The Italian Energy Policy: Changing Priorities

by A. D'Orazio, C. Poletti

In the 90s, when the liberalization of Italian energy markets started, short-term efficiency issues were driving the economic debate. Over time, the focus of energy policies has progressively shifted towards a multilayered set of interrelated long-term objectives, ranging from climate change, to security of supply and industrial development. Within this changing environment, the article focuses on two crucial issues for the Italian energy policy: the environmental sustainability of economic growth and the security of national energy supply. To this aim the article analyses the Italian environmental performance of the energy sector, past trends and future scenarios, and reviews the so-called gas emergency experienced by Italy on 2005/2006. The article shows that over the last fifteen years Italy has not been able to decouple its economic growth from GHG emissions: a necessary condition to meet the Kyoto target. Even the deployment of renewable sources (RES) has been slow, despite the numerous support schemes implemented since the beginning of the 1990s. RES share on gross final energy consumption was less than 6% on 2006 and, according to the business as usual scenario (BAU) estimated by the EC, it should increase up to 8.2% by 2020. Far below the proposed 17% target. The article discusses this BAU scenario and suggests that, if all the new policies and actions approved or put in the agenda by the Italian government during the years 2007 and 2008 were actually implemented, the gap between EC targets and actual performance could be much lower. Namely, Italy could reach a GHG emissions reduction of 4.8% from 2005 to 2020 and a 9.3% share of renewable sources in gross final consumption by 2020. As for security of supply issues, the article claims that the basis of the 2006 gas emergency were not cuts in international gas supplies. Two were the main reasons of the gas emergency: the inadequacy of the intertemporal flexibility tools, such as storage capacity and the bad functioning of the gas markets whose prices were not allowed to adjust to signal the gas scarcity.