Adnkronos (Adnkronos) – Reducing dependence on gas without creating a new one from Chinese technologies. Accelerating decarbonization without sacrificing European industry on the altar of lower prices. For Letizia Magaldi, president of Kyoto Club and an energy entrepreneur, this is the true challenge of the transition. A challenge in which Europe, in her opinion, still has the skills and technologies to compete, but must change the rules of the game.
“We can't have the same rules we had five years ago,” he explains in an interview with Adnkronos.
Magaldi calls for an industrial policy capable of rewarding the added value produced within Europe, without sacrificing competition or slowing down decarbonization.
The problem also affects Italy. Regarding the Fer-T decree, intended to support heat production from renewable sources, it highlights a significant gap between the resources initially announced and those envisaged in the latest draft: €700 million versus €60 million.
A figure that he deems insufficient for a sector that is crucial both for the competitiveness of companies and for national energy security.
The energy crisis has brought the issue of Italy's dependence on gas imports to the forefront. How much can the energy transition contribute to national security?
“I think it is essential to understand that gas is not only used to produce electricity.
It's also essential for industrial production processes. If we look at global industrial energy consumption, about 70% goes to heat production and the remaining 30% to electricity. And much of that heat is still produced using natural gas.
Consider the paper, food, pharmaceutical, and chemical industries. These industries require heat to dry, pasteurize, and transform materials. Rising gas prices therefore impact not only electricity bills but also production costs.
The good news is that we now have the technologies to replace a significant portion of this consumption with renewable energy. The economic competitiveness of renewables has changed radically. Technologies that were previously too expensive can now represent an alternative to gas. This means reducing our exposure to international shocks and strengthening the country's energy security.
Many Italian companies complain about excessively high energy costs compared to their international competitors. Is the Green Deal the problem, as some critics claim, or is it elsewhere?
The main problem is the price of gas. There's a lot of discussion about the ETS system and the cost of emissions, but we need to look at the proportions. The impact of the ETS on energy costs is relatively small compared to the increases we've seen on gas in recent years.
We also need to consider how investments in new technologies work. With gas, we already have an existing infrastructure: the pipe arrives at the factory, and the company purchases the fuel. If we want to use photovoltaic panels, heat pumps, electric boilers, or thermal batteries, we need to build the systems. An initial investment is required.
But once implemented, this investment will reduce dependence on gas and its price shocks. We are changing the energy generation system. We must support this transformation without putting businesses in difficulty and, above all, without weakening European industrial supply chains.
What are the most urgent interventions that the government should implement to accelerate this transformation?
A very important measure is the Fer-T decree, dedicated to renewable sources for thermal energy production. This sector has received less attention than electricity generation, despite heat representing a huge component of industrial consumption.
The problem is that, while €700 million had previously been announced, the currently circulating draft budget is only €60 million. Clearly, we're facing a significant reduction in the planned resources.
I hope that a significant portion of available resources will be directed precisely at the electrification of industrial heat. We're talking about technologies that already exist, that can replace gas, and that have enormous potential.
The heat sector is also more fragmented than other energy sectors: there are many operators, many small companies, and this makes it more difficult to build a united voice. But that doesn't mean it should receive less attention. Companies alone can't do it: an industrial policy is needed.
Europe has understood the importance of electrifying industrial heat. It has already launched an initial support program and is preparing a second, worth one billion euros, as part of a much broader path to decarbonizing industry.
Competitive auctions are welcome. I'm not against competition, on the contrary. But we must ask ourselves whether it still makes sense to have competition that only considers price and not the industrial value created in our countries.
Anyone who develops a technology in Europe competes on the global market. The challenge is competing with industrial systems that benefit from very different public policies and conditions. We need to achieve a level of competition that isn't anachronistic, that takes into account the added value produced within the country, skills, employment, and supply chain security.
The risk is that Europe will reduce its dependence on fossil fuels, but end up dependent on China for solar panels, batteries, and other transition technologies. How can this be avoided?
We need to start thinking in terms of industrial policy and not just price. Those who install a plant naturally want to purchase the best technology at the lowest cost. That's understandable. But those responsible for the country's industrial strategy must have a different perspective.
