Italian Hydrogen Policy: Drivers, Constraints and Recent Developments

Abstract

Italy presents, potentially, some important comparative advantages in the emerging clean hydrogen economy. However, unlike other large EU countries, Italy has not yet issued a comprehensive strategy on hydrogen nor has it developed a coherent hydrogen diplomacy. It was only with the National Recovery and Resilience Plan, launched in the wake of the COVID-19 crisis, that Italy upgraded its measures for promoting green hydrogen and related activities. The main players in the Italian hydrogen landscape are national industrial actors, especially state-owned energy companies. This leading role can be an important asset to overcome the problems related to an industrial system otherwise composed of small and medium companies, which can suffer competition from hydrogen frontrunners. Externally, Italy has supported all the European and multilateral initiatives on hydrogen. The main focus of the Italian international approach, however, is linked to the hydrogen hub concept, which targets the MENA region and is also supported by its national energy companies. This concept has received a further push after the beginning of the war in Ukraine. Yet, its practical realization is very problematic because of domestic and external challenges.

1 Hydrogen in Italy: In Search of a National Strategy

Unlike other large European countries, as of 2023, Italy was yet to issue a comprehensive strategy on hydrogen. At the end of 2020, the government published the first policy document—the ‘Preliminary Guidelines for a National Hydrogen Strategy’—launching a consultation with stakeholders. However, the actual national hydrogen strategy, initially expected at the beginning of 2021, was never finalised. Despite this delay—which is not surprising for a country like Italy not used to adopting a forward-looking and comprehensive approach to energy and industrial policy issues—the development of hydrogen has become a topic more and more discussed in policy and business circles (e.g. Confindustria, 2020; European House-Ambrosetti, 2020, 2022). This debate has also focused on the external dimension of the Italian hydrogen policy, as the country might play the role of a ‘hub’ in the emerging international hydrogen trade by connecting North Africa with the EU market. Moreover, important national industrial actors, particularly state-owned energy companies, have recently increased their involvement in several initiatives, projects and alliances on hydrogen at home and abroad. This trend has further accelerated in the wake of the Russian invasion of Ukraine and the growing role that hydrogen has gained in the EU policy response to the energy and climate crises under the REPowerEU plan.

1.1 Overview and Comparative Advantages

Italy presents, potentially, some important comparative advantages in the emerging clean hydrogen economy (European House-Ambrosetti, 2020; Franza, 2021; FCH, 2020; Giuli, 2022; SNAM, 2019). On the supply side, Italy could become the first EU market where green hydrogen would be the cheapest source of hydrogen. Italy is the third EU country for renewable power capacity (excluding hydro) installed after Germany and Spain (IRENA, 2022). According to a study of SNAM (2019)—the national gas Transmission System Operator (TSO)—given the country’s access to low-cost renewable generation (particularly because of higher solar irradiation), green hydrogen will outcompete grey hydrogen by 2030, 5–10 years earlier than Germany. A study by the FCH Joint Undertaking (2020) estimates that covering Italy’s 2030 clean hydrogen demand, ranging between 113,100 and 571,800 tH₂, could require between 4.1 and 21 GW of dedicated renewable capacity (as of 2022 Italian renewable capacity totalled around 60 GW). Italy has the potential to develop a similar capacity. However, the slow pace in new renewable energy installations (around 1 GW per year) since the mid-2010s—when in the wake of the economic crisis the government dismantled several supporting measures (Prontera, 2021)—is a factor of major concern for Italy’s hydrogen ambitions (GSE, 2022).

