What can bring together scientific evidence, new technological frontiers, financial interests and the desire for a fairer, more equitable society? Only electrical energy, a powerful – perhaps the most powerful – way of facilitating development by creating long-term shared value while helping to preserve our vital ecosystem.
This, in short, is the message promoted by our Group in a series of encounters held in New York at the same time as the UN General Assembly’s week of debates, which brought together leaders from all over the world, to discuss the action needed to ensure the future health and prosperity of our society and our planet.
Enel’s CEO Francesco Starace, CFO Alberto De Paoli, Chief Innovability Officer Ernesto Ciorra and Director of Communications Roberto Deambrogio had a packed schedule of appointments, from the Climate Action Summit, chaired by UN Secretary-General António Guterres and focussing on measures to combat climate change to the Bloomberg Global Business Forum, which discussed solutions to enable the financial system to play its role in this campaign, the CEO Round table of the Global Compact on financing the UN’s 2030 Agenda, as well as the SDG Business Forum on the private sector’s role in achieving the UN’s Sustainable Development Goals (SDGs).
The week of 23 to 27 September was also an opportunity to reaffirm Enel’s participation and support in the context of a series of key initiatives like the “Business Ambition for 1.5°” campaign, which involves eighty-seven large companies with a total market capitalisation of 2.3 trillion dollars. These companies all share ambitious strategies to limit global warming to within 1.5°C, the target set by the IPCC (Intergovernmental Panel on Climate Change).
Renewables and technology, electricity provides a solution
During these encounters the Enel managers emphasised several fundamental themes. The most important was the role of electricity in the energy transition. As highlighted by our CEO Francesco Starace, the electricity sector is currently experiencing the exponential development of new technologies, especially those concerning renewable energies. This has led to substantial cuts in generation costs from these sources to an extent that was unimaginable until just a few years ago. In real terms this means an 85% reduction between 2010 and today in the levelized cost of energy (LCOE) produced by solar photovoltaic and a 49% decrease for energy produced by onshore wind generators (source: BNEF New Energy Outlook 2019). This makes electricity not only clean but also progressively more cost effective, transforming it into the ideal instrument with which to achieve the goal of totally decarbonising the energy sector. What’s more, digitalisation now means the electricity vector is increasingly versatile, precise and efficient in its end uses, enabling us to supply competitive, sustainable energy to countless other sectors (transport, for example), with further positive results in economic and environmental terms, from the creation of new production chains to improving air quality.
In other words, the transition taking place in our sector enables us to tackle a series of complex problems that extend beyond climate change to take in the need for sustainable urbanisation, safeguarding health, promoting employment, while also providing a means for us to respond to society’s legitimate demands for rapid, concrete and scalable solutions.
Decarbonisation, Enel’s commitments
Our Group made a conscious decision to embark on the path of technological progress, making a solid commitment to decarbonisation and taking on the role of global leader in the renewables sector. This is also made possible by an approach based on open innovation, which means involving talented individuals and creative potential from outside the company to encourage the rapid development of sustainable and competitive technological solutions that can create long-term shared value for all stakeholders. Enel has a long-standing commitment to what we call the “Open innovability” model, which allows us to generate innovation in an extensive ecosystem that includes startups, universities, research centres, NGOs and companies in other sectors.
In the context of sustainability and achieving the objectives outlined in the Paris Agreement, our Group’s vision is clear: our aim is to make drastic 70% cuts in emissions by 2030 compared to 2017 levels. This represents a significant step forward towards the declared objective of “carbon-neutrality” by 2050, making a profound contribution to limiting global warming to within 1.5 degrees.
Finally, Enel, which has been on the board of the UN Global Compact since 2015 through the presence of CEO Francesco Starace, has placed the UN’s seventeen Sustainable Development Goals at the centre of its operations, contributing directly to achieving four of these (2019-2021): SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action).
This well thought-out, determined strategy led Rachel Kyte, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All, to say that she was “inspired by Enel’s passion. It’s one of the few companies that has managed to let us imagine what the future could look like, and is working to transform this vision into reality.”
Investing in sustainability
Regarding the financial community, Starace and De Paoli repeatedly took the opportunity in New York to underline how investors all over the world are seeking stability and long-term returns, and how these demands are increasingly being met by financial instruments linked to the energy transition and the principles of sustainability. Ample proof has been provided by the success of the green bonds our Group has issued in recent years and the new instrument that Starace described during the plenary session of the Bloomberg Global Business Forum, chaired by the incoming president of the European Central Bank, Christine Lagarde. The instrument in question is the SDG-linked bond, the first of its kind. “Rather than being linked to a particular project,” said Starace, “it’s about our company achieving targets in terms of renewable capacity by 31 December 2021. The extremely positive response to this bond is clear proof that sustainability generates value and that there are many investors interested in this type of instrument.”
In this context it is now clear that electricity is the benchmark for the energy system, as it is a clean vector that digitalisation has rendered even more versatile. All in all, no existing energy vector can limit emissions as effectively as electricity. During the week this concept was expressed in no uncertain terms by the UN Secretary-General: “We have to be much more ambitious in tackling the climate emergency. We need a global transition to a zero-emission economy.”
The most important factor at the heart of all these considerations is people. The energy transition is inevitable and necessary, and for this reason this shift must be fair and equal in order to garner support from all sectors, including those it impacts most strongly. The changes, Starace explained, must be gradual and carefully planned so that no one is excluded. It is therefore necessary that governments understand both the positive aspects of the transition and the potential negative implications for groups of people or industrial sectors, and develop instruments that accelerate the transformation while making it genuinely inclusive. If we succeed in introducing the changes in the context of the Just Transition, for example, according to the study presented in September at The European House-Ambrosetti Forum, the energy transition could generate huge benefits for the European Union. The best-case scenario predicts a net final effect on production value of +145 billion euros in 2030, with 1.4 million new jobs created.
It’s a complex situation, but by no means a discouraging one: in New York the world seemed to be firmly committed to adopting concrete measures to tackle the problem, and all seemed well aware of the importance of singing from the same hymn sheet. Guterres launched an appeal for collaboration on a global scale, saying, “The United Nations, governments, companies and civil society must work together. It’s a fight we can and must win”.