from current levels. By contrast, just 89 pledges detailed lower emissions, resulting in about a 12% reduction in emissions.

All countries have to sprint and join together to understand that we are all in this together," Kerry said. We now have about 55% of global GDP [gross domestic product] committed to undertake tracks that will hold the temperature to 1.5 degrees. There are other countries now sharpening their pencils."

-Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

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