Italy’s Gas Gamble: A Risky Bet on a Declining Fuel
Table of Contents
- 1. Italy’s Gas Gamble: A Risky Bet on a Declining Fuel
- 2. Consumption Drops,Investments Rise
- 3. Italy’s ambitions on Gas
- 4. Climate Objectives at risk
- 5. What specific policy recommendations does Mary Jaller-Makarewicz offer to guide Italy towards a more enduring energy future beyond relying on gas?
- 6. italy’s Gas Gamble: A Conversation with Energy Analyst Mary Jaller-Makarewicz
- 7. Mary Jaller-Makarewicz, Lead Energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA)
- 8. Consumption Drops,Investments Rise
- 9. Italy’s Ambitions on Gas
- 10. Climate Objectives at Risk
Italy’s energy future is at a crossroads. While the nation aims to become a “European energy hub,” a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA) casts a shadow of doubt on this ambitious vision. The report reveals a stark contradiction: gas consumption in Italy is plummeting, yet the government is pushing forward with massive investments in gas infrastructure.
Consumption Drops,Investments Rise
according to the IEEFA report,gas consumption in italy has dropped by 19% as 2021 and is projected to continue declining. This downward trend is attributed to increased energy efficiency in buildings and the growing adoption of renewable energy sources. Yet, despite this reality, Italy is on track to triple its regasification capacity by 2026, increasing from 16.1 billion cubic meters in 2022 to 47.5 billion cubic meters.
“It is essential to recognise where the market is going before engaging in new investments,” explains mary Jaller-Makerwiz,Lead Energy analyst at IEEFA and author of the report. “The Piombino regasifier, for example, started operations in 2023, and in 2024, its utilization rate was only 18%.”
Adding to the concern, Italy plans to increase its import capacity by 22% in the first quarter of 2025 with the opening of a new regasification terminal in Ravenna, despite projections showing continued declines in LNG demand.
Italy’s ambitions on Gas
Many of these investments were approved during the 2022 gas crisis triggered by Russia’s invasion of Ukraine. While understandable at the time, these projects, championed by both the Draghi and Meloni governments, now appear to be misaligned with the changing energy landscape.
Beyond Ravenna, Italy plans to launch a terminal in Porto Empedocle by 2026 and potentially expand the Gioia Tauro terminal, a project first proposed in 2005.
These ambitious plans, estimated to cost billions of euros, raise serious questions about Italy’s commitment to achieving its climate goals. While these investments benefit Snam, Italy’s primary gas transporter, critics argue they contradict the European Union’s Green Deal, which prioritizes transitioning away from fossil fuels and embracing renewable energy.
Climate Objectives at risk
Snam, despite pledging to achieve net-zero emissions by 2050, is investing heavily in expanding gas infrastructure. “Snam’s strategic 2025-2029 plan allocates €10.9 billion towards increasing the transport and storage of liquefied gas,” notes Ana Maria Jaller-Makarewicz, IEEFA analyst. “However, there are no clear indications of investments in solar or wind energy projects.”
Italy’s continued reliance on gas, a fossil fuel, puts its climate goals at risk. While recognized as a “transition fuel,” gas still contributes significantly to greenhouse gas emissions. International energy experts advocate for limiting its role in the transition towards renewable energy.
Italy’s gas gamble risks leaving the country behind in the fight against climate change. As demand for gas declines, investing in outdated infrastructure may prove costly and ultimately detrimental to Italy’s lasting future.
Photo: ANSA | The OLT Rigasifier of Livorno
What specific policy recommendations does Mary Jaller-Makarewicz offer to guide Italy towards a more enduring energy future beyond relying on gas?
italy’s Gas Gamble: A Conversation with Energy Analyst Mary Jaller-Makarewicz
Mary Jaller-Makarewicz, Lead Energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA)
italy is embracing a vision of becoming a “European energy hub,” but a recent IEEFA report casts doubt on this trajectory. In this interview,we speak with Mary Jaller-Makarewicz,lead author of the report and a prominent energy analyst,to delve into the complex realities facing Italy’s energy future.
Consumption Drops,Investments Rise
Archyde: Your report highlights a concerning disconnect between Italy’s declining gas consumption and its aspiring investments in gas infrastructure. Could you elaborate on this contradiction?
Mary Jaller-Makarewicz: Certainly. Italy has witnessed a important drop in gas consumption, reaching 19% lower than in 2021. This trend is attributed to factors such as increased energy efficiency in buildings and the growing adoption of renewable energy sources.Despite this reality, the Italian goverment is pushing forward with substantial investments in gas infrastructure, with plans to triple regasification capacity by 2026.
archyde: The piombino regasifier, operational as 2023, serves as a case in point, with utilization rates hovering around just 18% in 2024. What are the implications of such low utilization?
Mary Jaller-Makarewicz: Low utilization rates for newly constructed infrastructure are a red flag. They indicate a mismatch between investment and market demand, ultimately leading to wasted resources and possibly hindering Italy’s ability to pivot towards cleaner energy sources.
Italy’s Ambitions on Gas
Archyde: Many of these investments were likely conceived during the 2022 gas crisis triggered by the war in Ukraine.However, are these projects now becoming misaligned with the changing energy landscape?
Mary Jaller-Makarewicz: Yes, precisely. While understandable in the context of the 2022 crisis, these projects, championed by both the Draghi and Meloni governments, now appear out of sync with the long-term trends. We see projections indicating continued declines in LNG demand, yet Italy is pushing forward with significant import capacity increases.
Climate Objectives at Risk
Archyde: How do these gas investments potentially impact Italy’s climate goals?
Mary Jaller-makarewicz: Italy’s continued reliance on gas, despite its recognition as a “transition fuel,” poses a significant risk to its climate objectives. Gas still contributes substantially to greenhouse gas emissions,and international energy experts stress the need to limit its role during the transition to renewable energy.
Snam, the primary gas transporter in Italy, has pledged to achieve net-zero emissions by 2050, but its strategic plan focuses heavily on expanding gas infrastructure, with no clear indications of investments in solar or wind energy.
Archyde: Given your analysis, what would you say to Italians who view gas as a necessary bridge to a renewable future?
Mary Jaller-Makarewicz: While gas might potentially be seen as a bridge, investing in outdated infrastructure risks leaving Italy behind in the fight against climate change. The world is rapidly moving towards cleaner energy solutions, and Italy needs to adapt accordingly to ensure a sustainable and prosperous future.