On the demand side, Italy’s use of hydrogen accounts for about 500,000 tH₂/yr (MITE, 2022). This amount is manly produced by using steam methane reformers (grey hydrogen) and is almost entirely used by the chemical and refining industry. The state-owned oil and gas company ENI is the major producer and consumer of hydrogen in Italy. According to the FCH-JU (2020) projection, however, the country has significant potential for expanding hydrogen demand in several sectors. First of all, hydrogen could play an important role in the decarbonisation of industrial energy demand, where natural gas accounts for about 35%. Moreover, there are several steel plants in Italy (5% of the primary steel that is produced in Europe) that could switch to hydrogen. Overall, FCH-JU sees Italian industry clean hydrogen demand oscillating between 1.13 TWh (low estimate) and 6.41 TWh (high estimate) by 2030 (FCH-JU, 2020). Further opportunity for hydrogen demand is in the heating and cooling sector, where natural gas accounts for almost 50% of the final energy demand. In these sectors the FCH-JU estimates oscillated between 1.98 and 5.4 TWh by 2030. Finally, the larger opportunity for hydrogen in Italy comes from the transport sector: particularly road transport (trucks, buses and light commercial vehicles), as railway transport is electrified to a large extent and shipping does not play a major role in the economy. In the transport sector the FCH-JU (2020) estimates oscillate between 0.75 and 7.5 TWh by 2030. Currently, however, in Italy there are only five hydrogen stations for road transport: two for public transport (buses) and three for private vehicles (two of them realised thanks to a collaboration between ENI and Toyota).

Opportunities for hydrogen development in Italy also come from the presence in the country of industrial actors working on core hydrogen technologies, such as electrolysers and fuel cells, and related equipment (European House-Ambrosetti, 2020; Giuli, 2022). Italy is the second EU producer of electrolysis-related core technologies (25.2% of the EU total) (European House-Ambrosetti, 2020). This industrial capacity, however, is not aimed at producing clean hydrogen. The Italian electrolysis-related industry should adapt to this end if intends to exploit export opportunities among partners willing to upscale clean hydrogen production. Fuel cells production is not particularly developed in Italy: €1 million in 2018 compared to 21.8 million in Germany (European House-Ambrosetti, 2020). The picture is more promising with respect to some supporting technologies and equipment: mechanical, thermal, electric, and control systems. Italy is the leading EU manufacturer of thermal equipment such as evaporators, condensers, burners, and boilers for blue hydrogen. In 2018, the Italian market share was almost 25% of total EU production. As for mechanical technologies (valves, pumps, compressors and pressure converters) Italy ranks second in Europe behind Germany, with a 19% market share (European House-Ambrosetti, 2020). However, it is worth noting that Italian companies in all these sectors are generally small size companies. This can represent a disadvantage with respect to the key competitors such as Germany, China, Japan and Korea (Giuli, 2022).

Finally, thanks to its geographical position and its large gas infrastructure network, Italy might become a hydrogen hub. Italy could use the existing gas pipelines from North Africa (Algeria, Tunisia and Libya), where hydrogen can be generated from low-cost renewables and then transported to Italy and possibly Northern Europe. According to a study of SNAM (2019) importing North African green hydrogen, in the long-term, would cost 10–15% less than producing hydrogen in Italy. It is worth stressing that the hydrogen hub concept is strongly supported by SNAM itself (see also below). SNAM and ENI manage the gas pipelines connecting Algeria (Transmed) and Libya (Greenstream) with Italy. SNAM’s stated vision, particularly, is to ‘transport entirely decarbonised gas (not only hydrogen, but also biomethane), helping to strengthen Italy’s role as a European hub, with a view to exporting clean energy to Northern Europe’ (SNAM, 2022). The 50% of the approximately €7.4 billion of SNAM’s 2020–2024 business plan is for the replacement and development of pipelines that are also compatible with hydrogen transport.

Box 1. Italy as a Hydrogen Hub? Lessons Learned from the Failure of the Gas Hub Concept

In the mid-2000s the concept of transforming Italy into a gas ‘hub’ in the Mediterranean gained popularity in policy and business circles. However, this goal was never achieved and the country remained an end market for gas export with very high prices. Several factors contributed to this failure, particularly:

• Instability in the North African region

• Instability of the Italian policy and regulatory framework

• Local opposition to energy infrastructures and length of the procedures for their authorisation

• Flat domestic gas demand.

