Naturally, the biggest concerns in Europe right now are high energy prices and security of supply. This, however, is not in contradiction with the energy transition. We need to be ambitious about lowering our carbon footprint, but to guarantee an orderly transition we must also prioritise security of supply for our citizens and industry.

The elephant in the room is that the world is not reducing emissions. Since the 1990s, Europe has cut its emissions by more than 30pc, but partly by reducing the role of industry in the economy, which has fallen as a share of GDP from 21pc to 17pc in the last two decades. But in that timeframe, global CO₂ emissions have increased by around 44pc. Climate change is a global problem, and we will not reduce emissions just by relocating European industry.

The volume of CO₂ we must cut to reach our objectives is known, and this target should be set in stone. The key is to find the routes that can get us to net zero in the fastest and most cost-effective way, leveraging and enhancing Europe’s industrial and technological capabilities.

Electrification is not enough

Our goal must be to decarbonise the economy, not just to electrify it. The technologies that will help our society to decarbonise should not be seen as antagonistic, but as complementary.

Take renewable liquid fuels, for example, encompassing advanced biofuels and synthetic fuels—also called e-fuels, produced with renewable hydrogen and captured CO₂ as the only raw materials. They will be a necessary complement to electrification in the transport sector, broadening the range of low-emission mobility technologies, with consumers choosing the ones that best suit their needs. Europe has an opportunity to lead development and production of these fuels.

The elephant in the room is that the world is not reducing emissions

In the short and medium term, advanced biofuels made from non-food organic waste are a solution already available on the market and a quick, immediate means of reducing up to 90pc of the emissions from mobility compared with traditional fuels. In the medium term, synthetic fuels will come to the market as another net-zero emissions option compatible with existing combustion engines.

Immediacy is a key factor here. The 10pc of biofuels in gasoline and diesel in Spain are already avoiding emissions that are equivalent to putting 3mn electric vehicles (EVs) on the road. This decarbonisation is happening today and can be scaled up significantly.

The feedstock to produce these fuels is plentiful. Advanced biofuels can be made from a wide range of waste materials. These include: crop residues, prunings, manure and animal fats from our agricultural and agrifood industries; leaves, stem wood, logging and sawmill residues from the forestry sector; and used cooking oils and the organic parts of our solid household waste. The processing of these residues does not involve or compete with products intended for food, and it favours the reuse of resources through circular processes. Imperial College London estimates that the total availability of potential sustainable biomass in Europe is more than sufficient to supply the necessary feedstock for renewable fuels.

The EU will fail to reach its climate goals without renewable fuels. Liquid fuels today make up 93–95pc of Europe’s transport demand, and with the bottlenecks in the battery value chain and in charging infrastructure that are holding up a comprehensive rollout of EVs, we need renewable fuels to start reducing our emissions now in a cost-effective way.

These solutions will complement electrification and advance the decarbonisation of our mobility. We simply cannot allow ourselves to wait for the complete rollout of EVs to solve this challenge. There is too much at stake.

For our society to become carbon-neutral by 2050, we must have accessible, competitive and sustainable energy that supports social and economic development. A just transition is a concept that involves guaranteeing an adequate supply of energy, including hydrocarbons, to meet present and future demand at affordable prices.

I cannot stress enough the importance that regulation will play in delivering our objectives. We can compare, for example, the very different approaches between the European and US legal packages. I see the new Inflation Reduction Act approved in the US as a more inclusive way to go, relying on technological neutrality and diversification as the best route to achieve the effective decarbonisation of our economies.

In Europe, we have embarked on an ideological energy transition in which we are selecting, rejecting, and preventing some energy investments for ideological reasons, rather than scientific or technical ones. Consequently, consumers and companies pay more for energy, industries become less competitive—some are failing due to the high energy prices—and, worse still, our CO₂ emissions increase as we shift from gas back to coal to generate power. So, we have to rethink our approach on the basis of technological neutrality.

Clear strategy

Repsol is fully committed to achieving carbon-neutrality in 2050. For this we have a clear strategy, a streamlined organisation, an operating model focused on the target and a team of people that can make it happen. An orderly energy transition requires diversified sources of energy and must be just for everybody. This goal will be better achieved by guaranteeing security of supply and affordability through technological and industrial developments that, in turn, foster employment and social progress.

Josu Jon Imaz is CEO of Spanish oil and gas company Repsol.

This article is part of the upcoming special report Outlook 2023, which features expectations from the energy industry for key trends in the year ahead. Sign up here to receive updates about the full report.