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ENERGY

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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ENERGY

How long will it take Italy to wean itself off Russian gas?

Italy's government has repeatedly said it plans to end its dependence on Russia for gas supplies following the invasion of Ukraine. But as the timeline keeps changing, when and how could this happen?

How long will it take Italy to wean itself off Russian gas?

Italy is heavily dependent on Russian gas, but has been seeking new sources since Moscow’s invasion of Ukraine as part of an effort to end this reliance in the coming years.

But it remains unclear whether Italy can really end its dependence on Russia for its gas supply – or when this might be feasible.

READ ALSO: What does Italy’s Algerian gas deal mean for energy supplies?

The government has been seeking new sources since Moscow’s invasion of Ukraine, including with a recent deal to boost supplies from Algeria.

Prime Minister Mario Draghi said last week the country could be independent of Russian gas by the second half of 2024 – the latest in a series of changing estimates.

“Government estimates indicate that we can make ourselves independent from Russian gas in the second half of 2024,” Draghi told the Senate, while adding that the “first effects” of this plan would be felt by the end of this year.

He said his government was also seeking to boost its production of renewable energy, including by “destroying bureaucratic barriers” to investment, saying it was the “only way” to free Italy from having to import fossil fuels.

Explained: Why and how Italy will pay for Russian gas in rubles

In April, Italy‘s Ecological Transition Minister Roberto Cingolani estimated the country would no longer need Russian gas within 18 months, following an earlier prediction that it could take until 2025.

Italy is one of Europe’s biggest users and importers of natural gas, importing 90 percent of its gas supply with 45 percent of that coming from Russia – up from 27 percent ten years ago.

Italy now imports 29 billion cubic metres of Russian gas a year, which Cingolani said in March “must be replaced” – but he didn’t specify with what.

Analysts have said there are “a lot of questions” about how helpful Italy’s gas deal with Algeria will be.

Despite its vast natural gas reserves, Algeria is already exporting at close to full capacity.

Draghi repeated his strong support for EU sanctions on Moscow last week, including a proposed ban on imports of Russian oil, although this is currently being blocked by Hungary.

“We must continue to keep up the pressure on Russia through sanctions, because we must bring Moscow to the negotiating table,” he said.

But for now, Italian energy giant Eni says it plans to pay for Russian gas supplies in rubles, meeting a demand from Vladimir Putin.

It was not immediately clear whether the plan would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.

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