Rome, 9 April 2024. By 2050, the world will have reduced its tonnes of CO₂ by just 12 billion in 27 years, compared to the 37.4 required by the International Energy Agency to achieve climate neutrality. Italy, on the other hand, is going in the right direction: in 2023, it will have reduced its CO2 emissions by 7.7 per cent and made increasing use of renewable sources. Italy is therefore in line with the European 2030 targets and is expected to exceed its 2030 target on the share of renewable energy use by reaching 40.5%. The transport sector continues to contribute the most to air pollution in Italy (27%), followed by industry (19%), the residential sector (buildings) with 12% and finally agriculture (8%). Rome the most polluted capital of Europe.
This is what emerges from the report ‘Energy transition and large companies. Trends and economic impact in Italy and Europe.” published by Rome Business School and edited by Francesco Baldi, Lecturer of the International Master in Finance of Rome Business School; Massimiliano Parco, Economist, Centro Europa Ricerche and Valerio Mancini, Director of the Rome Business School’s Disclosure Research Centre.
The report explores the policies, trends and challenges of the energy transition process by analyzing the major European powers and energy companies in Europe. Institutions aim to halt investment in new fossil fuel projects and the sale of new internal combustion engine cars by 2035. “But the key action will be to increase primary energy production from renewable sources from 11.9 per cent in 2022 to 71.2 per cent in 2050 worldwide. This is a massive and unprecedented growth, to be implemented at a rate of more than 2 percentage points per year,’ says Francesco Baldi.
To achieve climate neutrality, primary energy from renewable sources would have to increase from 11.9 per cent in 2022 to 71.2 per cent in 2050, with oil going from 29.6% to 7.8%, natural gas from 22.9% to 5.9%, and coal from 26.9% to 2.8%. “However, there will be many risks if the energy transition process is not supported by coordinated policy actions, especially for the extractive industry, agriculture, forestry, fishing, construction and infrastructure networks,” warns Massimiliano Parco, who continues, “among the risks are also the decrease in profitability of companies operating in CO₂-intensive sectors, employment redistribution in favour of green and pro-climate companies, price variations, and the availability of technological opportunities”.
The European Union aims to achieve climate neutrality by 2050 with the REPowerEU plan, by reducing energy consumption, increasing diversification in the supply of energy sources and accelerating the production of energy from renewable sources. In Italy, the target is to reach 277 mtCO2ep by 2030, -33.8% compared to 2022 and -46.9% compared to 1990. The decreases for other countries are larger: in Germany, a reduction of 39.8% compared to 2022 is expected; in France and Spain, reductions of 37.6% and 46.9% respectively.
In the period 2016-2019, on average, CO2 emissions in Italy decreased by -1.3%. The pandemic shock in 2020 contributed to a further decrease in CO2 emissions (-8.8%), thanks to a decline in GDP per capita (-8.7%, in terms of contribution). In contrast, the production rebound (GDP/POP) in 2021 led to a new 8.5% increase in Italian pollutant emissions. In 2023, according to the authors’ estimates, Italy recorded a 7.7% reduction in CO2 emissions due to a decrease in energy intensity (-3.7%), a reduction in energy consumption and an increase in gross domestic product (at constant prices), as well as a slight decrease in population (-0.2%, percentage contribution). The increased use of renewable energy sources resulted in less pollution (CO2/REN, percentage contribution -20%).
Looking at energy sources, in 2022 nuclear power accounted for 34.9% in France, 12.6% in Spain and 3.1% in Germany, and was absent in Italy. Oil and oil products represented the first energy source in national energy consumption in Spain (44.4%) and Germany (35.2%), while it was the second source of use in Italy and France (34.9% and 31.5% respectively). In Italy, although decreasing compared to 2021, most of the energy consumed comes from the use of natural gas (38%). Fossil sources accounted for about 78% of energy consumption in Italy and Germany in 2022, about 70% in Spain and 50% in France. Finally, renewable energies and biofuels accounted for 18.8% in Italy, 17.3% in Germany, 16.2% in Spain and 13.7% in France in 2022.
By the end of 2022, Spain had the highest share of renewable energy use (22.1%), followed by Germany (20.8%), France (20.3%) and Italy (19.1%). According to the 2023 National Integrated Energy and Climate Plans, Spain and Italy are in line with the European 2030 targets. Spain aims to reach 47.9 per cent use of renewables by 2030, exceeding the EU target by 4.9 percentage points, while Italy is expected to exceed its target of 39%, reaching 40.5% (Energy and Climate Plan 2023 projections).
On average, Italian households spent less on electricity and gas in 2023 than in the previous year, with an average of around EUR 770 for electricity and EUR 863 for gas (34% and 27% less than in 2022). At regional level, Sardinia recorded the heaviest electricity bills, while the lightest bills were in Liguria, Basilicata and Trentino-Alto Adige. For gas, Trentino-Alto Adige paid the most, followed by Lombardy and Emilia-Romagna, while Sicily, Campania and Lazio recorded the lightest bills.
Looking at industrial electricity consumption, on the other hand, it decreased by 3.9% in 2023 compared to 2022. In December 2023, 47.3% of the demand for electricity was met by production from non-renewable energy sources, 34.5% by renewable energy sources, and the remainder by the foreign balance (Terna, 2023).
Overall, in December 2023, Italian electricity production from renewable energy sources increased by 26.3% compared to December 2022, with particular growth in hydro (+40.2% vs. December 2022), wind (+42.1%) and photovoltaic (+41.1%). In particular, photovoltaics saw an increase of more than double (+111%) compared to 2022.
The growth and distribution of renewable plants are uneven across Italy, with greater increases in installed capacity in the north for photovoltaics (led by Lombardy, then Veneto and Piedmont) and in the south for wind power (Puglia first, followed by Sicily and Campania). Hydroelectric production is instead concentrated in the Alpine regions (Lombardy, Piedmont and Trentino-Alto Adige).
The year 2023 was characterised by falling energy prices. In Europe, Europe’s largest 15 listed companies (in terms of sales revenue) operating in the energy sector recorded revenues of almost EUR 1,668 billion in 2023, up 24.5% compared to 2019 (EUR 1,339 billion). In Italy, the top eight listed companies (Eni, Enel, Snam, Terna, Edison, A2A, Hera and Iren) saw their equity grow by 5.5% between 2018 and 2023, reaching €130.8bn (revenue increase of 37.1%). However, in 2023, the revenues of these companies decreased by 30.2% due to lower energy prices.
In Europe in 2023 ENEL is seventh and ENI is eighth in terms of revenues, together the two generated revenues in 2023 of EUR 189.3bn. Germany fared better with EON and Uniper (together 201 billion), while the two Spanish companies (Repsol and Iberdrola) had revenues of 107.8 billion.
The Recovery and Resilience Plans of Germany and France, although smaller in terms of available resources than Italy and Spain, concentrate more resources in the climate contribution in terms of percentage share. The updated NRPs of Italy, Germany, France and Spain indicate quotas above 37.5% for all countries and an increase compared to the NRP 2021. Italy allocates the lowest share to climate contribution (39%), slightly higher is Spain’s (39.9%), while higher are those of Germany (45.8%) and France (49.5%).
Italy certainly still has a long way to go, but it is well on its way to achieving zero emission targets. “The implementation of the NRP and its equivalent in the main European countries will be crucial not only for reducing carbon emissions, but also for developing technological innovation, creating new jobs in the renewable energy sector, and improving overall air and environmental quality,” concludes Valerio Mancini.