VIII Encuentro SERNAUTO - Luis Cabra (REPSOL)

Thank you very much, and first of all, I'd like to thank Sernauto for allowing us to share with the entire audience our vision of what we've called the safest bet — without being so pretentious, a safe bet in terms of sustainable mobility, from the perspective of an energy-producing company like Repsol. If we move on to the next slide... someone can advance the transparencies.

Well, first of all, a call to the value and power of technology. We're talking about zero emissions. We're talking about climate neutrality. And this will come hand in hand with technology, or it won't come at all. The good thing is that we have options, and those options must be kept open. Our vision is that zero emissions can be achieved across the entire energy supply in the world, and particularly in transport, through mainly two vectors: one, without any doubt, a deep renewable electrification of transport; and second, where electrification cannot reach, there will be available low- or zero-carbon liquid and gaseous fuels, including biofuels, renewable nitrogen, etc. There is a third necessary pillar in the energy world, which is what we call carbon sinks — it applies less to transport, but it always speaks of residual CO2 emissions, and to reach zero emissions we must capture CO2 from the atmosphere, either artificially or naturally, taking advantage of natural sinks like forests.

We spoke first about technology. The second important pillar is regulation. Regulation plays an increasingly important role in Europe — a super important role in energy matters. We all know that in 2019, the European Green Deal set the foundations and ambition for climate neutrality by 2050. In 2020, the Climate Law established that by 2030 we would need to reduce CO2 emissions by 55%. And the package recently published in July, the so-called Fit for 55 from the European Commission — a legislative package of thousands of pages, many complicated, complex, and complete legislative proposals — is already setting the regulatory framework, the proposed regulatory framework that will have to be debated in the Council and in Parliament over the next, presumably, two years, to arrive at the final regulation that will determine the direction many companies and industries in our country and across Europe will take.

We also wanted to highlight, and I believe the president of Sernauto also stated it in a very emphatic and admirable way, that Europe — and we are all convinced — wants to and must be a leader in climate matters. It wants to have global leadership, it wants to have decisive action. It has started to regulate before other parts of the world, but a leader has to look back from time to time and see if others are following. Otherwise, we might end up a bit alone. We believe there is a more than reasonable balance, and the legislative proposal begins in that direction, but we need to achieve a reasonable balance between that ambition and pragmatism — what we call technological neutrality. Incentivizing all decarbonization options to have their space and their possibility of succeeding or not, depending on the technological bet, the investment bet. We need to talk about a just transition for everyone. We all need energy, and we all have different types of access or capacity to access energy. The transition must be just, and the transition must also protect the competitiveness of industry. This has also been discussed a lot in these sessions. In such a way that this balance, we believe, is still slightly shifted to the left in this equilibrium we need to find across Europe.

To be a bit more concrete, regarding transport and the transport part of Fit for 55, I would like to continue reminding in a debate that, from a regulatory standpoint, we have largely closed on some elements of the legislation, such as CO2 emission limits for vehicles. We're not going to keep discussing whether we should measure it at the tailpipe or the full life cycle — rationality advised us on certain things. But we must not forget that the internal combustion engine and the efficient hybridized combustion engine will be with us for many years, and we must supply low- or zero-carbon fuels for these internal combustion or hybrid vehicles. And we must not forget that depending on the fuel we use, the real net CO2 emissions across the entire life cycle of that transport and mobility can be very high if we continue using the gasoline and diesel we've been producing for many years, which has provided safe energy and safe mobility to all citizens. We also need to find the legislative space so that vehicle manufacturers can compute and account for the negative footprint that certain fuels can have — such as advanced biofuels, renewable hydrogen, etc.

Therefore, this is where we want to introduce this concept of a safe bet: betting on electrification and at the same time betting on an efficient hybrid vehicle with low-carbon fuel is the best way to reduce emissions in the transport sector from minute one. Otherwise, we're going to take too many years while the electric vehicle starts to penetrate certain segments, becomes majority or exclusive in certain segments, and not so much in others where other technological options may be more efficient, more effective, and can be applied sooner. There is also some consideration that transport needs a holistic view. Here today we talk about transport, fundamentally light transport, but road transport, land transport in any case. Let's also think that in the long term, aviation transport, maritime transport must be decarbonized, and the bets that can be made today on advanced biofuels, on hydrogen, in a transition period for light land transport — those investments will also have their validity in sectors like aviation or maritime transport. We need to mobilize new value chains in low-carbon fuels, we need to mobilize enormous investments in low-carbon fuels, and the industry needs a perspective in which there cannot be a vision of aviation transport in 2050 without having been able to make investments along the way and start decarbonizing all transport sectors.