1.2 Towards a Hydrogen Policy: Drivers and Key Pillars

As explained, Italy has not yet issued a national hydrogen strategy. An embryonic policy vision on hydrogen was only drafted along with the country’s 2019 National Energy and Climate Plan (NECP). Before this EU-driven document, hydrogen was basically absent from the policy debate. In the 2013 National Energy Strategy (SEN, 2013), the term hydrogen was mentioned only one time with reference to the EU R&D policy, i.e. the Strategic Energy Technology Plan. Similarly, in the 2017 National Energy Strategy (a policy document of 300 pages), hydrogen was mentioned only one time in a footnote, referring to the possibility to ‘imagine’ a role for this source in the country’s energy mix (SEN, 2017). Conversely, in the 2019 NECP the term hydrogen is mentioned 55 times (NECP, 2019). In this document, more importantly, the government explicitly recognised the role of hydrogen in the Italian climate and energy policy. The NECP called for exploring power-to-gas technologies to achieve flexibility and security of supply through sector integration. It also suggested that the Italian gas network could become the centrepiece of a ‘hybrid’ electric-gas energy system. Different possibilities were considered in the NECP, including blending as a transitional step to the development of two parallel infrastructures (on for gas and on for hydrogen). However, the NECP did not provide specific financial commitments nor did it set ambitious targets for hydrogen, mentioning only a small target in transportation: 1% of the RES target for transport (amounting to about 21,132 tH₂).

In 2020, government’s attention to hydrogen further increased. In November, the Italian Ministry for Economic Development issued the ‘Preliminary Guidelines for the Italian Hydrogen Strategy’ (MISE, 2020), launching a consultation with relevant stakeholders (a consultation ‘table’ was also set up at the Ministry for Economic Development). The goal of the government was to finalise the national strategy on hydrogen at the beginning of 2021. However, this never happened. On January 2021 the government in charge—the so-called Conte II government—was dismissed. The newly appointed government lead by Mario Draghi (February 2021–July 2022) did not issue a national strategy on hydrogen. However, a set of new measures on hydrogen were included in the National Recovery and Resilience Plan (NRRP), transmitted by the government to the European Commission on 30 April 2021 and approved on 13 July 2021.

In the 2020 ‘Preliminary Guidelines for the Italian Hydrogen Strategy’ the government framed hydrogen mainly as a way of matching the country’s increasingly ambitious decarbonisation objectives and as a vehicle for industrial and technological development (MISE, 2020). The intention of the government was to outline a roadmap with targets to establish a hydrogen economy in Italy. Hydrogen was expected to represent 2% of Italy’s total final energy consumption by 2030 (about 700,000 tH₂), targeting a 20% share by 2050. The 2030 goal would be delivered by 5 GW of electrolyser capacity, which would however cover only slightly more than half the targeted amount. This suggests a role for blue hydrogen as well (Giuli, 2022), unless significant imports of green hydrogen would be commenced before 2030 (a scenario that currently is not very likely). The government foresaw that the new targets would require up to €10 billion of investments between 2020 and 2030, to which one should add investment for dedicated renewable capacity. Out of the total amount, €5–7 billion would be dedicated to production, €2–3 billion to distribution infrastructure, and €1 billion to R&D. It was expected that up to half of these investments could be supported by ad hoc national and EU resources and funds. The preliminary guidelines focused on stimulating hydrogen demand mainly in trains, heavy duty vehicles, petrochemicals and refining. Sectoral objectives, however, were only foreseen for long haul trucks: targeting 2% by 2030 and up to 80% by 2050. Blending hydrogen in the existing gas network was also considered as a viable strategy for stimulating the hydrogen market. According to the guidelines, with these hydrogen targets, Italy should benefit from a CO₂ reduction of 8 Mton by 2030, as well as promoting the creation of 200,000 temporary jobs and 10,000 permanent jobs. The preliminary guidelines also considered the establishment of ‘hydrogen valleys’, as ecosystem for hydrogen innovations and technological development. Finally, the preliminary guidelines highlighted the potential role of the country as a hub for the wider European market, thanks to imports of green and blue hydrogen from North Africa.

