Francine Lacqua: Prime Minister, thank you so much for speaking to Bloomberg. We’re here in Glasgow, at COP26. How confident are you that we’ll get some kind of resolution that makes a real difference? Not just talk.
Kyriakos Mitsotakis: Ι am an optimist by nature. So, I would hope that at some point we’re able to see the big picture and rise to the occasion. Again, speaking as a representative of a country that is a relatively small emitter, we’re simply trying to do our part towards setting very ambitious targets, but also leading when it comes to certain areas where we feel that we have a natural comparative advantage in addressing either adaptation or mitigation issues when it comes to climate change.
Francine Lacqua: Prime Minister, we’ve seen terrible fires in Greece over the summer and over the last couple of quarters. Is there anything that you can do to mitigate this?
Kyriakos Mitsotakis: Unfortunately, this was not just a Greek problem. The Mediterranean is, unfortunately, a hotbed for climate change. We saw the same problems in the western United States; what we see is fires that are becoming much more intense and much more difficult to contain.
We know this is a direct consequence of climate change. We know we need to do more to manage our forests better, and of course, as a European Union, I think we need to do more to strengthen overall our civil protection.
But this has to do with how you contain the problem. It doesn’t address the root causes of climate change. But we will be living with the consequences of climate change for the foreseeable future. And our number one priority is to protect lives and properties.
That is why we’ve actually set up a Ministry of Climate Crisis and Civil Protection where we’re actually pooling our resources and trying to be more effective in addressing these natural catastrophes that we know with certainty we will face over the next years.
Francine Lacqua: Prime Minister, talk to me a little bit about the Climate Law. What will be in it?
Kyriakos Mitsotakis: We are happy to introduce our first Climate Law to the Cabinet this week. It sets up a very, I think, comprehensive governance structure for monitoring our climate policies in the short- but also in the medium-term. We will commit to our European targets of reducing our emissions by 55% by 2030 and becoming climate neutral by 2050.
And then, of course, we have several very specific provisions that are particularly relevant to Greece in terms of energy efficiency, in terms of phasing out coal. We call it lignite in our case, which is brown coal. We hope to shut down our last lignite plant by 2028 at the latest, which is ahead of many other European countries.
And we will also be introducing a new piece of legislation regarding renewables and in particular offshore wind, where we want to be one of the leaders in the Mediterranean, as we have a lot of capacity.
Francine Lacqua: I thought you were limiting lignite by 2025. It’s 2028?
Kyriakos Mitsotakis: 2028 at the latest and we hope to do it by 2025. We want to be more optimistic. We set 2028 at the latest, but I hope we will be able to achieve it by 2025.
Francine Lacqua: What are the main challenges in this transition? How do you supply energy to make sure that once you are out of lignite…
Kyriakos Mitsotakis: We have to be realistic. As hard as we push renewables -and we are pushing very hard, we are blessed with having a lot of sun and lots of wind- you still need a transition fuel. And we anticipate natural gas to be the transition fuel until renewables penetrate more aggressively and until we also solve the storage problem. So as we move out of coal, we will use natural gas as a transition fuel.
Francine Lacqua: Is there a worry that the energy crisis makes this transition much more difficult?
Kyriakos Mitsotakis: It shouldn’t. And, really, we are seeing short-term distortions in the gas market. We’ve actually set aside almost 500 million euros to support vulnerable households. Because the last thing we want to happen, Francine, is for people to get disappointed with climate politics because they actually are forced to pay the cost of this transition.
We cannot afford this to happen. We need people to support us. And that is why even in those areas of Greece, which are heavily dependent on lignite, we are spending close to 5 billion euros to create new jobs, to create new industries; to help people move away from coal into hopefully what will be a more productive and better future with better-paying jobs.
So I’m very conscious that this is not an easy exercise. But we should know, even when today people are skeptical about the increase in the price of gas, that renewables are much cheaper than gas today, especially for a country such as Greece with ample sunshine. The cost of producing energy from the sun and from the wind is cheaper than importing natural gas. We do not have our own natural gas. So we are very dependent on the market and on the variability of prices.
Francine Lacqua: Prime Minister, do you think citizens are actually worried of it because of the gas prices going up? You talked about investing 5 billion, what about giving money out? Is there anything that your country can do to ease the pain from the energy prices?
Kyriakos Mitsotakis: Yes we are supporting the vulnerable households by, essentially, subsidizing electricity bills. I want to make sure that people don’t see a significant increase in their electricity bills. And we are also supporting households that are dependent on natural gas but also heating oil. So, there is a lot of money to be spent to make sure that we address the problem of energy poverty.
High electricity bills and high natural gas bills are simply not acceptable, because people will think that they are the consequences of the transition when that is actually not the case.
And, of course, we also need to look at what we can do at the European level. We had a very thorough discussion at the European Council. Are there European solutions to the problem? Possibly yes; we need more storage for natural gas. We could contemplate the possibility of purchasing natural gas as a supernatural entity, to increase our purchasing power.
And, of course, if there are distortions in the way our electricity market is currently structured, we need to take a look at those and make sure that we are not subject to this extreme variability in the prices of natural gas.
Francine Lacqua: Are you expecting more volatility to come in the winter months?
Kyriakos Mitsotakis: I would hope that we’ve seen the worst, but I don’t know, we need to prepare for the worst. The good thing with Greece is that we’re not that dependent on natural gas for heating as we are more to the South. But still, we are dependent on natural gas for electricity production as we phase out coal.
Francine Lacqua: As we get into the winter months, we talk about Covid, a resurgence; we talk about possible inflationary pressures; supply chain issues. What do you worry about the most?
Kyriakos Mitsotakis: I think inflation is a real concern for all of us. I would hope that it is a short term asymmetry between global supply and global demand. Overall, I’m very bullish about the potential of the economy. We’re constantly upgrading our growth forecast for the year. Right now it’s at 6.1%, I wouldn’t be surprised if it is higher than that. We had a fantastic tourism season. Lots of foreign direct investment is flowing into Greece. We’re creating lots of lots of jobs. Unemployment is coming down. The tech sector is booming.
And we also have 32 billion euros of funds from the Recovery and Resilience Fund, the new European facility that was put in place to address the consequences of COVID. So, I think we’re in a good position to weather whatever the global economy throws at us.
Francine Lacqua: But there’s nothing you can do on inflation. So when do we know whether inflation is transitory…
Kyriakos Mitsotakis: I think we will know if that is the case by, probably, the first quarter of 2022. The good thing is that we’ve supported households and businesses during COVID, we’ve kept jobs. Savings have increased. So there is a buffer in Greek society to absorb what I hope will be a temporary increase in prices.
Francine Lacqua: Prime Minister, thank you so much for your time.
Kyriakos Mitsotakis: Thank you very much.