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