A brief description of what we're doing in a company like Repsol. We see that electrification is going to enter with great force in something that was naturally our playing field, which was mobility, and Repsol is also entering decisively in this area. What we are offering in a differentiated way in the short term is something we can deploy across the service station networks we have throughout the Spanish geography. We have a program that we've published and made known recently to put more than a thousand fast and ultra-fast chargers on all the main corridors of the Spanish geography, and probably extending it to Portugal, so that every 50 kilometers a customer has the possibility of a fast or ultra-fast recharge on all these main corridors and also in the main cities. All of this will go hand in hand with digital technology to help the customer find their recharge point or find the charger that their economy and transport needs at any given moment advise.

Logically, our bet on electrification is not only in public recharging, where we think we can have this differentiated offer, but also in home charging, enterprise charging, residential elements, together with the electricity supply at home, in the electrical part of our new mobility business. Regarding electricity, we should always remember that zero emissions at the tailpipe of an electric vehicle will also depend on having renewable electricity generation. In that sense, Repsol is also making its bets in Spain, in Chile, in the US, to have sufficient production capacity of wind, solar, and hydroelectric generation to supply all the electricity supplies we make for mobility and for the residential segment.

I would also like to pause for a moment on low-carbon fuels, the other pillar of sustainable mobility that makes up this safe bet. I would like to highlight the work of the European Association of Fuel Producers, which I have the pleasure and honor of chairing for the next two years, where very meticulous work has been developed to demonstrate that low-carbon fuels can be produced, can be produced from sustainable raw materials, can be produced in the quantities that the land transport, maritime, and aviation sectors will need over the next 30 years. And if we are to reach that vision of zero-emission transport, that information even discusses all the investments that may be needed in a sector that must undergo deep transformation — a sector that definitely knows and understands that demand for part of its fuel will progressively decrease, but that bets on transforming its industrial complexes, its refineries, its petrochemical plants. Some will have to close, and that's not frightening — it's not the first time it has happened — and others will transform to become these new producers of low-carbon fuels. In that sense, Repsol is going to make the bet to transform and not to close. We need some help from regulation for this to happen, to have greater predictability in future investments. But Repsol has one of the most competitive refining systems in all of Europe. We earn more money, frankly, than many other refineries refining crude oil today and with natural gas input to produce gasoline and diesel. We're going to bet not on closing but on transforming all this productive fabric into new centers of production of low-carbon fuels. There you have some concrete objective figures for 2025 and 2030: production of advanced biofuels, production of renewable hydrogen, where we also think we have some differential capabilities.

A bet on technology — it's not just about applying existing technology to manufacture hydrogen or advanced biofuels. There are other longer-term ones we're betting on. An example is our bet within the Basque Country's hydrogen valley for the manufacture of synthetic fuels from CO2 captured at the refinery and renewable hydrogen. Or an idea still more speculative today, but one we're working on with Enagás on a proprietary technology to produce hydrogen directly from solar energy, without needing to go through the intermediate stage of electricity generation.

I'll end with a call for collaboration. We are creating new value chains, we are mobilizing enormous investments. This cannot be done alone, and it must be done with public-private and private-private collaboration. In the field of low-carbon fuels in Europe, there are already associations that bring together the entire value chain, from raw material producers that incorporate agricultural associations, etc., the producers and transformers of fuels, and the companies that use the fuels. At the European level, there are associations for component manufacturers. In Spain, we have a very powerful association that has been held up as an example in Europe for its capacity to bring together 20 associations, hundreds of thousands of companies, because there are many small companies involved in this platform for promoting biofuels — users, fleet companies, airline companies. Here I want to end by extending the invitation: Sernauto, to the extent that an association or platform in defense of advanced biofuels, neutral in emissions, also responds to its legitimate interests, I extend the invitation to participate in this platform of eco-fuels in Spain, which aims to maintain the productive fabric of many current businesses that are in transformation and that we believe will succeed throughout this energy transition process. I'll end by returning my thanks to Sernauto, and thank you very much for your attention.

[Applause]