Energy crisis: Italy to spend another €6 billion to offset price rises

The Italian government on Friday announced nearly €6 billion more in aid mainly for businesses hit by soaring energy bills.

energy bill
Soaring energy bills in Italy. Photo: Giorgio Tomassetti / Unsplash

The cabinet-approved package comes on top of some €10 billion already budgeted since last summer to shelter customers and businesses.

“We are putting nearly eight billion euros on the table, including six billion in energy aid”, Prime Minister Mario Draghi told a news conference.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

The decree signed on Friday introduces measures to simplify and speed up the construction of renewable power plants, he said.

It includes €1 billion in support for the Italian automotive industry and less polluting vehicles, which Draghi said were “at the heart of the ecological transition”.

And will also see the government “intervene in a structural manner to increase Italian gas production”.

Italy, which has not produced nuclear energy for over three decades, is extremely dependent on imports and consumes a lot of gas.

Gas accounts for between 35-40 percent of its primary energy consumption, compared with around 15 percent in France, according to official statistics for both countries.

Natural gas prices have reached historic highs in recent months, sending electricity costs spiralling across Europe and pouring cold water on the economic post-pandemic recovery.

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Italy’s Eni becomes latest energy giant to report record profits

Italian energy group Eni on Thursday followed rivals in posting mega profits for the past year after household bills soared across Europe.

Italy’s Eni becomes latest energy giant to report record profits

Eni promised bigger returns to shareholders after reporting a net profit of 13.8 billion euros- the highest in two decades and the latest record for Europe’s biggest oil and gas companies after the Ukraine war pushed up oil and gas prices in 2022.

The company’s adjusted earnings, a metric which is followed closely by investors and analysts, also came in at a record 20.4 billion euros.

READ ALSO: What will your Italian energy bills look like in 2023?

The jump in oil and gas prices following Russia’s invasion of Ukraine has helped energy firms to bumper profits, leading Italy and other countries to impose windfall taxes on profits.

Eni said it was subject to windfall taxes on energy profits totalling 1.7 billion euros, of which 1 billion was paid in 2022. It was also subject to similar taxes in other countries, including the UK, where it paid €100mn last year according to the Financial Times.

Energy bosses in Italy said last year that they were not concerned about the taxes as the impact on their profits would be negligible.

READ ALSO: Italy says its windfall tax on energy firms ‘doesn’t work’

The taxes were set to be used to fund energy subsidies in Italy for the lowest-income households and smaller businesses.

But overall energy bills remain much higher than they were before Russia’s invasion of Ukraine. 

The average Italian household will spend 4,724 euros (nearly 400 euros a month) on gas and electricity bills combined in 2023 – 2,500 euros more than in 2021 – according to estimates.

Eni on Thursday said it had taken a lead in ensuring energy security after Russia cut gas deliveries to Europe amid tensions over Ukraine.

It also said new deals would allow Italy to fully replace Russian gas imports within two years.

“During the year, we were able to finalise agreements and activities to fully replace Russian gas by 2025, said Eni chief executive Claudio Descalzi.

He said deliveries had increased from Algeria, Egypt, Mozambique, Congo and Qatar.

Eni also plans to boost the percentage of natural gas in its production to 60 percent by 2030, up from 50 percent currently.

Before the war in Ukraine, Italy imported 95 percent of the gas it consumes – about 45 percent of which came from Russia.