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ENERGY

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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MONEY

EXPLAINED: What is Italy doing to cut the rising cost of living?

Amid soaring inflation and price rises, the Italian government has announced new measures to help families and businesses keep costs down. Here's what you need to know.

EXPLAINED: What is Italy doing to cut the rising cost of living?

Italy approved a much-anticipated aid decree on Thursday, August 4th, bringing a new round of state funding intended to tackle the country’s most critical issues: from the rising cost of living and sky-high inflation to the energy and supply crisis. 

READ ALSO: Fuel tax cut and help with energy bills: Italy approves inflation aid package

The ‘aiuti bis’ aid package, worth around 17 billion euros ($17.4 billion), likely marks the last major act by outgoing prime minister Mario Draghi before an early general election next month.

The funding is seen as badly needed after inflation hit 8 percent in Italy in June – the most severe spike the country has experienced since 1976.

After weeks of speculation about exactly which measures may or may not be included in the decree, we now know it contains everything from an extension to the fuel duty cut to more help with energy bills for those on lower incomes.

Here’s what you need to know about the latest measures intended to keep the cost of living under control.

Extension to fuel duty cut 

The current discount on fuel duties is to be extended again to September 20th, though the value of the discount will drop from 30 to 25 cents. 

The discount was recently extended to August 21st but the government decided to further prolong the incentive in a bid to ease the blow that record fuel prices have dealt to consumers and businesses.

The cut was initially introduced as far back as March when the average prices at the pump for petrol and diesel both exceeded the two-euro mark.

Help with energy bills

Measures introduced in the first half of the year to help lower-income households and vulnerable people pay rising energy bills will be extended under the new decree.

It extends an existing government discount on gas and electricity bills for a further three months, until the end of 2022, as well as reducing system charges.

READ ALSO:

Italy’s tax on the ‘excess profits’ of energy companies has meanwhile been extended to June 2023 after the government reportedly received fewer payments than expected.

Tax cut for employees

Workers earning a gross income of under €35,000 are eligible for a two percent tax saving, amounting to a small monthly ‘pay rise’ until the end of this year.

“Already in the budget law we reduced social contributions by 0.8 percent; for the second half of the year this reduction goes up to 2 percent, as we’re now adding 1.2 percent”, said Economy Minister Daniele Franco at a press conference on Thursday.

As the tax relief lasts until the end of the calendar year for a six-month period, the July deduction will be retroactive.

New aid measures announced on Thursday are hoped to boost Italy’s consumer spending power as the cost of everyday goods rises. Photo by ANDREAS SOLARO / AFP

Those earning €35,000 can expect to save around a further €30 per month (1.2 percent of a monthly salary of €2,692 – most Italian salaries are paid out over 13 rather than 12 months to give employees a tredicesima Christmas bonus).

To find out how this may apply to you, it’s advisable to speak to an accountant or your local Italian tax agency (Agenzie delle entrate) office.

More funding for mental health treatment

The new decree will also enhance the existing ‘psychologist bonus’ (bonus psicologo) by allocating an additional 15 million euros to the measure. This will bring the total amount of funds available for the bonus to 25 million euros. 

The bonus was officially introduced at the end of July to help make mental health services more affordable, amid a pandemic-induced crisis in Italy.

All individuals with an Isee (a calculation of relative household income and wealth) lower than 50,000 euros will be eligible to receive a 600-euro voucher, which they’ll be able to use when seeing professionals listed on Italy’s official register of psychologists.

See more information about claiming the bonus in a separate article here.

Discount on public transport tickets

The government will allocate a total of 101 million euros to funding its ‘transport bonus’ (bonus trasporti); 22 million more than the original amount.

The bonus takes the form of a one-time 60-euro discount to be used on the purchase of monthly or yearly tickets for local transport services.

It will be available from September 2022 to all pensioners, students, and employees with an Isee of up to 35,000 euros.

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