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Italy’s Energy Problem: Can the European Union help bring down the prices?
As summer approaches and the temperatures soar, air-conditioning units in homes and work places are beginning to lure their sweaty recipients toward the “on” buttons. Italians, however, may be forced to stray away from the comfort of air-conditioning this summer because of the exorbitant prices: Italian electricity consumers pay some of the highest rates in Europe.
Historically, Italy has carried limited domestic energy resources and has required imports from various countries in order to keep up with electricity demand. As a result of its oil-fired electricity plants, and old technology, oil and natural gas power most of Italy, making it the fourth largest consumer of oil in the European Union.
Less than 13% of electric generation comes from renewable fuels and, as a result of concerns over the safety of nuclear power raised by the 1986 Chernobyl incident, Italy holds zero operational nuclear power plants.
This, of course, leads to the steep prices that Italians must endure throughout the year, particularly in the summer.
Since 1999, however, fuel diversity has become more of a priority due to the liberalization of the state-owned electric company Enel. Enel previously held a monopoly over the electricity industry but has since been broken down in three independently operated corporations, Elettrogen, Eurogen, and Interpower, allowing for cheaper prices, increased fuel exploration, and the ability to update electric facilities.
Italy has further been encouraged to diversify its energy resources through the European Union’s energy policy set in January of 2007. In order to promote competitiveness and curb climate change, the European Union set out to liberalize the European gas and electric market by developing an effective emissions trading mechanism and increasing the use of renewable fuels in electricity generation. In conjunction with the European Council, the European Commission set the goal of the European Union’s energy mix to be at least 20% supplied by renewable fuels.
Italy’s dependence on oil and natural gas, however, rose 118% between 1990 and 2004, placing the country above the EU-27 average. Although this figure seems bleak, Italy has been noted to have sufficient capacity to invest in renewable energy sources. However, there are several barriers that must be accounted for.
Firstly, the frequent political and policy changes have made the legal framework to introduce more renewables very uncertain.
Secondly, local bureaucracies make it extremely difficult through administrative constraints and red tape. Lastly, especially with Italy’s debt, there are financial barriers: financing electricity grids is costly.
Since 1990, however, renewable energy sources in Italy doubled, placing the county’s renewable production slightly higher than the EU-27 average. Italy is the fifth largest producer of wind energy, and has a considerable geo-thermal and solar potential. Furthermore, the production of biofuels also could be be expanded.
As a result of a European voice in the Italian electricity industry and Italy working towards diversifying their stagnated energy mix of oil and natural gas, the “on” button on the air conditioning unit may be friendlier to both the environment and the wallet in the years to come.
Italy and Europe - a8.05.30.20.28
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