With the 2021 NRRP the Italian hydrogen policy has been upgraded and better defined. In the NRRP the term hydrogen is mentioned 85 times, underlining a trend of growing attention to the issue by the Italian governments (Fig. 1). Decarbonization and goals to obtain industrial leadership over hydrogen technologies (along all the supply chain, from production to transport, consumption and storage) have been the main drivers of this development. Moreover, with the NRRP—which is closely aligned with the 2020 EU strategy on hydrogen—the Italian government more explicitly focuses on green hydrogen, although blue hydrogen continues to be supported by important national industrial players (see below).

Fig. 1

Source Author’s own elaboration

Mention frequency of the term ‘hydrogen’ in recent Italian policy documents and plans.

According to the NRRP, the Italian hydrogen policy is based on six main pillars: (i) development of flagship projects for supporting the use of hydrogen in hard-to-abate industrial sectors, starting with the steel industry; (ii) promotion of ‘hydrogen valleys’ for industrial and technological upgrading by using brownfield industrial sites; (iii) promotion of hydrogen use in the heavy transport sector—also supporting refuelling stations—and in the non-electrified railway transport (4763 km of the Italian rail network are still served by diesel trains); (iv) creation of a gigafactory for electrolyzer production; (v) support for R&D activities, particularly in the area of green hydrogen production, transport and storage; (vi) improvement of the regulatory framework for enhancing the hydrogen economy. Overall, the Italian NRRP allocates €3.64 billion for direct investments into hydrogen to be disbursed by 2026 (Table 1).

Table 1 Hydrogen investments in the Italian NRRP

The larger amount of resources is allocated to the decarbonization of hard-to-abate sectors, including the shift from grey to green hydrogen (€2 billion). Green hydrogen production in brownfield industrial sites also has an important role in the NRRP (€0.50 billion): the goal of the government is to establish 10 ‘hydrogen valleys’. As of 2023, eleven Italian regions opened a call to develop similar projects with the first €0.2 billion of NRRP financial support. For the Gigafactory, the NRRP goal is to achieve 1 GW of electrolyser production capacity by 2030, whereas for road transport the target is 40 refuelling stations. In addition to these targeted measures, it is expected that the NRRP will provide indirect investments linked to the hydrogen economy in the amount of some €17 billion (MITE, 2022). However, the NRRP remains quite generic on several important aspects. For instance, the NRRP considers the opportunity to offer additional financial support for ‘hydrogen production and transportation’ (PNRR, 2021: 33). But it defers the details of these measures to the final publication of the national strategy on hydrogen. Such strategy, however, was not formulated even by the right-wing Meloni Government, which replaced the Draghi government in October 2022. Despite these limits, the NRRP has been instrumental in accelerating investments in hydrogen also by better linking national and EU-level strategies. For instance, in April 2023, the European Commission approved, under the State Aid Temporary Crisis and Transition Framework, the Italian scheme for hydrogen valleys (worth €450 million) (European Commission, 2023). This decision, which is in line with the RePower EU Plan and the Green Deal Investment Plan, will further help the realization the related NRRP objectives. Moreover, in its ‘RePowerEU chapter’—issued on July 2023 and approved by the EU at the end of September 2023—intended to update the NRRP in the wake of the war in Ukraine, the Italian government has earmarked additional €90 million for the ‘hydrogen valleys’ and €140 million for R&D on hydrogen.

2 The Role of National Industrial Actors

The interest in hydrogen economy is quite recent in Italy. The country lags well behind the other large European states in terms of hydrogen projects (Fig. 2). Of the 32 Italian hydrogen projects, as of October 2022, only 5 were operational, 1 under construction, 3 in the demonstration phase and 23 in the ‘concept’ or ‘feasibility study’ phase.

Fig. 2

Source Author’s elaboration from ‘IEA Hydrogen Projects Database’, available at: https://www.iea.org/data-and-statistics/data-product/hydrogen-projects-database. Accessed 10 February 2023 (data as of October 2022)

Hydrogen projects in Italy and selected European countries.

