The CEO of Italian power firm Enel has cast doubt on the continued benefit of using gas to produce electricity, telling CNBC it is “stupid” and that cheaper and better alternatives are now available.
Speaking to CNBC’s Steve Sedgwick at the World Economic Forum, Francesco Starace discussed where Europe had sourced its gas from over the years, name-checking both Libya and Russia.
Russia was the biggest supplier of petroleum oils and natural gas to the EU last year, according to Eurostat. The bloc is now attempting to wean itself off Russian hydrocarbons following the country’s invasion of Ukraine.
“I think this is a big wake up call,” Starace said, adding that “too much gas” was being used “in a stupid way, because burning gas to produce electricity is, today, stupid.”
Instead, Starace said there were more attractive alternatives.
“You can produce electricity better, cheaper, without using gas … Gas is a precious molecule and you should leave it for … applications where that is needed,” he added.
These industrial uses include chemical applications, the paper industry and use in the production of ceramics and glass, he said.
“Spare gas for them,” Starace said. “Stop using gas for heating, stop using gas for generating electricity when there are alternatives that are better.”
Alternative methods of electricity generation include wind and solar power, among others.
According to a recent report from Ember, a think tank focused on moving the planet away from coal to what it calls “clean electricity,” fossil fuels were responsible for 37% of EU electricity generation in 2021.
Breaking down the above figure, Ember’s report — published in February — said fossil gas power produced 18% of the EU’s electricity, a three-year low. Renewables were responsible for 37%, while nuclear produced 26% of the bloc’s electricity last year, Ember said.
Across the Atlantic, preliminary figures from the U.S. Energy Administration show that natural gas was used in 38.3% of utility scale electricity generation in the United States in 2021.
In Starace’s opinion, change is coming to Europe, where the EU has said it wants to be carbon neutral by 2050. “Overall I think there will be a reduction of gas consumption in Europe across the board coming mostly from those, like I said, ‘stupid’ uses,” he said.
“So burning it to generate electricity is not smart anymore, there is a better way,” he said. “Burning it to heat our homes is not intelligent, there is a better way.”
The Enel Group — whose main shareholder is the Italian Ministry of Economy and Finance — has said it will abandon gas generation by 2040. It also plans to leave the retail gas market in 2040.
Starace was asked if the move to net-zero and focus on using more renewables in Europe would be turbocharged by the current crisis.
“I think yes, definitely,” he said. “Because on top of the economics, on top of the climate, there is now [a] security of supply issue.”
“So you have a combination of three factors, not two, so definitely there is an acceleration there,” he added.
He said it could take two or three years but, “you will start to see a dent in gas consumption going forward, no question.”