Thank you, Lorenzo. Another brilliant session moving swiftly on. I would like to pass now to Simon Webb, Reuters' editor for Commodities and Energy, for an exclusive conversation with Eni's Chief Executive Officer, Claudio Descalzi. Simon, over to you.
Thanks, Eni. Hello everybody. As said, I'm Simon Webb, the Global Editor for Energy and Commodities at Reuters. I'm here with my colleague Steve Jukes, Senior Correspondent in Milan. We have the great pleasure of being joined today by Claudio Descalzi, Chief Executive at Italian energy group Eni. Claudio has been CEO at Eni since 2014 and has been at the company for over 40 years, since joining as an oil and gas field petroleum engineer in early 1981. Before he became CEO, he was head of the upstream oil and gas division. Claudio's discovery track record included the group's biggest ever gas find in Mozambique. He also set up the group's first clean energy unit in 2015, just a year into his tenure. Welcome, Claudio. It's good to have you with us today.
Okay. So, I'll start off with a general question. There's been a lot of talk over the past year about the pandemic accelerating the transition. What has your experience of that been as the chief executive at Eni? What do you think has changed and how have you seen or experienced the pandemic accelerating the energy transition?
So, clearly the pandemic accelerated the transition, but I think that this situation started some time before. We started our change in our company and we started changing our company in 2014, 2015. Already in this period we felt that we were already in a transition: oil and gas very volatile, low prices, and the growing need to reduce our emissions. The pandemic accelerated that, that is true. And I think that the pandemic accelerated the transition and created a feeling that we have a sense of urgency in terms of doing something to help ourselves, to help our people, and help the planet and the environment. It's clear that the pandemic increased this sense of urgency in everybody. I think as a company, as an IOC, as an energy company, we have to play a very important role leading this transition, giving the example, and working together. We cannot do that by ourselves, but we need to invest in the transition, in new kinds of energy, in new kinds of models. And that is what we did in the last seven years, changing drastically and trying to diversify our business moving toward different kinds of bio, green activities, changing also our product. Because our aim was clearly first to impact and reduce our emissions in scope 1 and 2, but for us it was important to have a strong impact on scope 3. Scope 3 is 7, 10, 12 times more than scope 1, so we have to work on our product, decarbonize our product, selling a clean product, green blue, that can give the opportunity to our customers to reduce the CO2 impact. So our role is clearly crucial in that.
I mean, you were one of the first companies to come out with ambitious carbon cutting targets in the industry. But the rate of change, the rate of the energy transition has accelerated. And are you concerned about Eni keeping up with that accelerating transition? I mean, what was ambitious maybe a year or two ago doesn't look so ambitious now. And do you have any plans to change your targets or to accelerate?
We honestly change our target every year and we improve our targets every year because we developed in the last seven years different kinds of technologies that allow us to improve the target. And technology R&D investment that we are in the range of 4-4.5 billion euros in the last six and a half years, with a very short time to market. We had the technology, we implement the technology. For example, in the biorefineries, we shut down two standard refineries and we developed two new biorefineries. Now we are producing more than one million tons with the target to reach two million tons per year. And we are the second-largest producer in the world; now Neste is the first one. So that allows us to change and improve. Two years ago we presented a very challenging target to reduce scope, to have carbon neutrality for upstream by 2030 and for the whole company by 2040, and reduce our cumulative emissions by 80%. And now this year, in 2021, we presented in February a new strategy with clear targets to be carbon neutral by 2050, but with interim targets. So we have targets for 2025, 2030, 2040. That was quite important to give to our shareholders and stakeholders the path, not just the final target, but how we reach it, in absolute terms and also as intensity. So we said by 2030, for example, scope 1, 2, and 3 reduction 25%, by 2040 65%, and 100% of absolute by 2050. And we worked out the plan approved by our board, very detailed. We put all our investment, all the cash flow with different kinds of sensitivity, the EBIT, all the different costs, and also the cash neutrality of the different businesses to calculate also the shareholder returns based on the two different kinds of business. So the upstream that became different, more gassy, with clearly zero emissions by 2030, and the new businesses that will grow and will justify themselves in terms of investment and pay the dividend. That is very detailed. For that reason, now our ranking in the ESG ratings is very high, and that allowed us to have the first sustainability-linked bond that is a 7-year maturity and 1 billion, the first sustainability-linked bond for the industry, and it was very successful. And that happened because of this evolution of our business. It's true what you said. What we said three years ago is very old, just one year ago very old, because technology helps you improve on a daily basis. You must be very transparent and give all the results of your hard work and be very effective in the time to market, apply the technology, give the results. And that is a very good way because as an ESG investor you can get access to good money to develop further your new businesses.
You've done a little bit of restructuring and reorganizing of your upstream portfolio recently. In May you announced a memorandum of understanding with BP to combine some upstream portfolios in Angola. Are you considering further deals of this kind?
I think this is what we call business combination. The first one was in Norway with Vår Energi that we did with the fund, with the investment. Now we are working with BP for Angola. That is interesting because it allows us, I think, to couple the corporation with this new entity. First of all, it can invest; every debt we work with the bank to understand which kind of debt can allow it and they can have to develop their own company without increasing the leverage of Eni and give Eni the flexibility and the ability to invest in the new businesses. That is the first one. We think that Vår in Norway was the first one, then we have Angola, and we are thinking also in another possible area where especially we have a lot of investments. So we want really to segregate this kind of investment in a single entity with some other company that have this same kind of model in mind. That is a way to reduce our leverage. And the same thing we are doing with the renewable business is another business combination for a possible future listing or sell or the minority portion to get, I can say, a double win. First of all, to reduce our investment because this company, as a possible listed company or with a special partner we have to decide, we are working on that. They have the possibility to invest. They have different kinds of multiples. In our sector we have 3-4 times our EBITDA; in this case we can reach 7, 8, 10. So it can play the role and the growth in the renewables field in a different way, with the right multiple. Then it can have a debt and we can accelerate in this case the renewables and extract value from assets that are in Eni but with a different kind of value. And I can say, as the last point, that is a really win point: we can impact scope 3 because we're going to sell green, bio green or bio product to our customers. And fortunately we have about 10 million customers; in 2024 more than 11 million, and we want to reach 15 million by 2030. So the possibility to reach with clean product our customer will impact positively our scope 3 reduction.