Despite this gap, it is worth noting that many of these projects are promoted by important national industrial actors (i.e. state-owned energy companies), which are involved (alone or in partnership with other companies) in hydrogen development in Italy: SNAM (the Italian gas TSO); ENI (the former gas monopolist); and ENEL Green Power (ENEL is the former electricity monopolist; ENEL Green Power is the group’s company that focuses on renewables). The activism of these big players in hydrogen development is in line with the Italian tradition of state-led capitalism (Schmidt, 2009), which sees national champions taking the lead in emerging industrial sectors. This development might help close the gaps of an industrial system otherwise characterised by medium and small size companies. By creating partnerships with other players, these national champions link hydrogen production with relevant offtakers (e.g. energy utilities, railway operators, refineries) and support technological upgrading (see below). However, while ENI and SNAM support both blue and green hydrogen (and carbon capture and storage, CCS, technologies), ENEL Green Power, which is a global player in the area of renewables, focuses on green hydrogen. If not properly managed, this divergence, in the long run, could undermine the coherence of the Italian hydrogen policy, as the energy choices of the country are widely influenced by these state-owned companies.

SNAM, along with ENI, is the main promoter of the vision of transforming Italy into a European hydrogen hub. Along with investments for adapting its gas infrastructure to this task, SNAM is also working on developing international standard for transporting hydrogen into steel pipelines, in cooperation with RINA, an Italian company leader in international certification. Moreover, SNAM has entered into partnerships with various operators for the development of the Italian hydrogen supply chain. SNAM is working with railway operators (FS Italiane and Ferrovie Nord), traction motor suppliers (Alstom) and energy utilities (ENI, A2A and Hera) to develop refuelling infrastructure for hydrogen mobility in Italy. It also started a collaboration with Wolftank Hydrogen—a company of the Austrian Wolftank-Adisa Group dedicated to hydrogen and renewable energy—to promote hydrogen mobility through the construction of refuelling stations for cars, buses and trucks. Finally, SNAM is involved in several experiments and trials for using hydrogen to decarbonise industry and power generation.

ENI is the main Italian hydrogen producer and consumer. The company’s Strategic Plan for the 2022–2025 period sets a target of producing 4 million tonnes of hydrogen per year by 2050. ENI, however, supports ‘a technologically neutral approach’ that combines all the available low-carbon technologies. In practice, this means that ENI supports blue hydrogen and it is investing in CCS technologies and projects in Italy and abroad. In Italy, in 2022, ENI launched a cooperation with Edison (an electricity utility) and Ansaldo Energia (an Italian power engineering company) to test the use of hydrogen (both green and blue) to substitute natural gas in a power plant owned by Edison. Moreover, ENI is a member of the Hydrogen Joint Research Platform, an Italian R&D initiative launched in 2021 in cooperation with Edison, SNAM and the Polytechnic University of Milan. Finally, on September 2022, SAIPEM—an engineering company of the ENI group—entered into a partnership with Edison and Alboran Hydrogen for developing three green hydrogen projects linked to the Puglia Region ‘hydrogen valley’ initiative.

Unlike ENI, ENEL Green Power focuses on green hydrogen. In 2021, the company began cooperation with Saras (an Italian energy company with operations in petroleum refining, marketing, transportation and power generation) to develop a green hydrogen project in Sardinia. This project provides for the use of a 20 MW electrolyser powered by renewable energy produced on site to supply green hydrogen to be used as raw material in the Saras refinery at the industrial site of Sarroch, in the province of Cagliari. In 2022, then, ENEL Green Power launched, in cooperation with Sapio (an Italian engineering company), a green hydrogen project linked to a wind power plant located in Sicily (at Carlentini). Here, ENEL Green Power also launched the ‘NextHy’ initiative, a multi-stakeholder platform for promoting R&D on green hydrogen. Finally, ENEL also takes part in the development of the Italian hydrogen valleys. For the implementation of the one in Lombardy, it entered into a partnership with Trenord—a railway transport company—for suppling green hydrogen for hydrogen-powered trains.

