· Published in RecoveryWatch

The Adriatic Blue CCS Project: the false solution of ENI for the ecological transition

Since its approval in July 2020, the Next Generation EU (NGEU) fund, 750 billion euros financial package to support the recovery of member states hit by the COVID-19 pandemic, has been targeted by influential members of the fossil fuel industry lobby. In Italy, these groups made every effort to shape the Italian “recovery plan” according to their own interests. Eni, the largest Italian oil&gas company, 30% owned by the Italian government, played a key role in the lobbying game. By leveraging its privileged relationships with key State ministries, the company successfully obtained the roll back of environmental deregulation and inclusion of false solutions into the recovery plan, such as hydrogen, biomethane and CCS.

On February 2021 Eni published its 2021-24 Strategic Plan, committing to become “carbon neutral” by 2050. Carbon Capture and Storage (CCS) – a technology supposed to capture emitted CO2 and store it underground - will be a key tool for Eni’s decarbonization plan. In February 2020, Eni’s CEO Claudio Descalzi announced the company’s intention to build a CCS plant off the coast of Ravenna, the Adriatic Blue CCS Project, using depleted gas deposits in the Adriatic Sea. The company expected to obtain all necessary permits not sooner than 2025.

Ravenna: the golden goose of the transition

This project will be the first CCS project in the Mediterranean region and the intention of Eni is to make the Ravenna plant the largest of its kind in Europe, as well as a “hub” for southern Europe and the Mediterranean region. Ravenna is a perfect place for a project like that, according to Eni’s chief financial officer Francesco Gattei: “Ravenna, with its industrial set-up and still operating infrastructures, offers a unique opportunity for CCS, since reusing existing plants and its proximity to emission plants will allow costs to be kept highly competitive."

The reality on the ground is that the city is torn on this matter [1]. On one side there are Ravenna’s mayor Michele De Pascale and some trade unions who welcome the CCS Project as a new investment for the city. On the other side, local environmentalist groups and academics who denounce how the project is a continuation of fossil fuel dominance on the industrial development of the city, used as a testing ground by Eni since 1950.

Indeed, the CCS infrastructure represents a way to produce ‘blue’ hydrogen - a pillar in Eni’s decarbonization plan - produced by transforming methane gas and capturing carbon emissions. Here Ravenna becomes the stage for a risky, consuming, and expensive technology that has the sole purpose of keeping fossil fuels alive.

Recovery Plan: a race against time

Since the project was announced for the first time, the plan envisaged completing feasibility/technical studies and the analysis of the regulatory framework by 2025, and then moving on to the execution phase. Complexities related to timing were additionally pointed out by Eni’s Chief Financial Officer who underlined the time consuming (4 -5 years) start-up phase of a trial project.

In July 2020 the European Council approved the Next Generation EU fund. The amount of the package, including subsidies and loans, is equal to 750 billion euros. 28% of this amount - 200 billion euros - goes to Italy. 37% of this huge amount of money will have to be devoted to the ecological transition. To be included in the Recovery Plan, and therefore access European funding, projects must be completed by 2026, under penalty of exclusion from the fund. Timing matters for Eni’s backroom staff and it becomes a crucial issue of lobbying.

In July and August 2020, Eni held three meetings at the Italian Ministry for Economic Development (MISE) to discuss the CCS project that received the endorsement from the Prime Minister Giuseppe Conte.

In September, Eni’s lobbying efforts achieved major progress. As part of the Decreto Semplificazioni 2020 - a bill that provides for a series of facilitations and simplification measures regarding construction sites, investments and tenders - an ad hoc amendment signed by the Democratic Senator Stefano Collina concerning the storage of carbon dioxide was approved. The amendment allows Eni to carry out its project before suitable areas for carbon storage are identified and to drastically reduce the timing of the authorization process. A considerable exception that can compromise adequate preliminary tests of a risky technology implemented in a high-risk seismic territory and with strong subsidence like the one of Ravenna.

As a result, the Adriatic Blue CCS Project was present in a draft of the Recovery Plan circulated in December 2020, with an allocation of 1.34 billion euros and completion by the first quarter of 2026. Local communities and civil society groups immediately opposed the inclusion of the project, which disappeared from the final text sent to the Italian parliament in January 2021.

In February 2021, a new government led by Mario Draghi established the Ministry for Ecological Transition (MITE) coordinating the energy component of the Recovery Plan. Eni immediately started to work for its own interests, lobbying at the ministry on the importance of the CCS Ravenna project. The final version of the Recovery Plan was published in April 2021 and the CCS project in Ravenna has not been explicitly included in it.

Rejected by the EU Commission, CCS will sneak in the back

Although it is true that the final version of the Italian Recovery Plan published by the government had no reference to the CCS project in Ravenna, nonetheless the version sent to the European Commission - never officially published by the government - highlights blue hydrogen produced from methane as a strategic investment for the ecological transition. Blue hydrogen is inevitably associated with CCS infrastructures. This plan fully reflects the interests of Eni, with green hydrogen mentioned as an underhand way to divert investments towards gas and CCS. The plan presented to the Commission provided for approximately 4 billion euros in funding for hydrogen, half of them devoted to refineries and steel plants, the so-called “hard to abate” sectors due to the big challenge of electrification and the costs of transition. The final plan was substantially modified by the EU Commission who demanded the exclusion for blue hydrogen thus hindering the inclusion of the Ravenna CCS Project within the Recovery Plan.

Does it mean we can put an end to the Adriatic Blue CCS Project? Nothing could be more wrong because several loopholes exist that will permit Eni to pursue its own interests. The regulation for Important Projects of Common European Interest (IPCEI) does not provide any kind of differentiation between types of hydrogen. The CCS project in Ravenna has already been submitted for the European Innovation Fund and a broad spectrum of funding possibilities opens up for CCS in the nationally- funded “complementary fund” to the Italian Recovery Plan, recently approved and not bound by European requirements. It is clear that we will still hear about CCS in Ravenna in the near future.

Footnotes

[1- Additional info on the industrial infrastructure of Ravenna and the different positions related to the CCS project are available here: Ravenna is the test case for Italy’s energy future - ReCommon