Driving the Energy Transition Together: the industrial perspective

Daniele Ferrari, CEO of Versalis

«  SET Plan Conference 2014 » Rome, 10th December 2014

Providing innovative products and enabling technical solutions in virtually all sectors

The European chemical industry is key for economic development and wealth

Sources: Eurostat and Cefic Chemdata InternationalEurostat SBS and Cefic analysis June 2014

€ 48.7 bln/y trade surplus

€ 9.0 bln/y R&D spending

29.000 companies

18% of world chemical sales

4% of EU manufacturing employment

€ 527 bln/y turnover 1.2 mln direct

employees

The example of plastics: a key sector for European manufacturing growth

Plas

tics

Man

ufa

ctu

rin

g

Com

mer

ce

Tran

spor

t

Oth

er*

Tota

l Im

pac

t

1.12999999999999

2.38

0.580000000000001

0.170.14

0.36

Pla

stic

s

Man

ufa

ctu

rin

g

Com

merc

e

Tra

nsp

ort

Oth

er*

Tota

l Im

pact

1.1

2.74

0.620000000000002

0.3 0.2

0.52

* Non-manufacturing, Agriculture, Construction, Hotel/Restaurant, Financial, Real Estate/services, Public Admin., Education, etc

GDP multiplier (Italy) Employment multiplier (Italy)

Source: The excellence of the plastics supply chain in relaunching manufacturing in Italy and Europe – Breakdown of the impact of an increase in GDP and in annual work unit; The European House – Ambrosetti

Greenhouse gas emissions in chemistry decoupled from production

6

Enabling low-carbon solutions to downstream sectors in Europe

Net avoided GHG emissions for selected applications

Source: Ecofys

EU manufacturers losing competitiveness: the deadly spiral for Europe

Boom of shale gas production

2006 2008 2011

1,02,2

7,9US shale gas production (tcf)

1

Henry Hub price (USD/ mmbtu)

Drop of gas prices2Emission factor in thermal power generation

Reduction in coal prices and CO2

3

+7%

Carbone

Gas

-34%

2013 vs. 2010

Change in the powergen mix

4

Emission factor in thermal power generation

Increasing CO2 emissions despite 60 bn€ annual subsidies to renewable

Increasing CO2 emissions

5

Power prices€/MWh

Gas prices$/mmbtu

US US

~3x~2x

EU EU

Dramatic energy gap in 2013

6

In addition to the energy issue other challenges affect competitiveness

Large integrated domestic markets

International network and technology leadership

Skilled workers and scientists

Continued strategic restructuring efforts

Strong innovation focus through industry clusters

OPPORTUNITIES CHALLENGES

Endemic low demand for chemicals in the EU

High Regulatory Compliance costs

Raw material availability and cost

Lack of a EU-wide Industrial Policy encompassing energy and innovation

European society reluctant to see benefits vs. risks of Innovation

The pillars of competitiveness for Europe:let us work on them

Market size

Health

Technology

Education

The 12 pillars of Competitiveness

Institutions

Labour market

Macroeconomics

Infrastructure

Business qualityGoods market

Financial market

Innovation

Education

Innovation

Institutions

Competitiveness

“the set of factors, policies and institutions that determine the level of productivity of a country taking into account its level of development”

Bio-based chemistry: an opportunity for a “circular economy”

Design out wastes

(material and energy

recovery)

Renewable feedstocks

Oils/sugarsBio-building blocks

Performance bio-products

BIOMASS PRE-TREATMENT

BIOMASS GROWING / COLLECTION

TRANSFORMATION / COMPOUNDING

BIO-REFINERY

An efficient value chain - integrated within the territory - for the complete exploitation of the biomass

Towards a sustainable energy transition: a call for Innovation and Competitiveness

Adaptability of skilled workforce

Sustainable and secure energy and

feedstocks

Strong support to PPP and joint

initiatives

Collaborative and open

approach in R&D

Expected net effect: up to €30 billion GDP and over 500 000 jobs