3 The International Dimension of Italian Hydrogen Policy: The Hub Concept and Beyond

Italy has not (yet) developed a coherent hydrogen diplomacy. In 2021, the Italian Ministry of Foreign Affairs funded a research project led by the Rome-based think tank ‘Istituto Affari Internazionali’ on the role of Italy in the emerging geopolitics and geoconomics of hydrogen. However, no formal policy document has been issued by the government on the matter. The major part of the international dimension of the Italian hydrogen policy is carried on by its state-owned companies. This is not a surprise: this pattern reproduces the traditional national approach in the fossil fuel sector where the government ‘delegated’ the country’s foreign energy policy to its oil and gas companies. As illustrated, the hydrogen hub concept—that can be considered the main strategic objective of the Italian international policy on hydrogen—is especially promoted by SNAM and ENI. This concept has gained further support in the wake of the war in Ukraine as the Italian government sees hydrogen import as a potential contribution (in the long term) to the country’s energy security. This concept is also in line with the ‘European Hydrogen Backbone’ initiative. Launched in 2020 by the European gas TSOs, this initiative envisages a North-Africa Italy Corridor for importing green hydrogen to the EU (EHB, 2022). An idea that has also been included in the RePowerEU Plan (European Commission, 2022). After Russia's invasion of Ukraine, both the Draghi government and its successor, the Meloni government (in office since October 2022) have backed this project, known as ‘SoutH2 Corridor’ (see below). Along with the hydrogen hub strategic objective, which requires developing appropriate supply chains and infrastructure, Italy and its state-owned energy companies are also involved in several international initiatives on hydrogen both in the EU and outside the bloc. In this case as well, an important role is played by national companies, which take part in relevant European bodies.

3.1 Political Dialogue, Research and Innovation

Italy has traditionally supported all the EU policies on hydrogen. In December 2020, Italy, along with other 22 EU countries and Norway, signed the manifesto for the development of a ‘European Hydrogen Technologies and Systems’ value chain promoting the launch of important projects of common European interest (IPCEIs) in the hydrogen sector. In 2022, six Italian companies were selected for the IPCEI funding (totalling about €1 billion): Ansaldo, ENEL, De Nora, Fincantieri, Alstom, Iveco. Italy is also member of ‘Mission Innovation’, a global initiative of 24 countries and the European Commission. In this context, Italy joined the ‘Renewable and Clean Hydrogen Innovation Challenge’, a multinational research program, launched in June 2021, to accelerate the development of the hydrogen market. Moreover, Italy is involved in the EU R&D programmes (Horizon 2020, Horizon Europe) and supports EU public–private partnerships on hydrogen, such as the ‘Fuel Cells and Hydrogen Joint Undertaking’ and its successor ‘Clean Hydrogen Partnership’.¹

At multilateral level, Italy is a member of the major international organizations dealing, among other things, with hydrogen development, like the IEA and IRENA. Italy is also a member of global multilateral fora like the ‘Clean Energy Ministerial-Hydrogen Initiative’ and the ‘International Partnership for Hydrogen and Fuel Cells in the Economy’, launched by the US in 2003. As for private sector initiatives, SNAM is a member of the Hydrogen Council and, along with other members, it launched in 2020 the Green Hydrogen Catapult initiative, which aims at installing 25 GW of green hydrogen production capacity by 2026. Moreover, SNAM is among the TSOs promoter of the ‘European Hydrogen Backbone’ initiative. ENI is a member of the ‘European Clean Hydrogen Alliance’, which is a multi-stakeholder platform established in 2020 by the EU and gathering European industrial players. The company is also involved in the ‘Hydrogen4EU’ project, which aims to analyse the contribution of hydrogen to EU long-term decarbonization objectives. Finally, both ENI and SNAM, along with several other Italian companies and the ‘Italian Hydrogen and Fuel Cell Association’, are member of ‘Hydrogen Europe’. ‘Hydrogen Europe’ is a pan-European industry association involved in shaping the EU regulatory and market framework for hydrogen. In July 2022, a representative of SNAM was nominated in the Boards of Directors of ‘Hydrogen Europe’.