We can't let the transition be driven solely by the economic interests of individual operators. We're moving from a centralized energy system, based on large power plants and large groups, to a distributed generation system, in which many different players operate. Who will ensure the strategic direction of this system?
There's also a technological issue, such as software and equipment control. I don't want to scaremonger or suggest that China will control our energy, but these are aspects that deserve attention.
When it comes to defense, no one would imagine entrusting strategic supplies exclusively to an international auction based on the lowest price. Why should we think differently in the energy sector?
But aren't we risking making the transition much more expensive and therefore slower by privileging European production?
We need to understand what cost differences we're talking about and how much of the overall system value they impact. In a photovoltaic system, for example, the cost of the module is only one component of the total investment. The rest is made up of assembly, wiring, installation, and other components.
If European products cost a few percentage points more, we need to ask ourselves how much this actually impacts the final cost and what economic and industrial value remains in our country. I don't believe the solution is to give up production because others have lower costs. It's an evaluation that must take into account the entire value chain.
We can also welcome foreign producers, including Chinese ones, but we must require them to invest here, hire European workers, and transfer technologies and skills. It's primarily a question of rules. Europe is moving in this direction, but we need to be more decisive. The economic conditions for renewables have changed profoundly, and we can't have the same rules we had five years ago.
What technologies could Italy leverage to build a competitive supply chain, without once again finding itself dependent on foreign suppliers, even for raw materials?
One of the most interesting opportunities is thermal storage. This is the sector in which Magaldi also operates, having developed a battery capable of storing renewable energy and releasing it in the form of heat and steam for industrial processes. The unique feature is that we use very common materials: essentially steel and silica sand. Therefore, we don't have the problem of critical raw materials that characterizes other technologies.
In our case, five hours of renewable energy availability, even non-consecutive, are sufficient to charge the system and subsequently produce steam within 24 hours. We chose to focus on a temperature range between 150 and 350 degrees Celsius, which corresponds to a significant portion of global industrial heat demand. We're thinking of paper mills, the food, pharmaceutical, and chemical industries.
We don't pretend to replace all technologies. Electrochemical batteries are used to store and release electricity; we produce thermal energy. They are different and complementary applications. The interesting thing, beyond individual companies, is that in Europe there still exists a strong industrial supply chain in heat technologies: heat pumps, electric boilers, thermal batteries. It's a heritage we must preserve.
Europe, however, has already lost ground in strategic sectors. I'm thinking of the difficulties facing battery gigafactories, from Northvolt to the Termoli project. Isn't this proof that the gap with China is now too great?
"I'd first ask myself a question: are these failures due to technological or economic problems? Because they are two very different things. I don't think Europe lacks the skills. When I attend international conferences, I see many Italians and Europeans in the technology section. We have extraordinary engineers; many of the innovations originated here. Then, however, when it comes to the market, we see a very strong Chinese presence.
The problem, in my opinion, isn't just financial. It's primarily regulatory and concerns the lack of a truly common industrial policy. We haven't yet managed to build a European market that supports technologies through to their commercial deployment. We need greater policy harmonization and competition that rewards the added value created locally. This is what can allow our companies to grow and compete.
There are also those, like a now-famous paper by Bruegel, who argue that it would be more advantageous to leave to China productions now dominated by its companies, such as photovoltaic panels, and focus European resources on other technologies. Don't you agree?
I'm not convinced this is the right path. Before abandoning a sector, we should ask ourselves a few questions: Why can't we produce those technologies? How much would it actually cost us? And what value would we lose, in industrial terms, by abandoning production? We need to think about the entire plant, not just the price of the individual component. Even when there's a cost difference, we need to understand how much it impacts the overall value and what it means to keep that production in Europe. In the healthcare and defense sectors, we're used to considering our production capabilities strategic. Why does energy always have to be the Cinderella story?
In the past, we could rely on relatively cheap gas, which made addressing certain issues less urgent. Today, the situation has changed. Renewables are competitive, we have the technology, and we know how risky it is to depend on foreign sources for energy.
We shouldn't consider ourselves defeated in the energy transition. But we must understand that, without an industrial policy, we risk winning the challenge of decarbonization while losing the challenge of European production and competitiveness.
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