How do you think the current conflict between Russia and Ukraine will affect the energy sector in Europe, both in the short and long term?
Russia is a key energy supplier for Europe. Today, we rely on Russia for around a third of our gas across the EU. But that average figure masks a dependency of more than 50 per cent for some countries including Austria, Finland, Greece, Poland, Hungary, and the Czech Republic.
While the tension between Russia and Ukraine seems to be stabilising, which would suggest that we can face the winter with greater peace of mind, the crisis has highlighted an ongoing issue for Europe. It is difficult for us to pursue an increasingly antagonistic relationship with Russia while depending on it to power our industries and homes. As European policy makers are now realising, energy independence is independence.
Europe therefore faces a choice. It either both scales down hostilities with Russia and seeks to work through differences and form a strategic partnership or it needs to work on securing its own energy independence. That means increasing domestic production of gas, not least by attempting to replicate the shale gas revolution in the USA, interconnecting the different countries so that gas can flow from West to East as well as East to West, and working to increase LNG imports over time. It also means that the continent should resign itself to using vast amounts of coal, and should rethink its opposition to nuclear power.
That will have impacts in terms of the environment, energy costs and Europe’s stagnant economy. But that’s the trade-off we face, and what the EU needs to consider as it seeks to turn a disparate collection of policy ideas into a comprehensive energy policy, consistent with its political views and ambitions.
You have focused part of your career on working for successful energy production companies. How do you respond to people who may believe there is a conflict between energy and the environment?
There is undoubtedly a conflict between using fossil fuels and protecting the environment. But it is a conflict which is likely to persist and which needs to be appropriately managed.
Today, fossil fuels fulfil the vast majority of our energy requirements. And the situation is not likely to change in the short to medium term. Energy demand is set to grow, as poorer countries and people start to experience the standard of living we take for granted. And existing renewables are expensive – indeed, in Europe the growth of solar and wind power requires €40bn of subsidies every year – and is difficult to scale up. Worse, until there is a breakthrough in our capacity to store energy, naturally intermittent wind and solar power will continue to be a complement to hydrocarbons, rather than a viable standalone proposition.
As things stand, we can’t do without fossil fuels. So my view is that we should work on a two-pronged strategy.
Right now, fuel switching and energy saving are the best ways we have to protect our environment while continuing to power growth and development. Fuel switching means choosing cleaner natural gas, rather than coal or fuel oil, wherever that is possible. And energy saving is the quickest and cheapest way we have of cutting emissions and reducing pollution, as well as conserving a precious resource.
In the longer term, renewables will need to take up the baton. I have no doubt that that will happen – every day the sun shines down a multiple of our global energy requirements.
But being able to access, store and use this energy efficiently will require important scientific breakthroughs in the way we transform energy and in the way we store it.
You have recently been appointed Deputy Chairman to the Rothschild Group. Do you feel you have contributed all you could or wanted to the energy industry, or do you think you might go back to this area in the future?</h5
To my mind, energy is the most interesting and significant segment of our economy. It is closely interrelated with politics and geopolitics. And the availability, security and cost of energy affect every aspect of our working and personal lives.
I have been lucky enough to work in this sector in different capacities – in Pilkington, a big energy user, in Enel, a power generator, and for the last 9 years at Eni, a global oil and gas company. And now I can put each aspect of this experience to good use. In Rothschild, I work closely with the global energy practice: understanding how clients are affected by the changing energetic and political scenario, and trying to think of how they could best position themselves, is a new thrill every day.
Like many other highly accomplished executives you have welcomed challenges and hunted for opportunities. What advice would you give to others to help them on their career paths? Is there one key ingredient or one route to success?
There is no one ingredient in the recipe for success, except perhaps luck. But there is a whole range of things that one can do to improve one’s chances, and I have my own list. It runs something like this:
From another perspective, we’re seeing a new innovation world appearing with CrowdFunding: The ‘Machine to Machine’ and the ‘Internet of things’, combined with platforms such as KickStarter are letting students without any business background create amazing companies that would never have been founded by Venture Capitalists and are being funded directly by their first customers.
5. Where do you find inspiration?
1. Given the choice, make your career in an industry which is unloved, and eschew popular sectors and companies. If you end up working for Google, where HR staff is inundated by CVs every day, you will be jostling for every promotion, for every position, with the very best. If you work for a construction company, your rise to the top will be smoother and faster. And to my mind it is much better to have a stellar career in a boring sector than a boring career in a stellar sector.
2. When you make it into managerial levels, try to get your head round the fact that your job has changed. You are no longer responsible for doing things. You are responsible for building a team that will do things. And that means getting the right people into the right places, stopping them from fighting, and keeping them motivated. Every time someone comes into your office, you should aim to have them leave more motivated than they were before they came in.
3. The third key pillar of a successful career is communication. Internally, so that employees understand where you are trying to go, and what they can do to help. And externally, to stakeholders including media, investors, local communities and regulators. That’s a lot of communication to be done. But the good news is that strategies which are going to work take five minutes to explain and everyone can understand them. If they take longer than that to communicate, you’ve probably got the wrong strategy on your hands.