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Italy may reopen coal plants amid concerns about energy supply, PM says

Italy will increase the domestic production of gas and may reopen coal-fired power stations under plans to ensure energy security, Prime Minister Mario Draghi said on Friday.

Italy may reopen coal plants amid concerns about energy supply, PM says
Steam rises from a chimney of a black coal-fired power plant. (Photo by Daniel ROLAND / AFP)

After Vladimir Putin launched a full-scale attack on Ukraine on Thursday, the EU announced an initial raft of sanctions against Russia with more expected to follow.

The instability and sanctions are expected to have a wide-ranging impact on gas supplies and prices in Europe, particularly in Germany and Italy, the two European countries most reliant on gas exports from Russia.

Addressing Italy’s parliament on Friday, Draghi laid out plans to offset price increases and turn to alternative sources of energy.

“The sanctions require us to carefully consider the impact on our economy,” he said.

“The biggest concern is in the energy sector, which has already been hit by price rises in recent months: around 45 percent of the gas we import comes from Russia, up from 27 percent ten years ago.”

Draghi suggested Italy needs to increase its domestic production of gas, which has fallen in recent years, and source more power from existing coal plants.

“The reopening of coal-fired power stations could be used to make up any shortfall in the immediate future,” he said, adding that “the government is ready to intervene to further lower the price of energy, should this be necessary. It is necessary.”

Italy is already in the middle of an energy price crisis, with the authorities last week announcing another €6 billion in aid to offset price hikes following record bill rises last month.

These funds are on top of some €10 billion already budgeted since last summer to help customers and businesses.

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

Increasing reliance on coal-fired power would spell an ecological step backwards, as Italy plans in the longer term to achieve climate neutrality by replacing fossil fuels to produce electricity.

As part of Italy’s overall strategy to transition to more sustainable sources of energy, state-backed energy provider Enel closed a coal power plant in La Spezia, Liguria, in December, after closing two others in 2020.

Draghi acknowledged that the new concern about gas supplies shows Italy hasn’t made enough progress in developing alternative energy sources.

“The events of these days demonstrate the imprudence of not having diversified our energy sources and suppliers more in recent decades,” Draghi stated.

“We need to move quickly on the diversification front, to overcome our vulnerability as soon as possible and avoid the risk of future crises.”

He pointed to a slight reprieve that allows us to look forward “with greater confidence”, as winter is coming to an end and warmer months are ahead.

But he said Italy needs to take various measures to diversify imports, increase natural gas production, and  further improve gas storage capacity for the coming years.

On a longer-term scale, Draghi reiterated the need to look towards renewable energy sources.

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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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