Eni's Pavia Biorefinery: A Strategic Move Toward Carbon-Neutral Energy Leadership

Eni's conversion of its Sannazzaro de' Burgondi (Pavia) refinery into a biorefinery represents a pivotal step in the company's transition to carbon-neutral energy leadership. With a projected capacity to process 550,000 tonnes of feedstock annually using Ecofining™ technology, the facility will produce both hydrotreated vegetable oil (HVO) diesel and sustainable aviation fuel (SAF) by 2028Eni unveils new biorefinery project in Sannazzaro de’ Burgondi^[1]. This initiative aligns with the European Union's aggressive decarbonization targets, including the Fit for 55 package and ReFuelEU Aviation mandates, which aim to reduce greenhouse gas emissions by 55% by 2030 and mandate a 2% SAF blend in aviation fuel starting in 2025Energy: how new EU regulatory developments can change the investment case^[2].

Technological Innovation and Operational Flexibility

The Pavia biorefinery's use of Ecofining™ technology, a proprietary process developed by Eni and Saipem, enables the conversion of waste and residues—such as used cooking oil and animal fats—into high-purity HVO and SAFEni and Saipem extend collaboration agreement in biorefining^[3]. This technology not only reduces reliance on fossil fuels but also ensures compatibility with existing infrastructure, allowing the biorefinery to operate alongside traditional fuel production without disrupting Eni's current operationsEni unveils new biorefinery project in Sannazzaro de’ Burgondi^[1]. The facility's dual-output flexibility—switching between HVO and SAF—positions it to capitalize on shifting market demands, particularly as the EU's SAF quota is projected to rise to 6% of kerosene consumption by 2030SAF-Outlook / CENA^[4].

Policy Tailwinds and EU Regulatory Support

The European Union's regulatory framework provides a robust tailwind for Eni's biorefining ambitions. The ReFuelEU Aviation Regulation, effective from 2025, mandates a 2% SAF blend in aviation fuel, with the quota increasing to 70% by 2050COMMODITIES 2025: Regulations position Europe as SAF demand hub^[5]. This policy is expected to drive European SAF consumption to 1.9 million metric tons in 2025, a 216% year-over-year surgeCOMMODITIES 2025: Regulations position Europe as SAF demand hub^[5]. Additionally, the EU's Emissions Trading System (ETS) allocates allowances to airlines for SAF use, with €1.5 billion in financial support earmarked for 2024–2025EU allocates €100m-worth of ETS allowances to help airlines buy sustainable aviation fuels^[6]. Eni's projects, including the Pavia biorefinery, are further bolstered by the European Investment Bank (EIB), which has already approved €500 million in financing for similar initiatives, such as the Livorno biorefineryENI BIOREFINERY^[7].

Competitive Positioning and Market Dynamics

Eni's biorefining strategy places it ahead of peers like Repsol, which is repurposing €5.5 billion in capital to produce renewable fuels but lacks Eni's proprietary Ecofining™ technologyEni, Repsol lean into low-carbon investment^[8]. By 2030, Eni aims to increase its biorefining capacity to over 5 million tonnes annually, with a target of producing 2 million tonnes of SAF per yearEni unveils new biorefinery project in Sannazzaro de’ Burgondi^[1]. This scale is critical in a market where EU HVO demand is projected to grow by 65% from 2024 to 2028HVO market in the EU from 2025 to 2030^[9]. Eni's partnerships with KKR—valuing its Enilive unit at over €12.5 billion—and its expansion into biorefineries in Malaysia and South Korea further solidify its global competitive edgeEni talks with KKR for Enilive stake^[10].

Financial Viability and ROI Projections

The Pavia biorefinery's financial feasibility is underpinned by favorable EIB financing terms and Eni's disciplined capital expenditure strategy. The company's net capex for 2024–2027 is capped at €27 billion, with Enilive's pro-forma EBITDA expected to exceed €1.6 billion by 2027Eni Capital Markets Update 2024-2027^[11]. The Livorno biorefinery, a comparable project, is projected to deliver “significantly higher” economic returns than traditional fossil fuel ventures, despite a €741 million total costENI BIOREFINERY^[7]. With HVO and SAF margins expected to widen due to EU mandates and carbon pricing mechanisms, Eni's biorefining division is poised for robust ROI, particularly as synthetic SAF (e-SAF) demand—required to meet 1.2% of the EU's 2030 quota—remains undersuppliedCOMMODITIES 2025: Regulations position Europe as SAF demand hub^[5].

Conclusion

Eni's Pavia Biorefinery is not merely a strategic investment but a transformative move that aligns with the EU's decarbonization trajectory and the global shift toward renewable energy. By leveraging cutting-edge technology, securing regulatory and financial support, and outpacing competitors, Eni is positioning itself as a leader in the carbon-neutral energy transition. For investors, the project's alignment with EU policy, scalable capacity, and strong ROI potential make it a compelling long-term opportunity in the evolving energy landscape.