As we move on with the green transition, major energy companies are diversifying their portfolio. These businesses have always had to adapt throughout the decades. However, the energy transition poses a new kind of challenge.
CEENERGYNEWS spoke with Zoltán Áldott, Chairman of the Supervisory Board of MOL Group and Member of the European Round Table for Industry (ERT), about how companies can maintain their competitiveness and the major challenges towards an EU single market.
“Energy companies have always been operating in an ever-changing and vulnerable environment, so portfolio diversification is nothing new,” Mr Áldott begins. “No doubt, however, that the energy transition – or rather the twin transition, combined with the digital one – poses new challenges for our companies.”
He underlines that MOL Group is well-prepared as the company strategy was revised a year ago already considering the challenges ahead of us to a great extent. Indeed, the Group has a strong ambition to make improvements in its operations that facilitate the gradual transition to a low-carbon, sustainable business model, hence also welcomes the aim of the Fit for 55 package to target a reduction of at least 55 per cent in greenhouse gas emissions by 2030.
“The business community widely agrees that the EU’s accelerated transition to a greener economy should not threaten the competitiveness of European companies,” he points out. “Forced to internalise their environmental costs, the European companies end up competing, even on the internal market, with rivals from other jurisdictions, where environmental standards are less stringent.”
Mr Áldott recalls how in the last years we have experienced that the energy transition will be costly, sometimes painful, full of challenges, bearing on all economic as well as social sectors.
“At MOL Group we explore opportunities behind these challenges, therefore we constantly look for new possibilities to realise integrated, green energy systems of the future,” he adds.
Regarding the ERT, where MOL Group is the only member from the CEE region, it has advocated the permanent pursuit of a more competitive European economy since its inception, as it is indispensable to the EU’s resilience, economic openness, enabling fair competition globally.
Despite current concerns of supply chain disruptions, inflation, increasing energy prices, labour and the pandemic, business leaders remain optimistic about both the short-term and the long-term competitiveness of the continent [according to the latest CEO survey of ERT.]
The EU has already ambitious goals for the green and digital transitions, however, there are still some internal problems that erode the EU’s ability to behave as a truly unified trade bloc.
“The twin transitions demand a renewed focus on competitiveness and harmonisation of the internal market,” explains Mr Áldott. “Nearly three decades since the dawn of the Single Market, crucial policy areas, such as the energy sector, the digital economy and capital markets, remain fragmented within Europe. EU leaders decided to refocus their attention on improving the Single Market as it is the core of the EU’s competitiveness.”
He goes on to underline that on a fragmented Single Market, limitations to the free circulation of goods, services and capital exist. Thus, ERT believes that the Single Market should be the driver for growth and prosperity. There is unanimous consensus among ERT business leaders that the free circulation of people, goods, services and capital is not fully completed (respondents of a confidence survey believed that the Single Market is only 79 per cent complete, with much room to improve).
“At a time when companies must radically innovate and rescale their operations towards achieving the ambitious climate goals set by governments, a similar effort from the public sector at all levels is required to improve the ease of doing business and simplify administrative procedures,” Zoltán Áldott highlights.
Moreover, besides the barriers, potential market fragmentation is a growing risk in new markets. In markets that are still under development, for instance, renewables or the hydrogen market, the danger of fragmentation is real and should be prevented.
For ERT, the benefits of removing national barriers to the Single Market for goods and services could amount to over 700 billion euros by the end of 2029 – a sum similar to the investments promised under the NextGenerationEU package.
“Quick wins do exist,” he continues. “For instance, high-quality infrastructure, without intra-EU borders and distortions or restrictions, is critical for making the Single Market work effectively in many areas, ranging from telecoms to gas and electricity as well as EV chargers. The publication entitled Renewing the dynamic of European integration: Single Market Stories by Business Leaders released in December includes in-depth analysis and recommendations to manage, revise and deepen the integration of the Single Market better.”
The story that Mr Áldott has shared addresses the shortcomings of the EU’s EV charging infrastructure. According to him, car manufacturers sell much more electric cars in Western Europe than in CEE, so EV penetration is significantly lower in the CEE region. He considers the EU’s public funding to start the establishment of the EV charging infrastructure in the framework of the NEXT-E and the East-E programs as a welcome step.
“Further good news is that the CEF2 tender has been opened and the CEE region will also be able to benefit from it which can contribute to another significant wave of charger deployment,” he continues.
Concerning the charging infrastructure, Mr Áldott points out that the CEE region’s slower entry into the EV market could also be seen as an advantage, as – unlike in Western Europe – it was not the slow-charging AC chargers that were installed in the network, but the fast DCs that were better adapted to both automotive developments and the needs of e-car users.
So, all in all, we expect further advancement and spread of the EV charging infrastructure in the CEE region, given the public funding opportunities both for the infrastructure itself as well as personal-used cars.
MOL and its partners have already installed 252 EV charging stations and the company plans to build many once market demand will rise in your countries. But, when will this happen?
“Electric cars are still too expensive when compared to conventional vehicles,” replies Mr Áldott. “So, at this early stage, EV cars can only reach higher numbers if supported financially, the still lengthy charging time of vehicles reduces steeply, while at the same time the charging grid becomes much more concentrated. Furthermore, the EU should look at providing resources to electricity storage as well, because without such support there is no way to reach favourable end-user prices. According to our estimates, these developments will take place in the next 4-5 years, so the actual demand for EVs is expected to be more significant from 2027 onwards.”
“The EU faces the considerable task of rebuilding its economy after the pandemic, replacing the jobs that have been lost and unlocking new sources of growth,” Mr Áldott concludes. “As it does so, it must ensure that it also delivers the twin green and digital transitions. These are the biggest tasks both for the short and the long term. And for that, the Single Market needs to be taken to the next level and re-invigorate EU integration.”
In his view, the private sector can accelerate progress on the twin transitions, but companies will only be successful if the public sector fully plays its part and helps create a conducive environment for businesses to innovate and grow in Europe.
“To achieve the desired transformation an EU-wide harmonised framework with less red tape is necessary,” he says. “Without a clear business case and market demand, companies will have fewer possibilities and incentives to invest in new technologies.”