Energy transition in Italy: challenges and opportunities. The PNIEC

The energy transition in Italy towards 2030 and 2050: the objectives and main axes of action are set by the PNIEC, the National Integrated Energy and Climate Plan. In July 2023, the Ministry of the Environment and Energy Security (MATTM) sent the European Commission a proposal to update the PNIEC 2019.
What effects can the energy transition outlined in the PNIEC 2023 have on Italy’s economic and productive system?

The main areas of the energy transition in Italy that the PNIEC focuses on are: decarbonisation; renewable energies energy efficiency; energy security; internal market; research, innovation, competitiveness. The status as of 2021 of the main energy and emission indicators in Italy and the forecasts to 2030 based on current policies show delays compared to the 2019 targets. For example, renewables at 27% vs target 30%, final oil consumption of 109 million tonnes vs target 104.

Certainly, compared to 2019, the reference context today has changed profoundly with the pandemic, the collapse and then recovery of the world economy, energy price shocks and raw materials and the war in Eastern Europe.

In particular, according to MATTM’s analysis, the dimensions of energy security and the speed of the decarbonisation process have strengthened with the extraordinary investment plans of the RePowerEU and the Pnrr in Europe. But delays are occurring on renewable energies, also due to the still very long lead times for authorisations of new plants. While the decarbonisation process will have to be speeded up not only in the most energy-intensive industrial sectors (hard-to-abate) linked to ETS (Emission Trading Scheme) targets, but also in ESR (Effort Sharing Regulation) sectors such as transport, residential civil, agriculture, waste, and small and medium industry.

The process of updating the PNIEC 2023 is based on a technology-neutral approach to achieving the goals of the energy transition in Italy. The PNIEC foresees an acceleration in particular on electrical renewables, production of renewables gas (hydrogen, biomethane) and biofuels such as HVO (hydrotreated vegetable oil), building renovation, electrification of final consumption (heat pumps), dissemination of electric vehicles and policies to reduce private mobility; CCS (CO2 capture, transport and storage).

Particular importance, with related criticism from think tanks and environmentalist and pro-renewable energy associations, is also given to the objective of making Italy a gas hub in the Mediterranean, strengthening its reception, transport and storage infrastructures according to a logic of diversification of sources, risk and energy technologies.
The recent decision of the Italian government to shift the sources of financing for EUR 15.9 billion of interventions, many of them related to energy transition goals, from the PNRR to other funds increases the importance of RePowerEU to over EUR 19 billion of investments.

The 2030 scenario outlined by the PNIEC, elaborated according to a standard input/output model based on ISTAT matrices of the interdependencies between 63 economic sectors with data from 2019, summarises the following changes for the period 2023-2030 compared to what would happen for the energy transition in Italy in the current policy scenario
– Higher investments of €27.2 billion, of which €8.9 billion in residential, €1.5 billion in the tertiary sector, 0.3 in industry, 10.6 in transport, 5.4 in the electricity system, 0.2 in storage systems.
– Additional average annual contribution of 13.6 billion to value creation, particularly in residential (5.9 billion) and transport (3.3 billion)
– Increase of 191,000 average annual temporary jobs (AWU – direct and indirect labour units, i.e. amount of work done in the year by a full-time employee), including +22,000 in renewables and -3600 in fossil fuels.

The Just Transition Fund (JTF) for EU social cohesion policies, provided by the European Green Deal to support territories facing the challenges of energy transition, has identified the Province of Taranto and Sulcis-Iglesiente as the most affected areas in Italy. The Territorial Plans with ERDF and ESF+ funds provide for interventions in three main areas
– Increased energy production from renewable sources and territorial rehabilitation.
– Economic diversification with green activities, agriculture, tourism and sustainable marine economy.
– Training and retraining of personnel with green skills.