3.2 Supply Chain Development and Overseas Financing

Italian state-owned companies’ international engagement on hydrogen is very recent, starting around 2020–2021. However, it has further increased after the Russian invasion of Ukraine (Italy was the second buyer of Russian gas in the EU after Germany). Paralleling domestic developments, ENI and SNAM are involved in green and blue hydrogen initiatives, whereas ENEL focuses on green hydrogen. Moreover, ENI and SNAM are particularly active in the MENA region. These companies are exploiting their long-standing relations with oil and gas partners to establish new international hydrogen supply chains. This mirrors previous patterns when especially ENI exploited its relations in the oil sector to develop new partnerships in the natural gas sector. These new hydrogen-related initiatives are supported by the government as well. Particularly in North Africa, Algeria, Tunisia and Egypt are the main Italian partners in the perspective of realising the hydrogen hub concept. In the event of political stabilisation, Libya is (potentially) another country that could be involved in this vision.

In July 2021, ENI began cooperation with the Algerian national oil and gas company, Sonatrach, for exploring Algerian hydrogen potential. In December 2021, ENI and Sonatrach signed a Memorandum of Understanding for promoting cooperation in the area of renewables, hydrogen and CCS technologies. Later on, in May 2022, after the beginning of the war in Ukraine, ENI and Sonatrach signed (supported by the Italian and Algerian governments) a new Memorandum of Understanding for extending their joint gas activities in Algeria. However, on this occasion they also decided to improve their hydrogen-related cooperation; a move reiterated with another agreement signed in January 2023. A pilot project for developing green hydrogen has been also planned by the joint venture Sonatrach-ENI GSE in the Algerian desert (at Bir Rebaa North, where ENI has already built a solar power plant). In Egypt, in July 2021, ENI has signed Memorandums of Understanding with the Egyptian Electricity Holding Company and the Egyptian Natural Gas Holding Company for developing common projects on green hydrogen, blue hydrogen and CCS. In September 2021, ENI has signed a Memorandum of Understanding with Mubadala Petroleum, a UAE company, for cooperation in the area of hydrogen and CCS. SNAM as well signed, in March 2021, a Memorandum of Understanding with the Mubadala Investment company for developing common projects on hydrogen in the UAE and worldwide. Then, in March 2023, ENI has also signed a Memorandum of Understanding with the UAE’s state-owned oil and gas company ADNOC for cooperation on similar activities.

After the outbreak of the war in Ukraine, the Italian government has increased energy cooperation with Tunisia (the Transmed gas pipeline connecting Algeria and Italy crosses Tunisia). In March 2022, the Italian Ministry for Foreign Affairs launched negotiations with Tunisia on a Memorandum of Understanding on developing green hydrogen projects. In May 2022, then, SNAM likewise began talks with the Tunisian government on green hydrogen cooperation. These efforts did not result in formal agreements, also because of the growing political instability in Tunisia. However, in July 2023, the European Commission signed a ‘Memorandum of Understanding on a strategic and global partnership between the European Union and Tunisia’, which also includes support for the development of green hydrogen. In addition, in May 2023, the Italian, German and Austrian governments—and their respective TSOs—agreed to cooperate on the realization of the ‘SoutH2 Corridor’, a move that could facilitate the provision of financial and diplomatic backing by the EU under the ‘Project of Common Interest’ framework. According to the developers, this 3300 km pipeline system, that would comprise newly built sections and repurposed ones to transport hydrogen, could deliver from North Africa more than 40% of the REPowerEU import target of green hydrogen (South2Corridor, 2023).

At the same time, in May 2022, SNAM also signed a Memorandum of Understanding with the Spanish company ENAGAS for evaluating the possibility of building a direct pipeline linking Spain with Italy across the Mediterranean Sea from Barcelona to Livorno. This project should allow the transportation of natural gas from Spain to Italy, and possibly to the wider EU market, bypassing France. Indeed, despite the energy crisis aggravated by the war in Ukraine, the French government has continued to oppose the so-called Midcat project (a pipeline that could allow Spanish LNG capacity to reach the European continental market). Although in the short to medium term the Barcelona-Livorno pipeline would be used for natural gas, SNAM and ENAGAS discussed the possibility (in the long-term) to use it for green hydrogen. Finally, SNAM, through its French subsidiary Teréga, is involved in the so-called H2Med project, a pipeline with the capacity to transport up to 2 million tonnes per year of green hydrogen that should connect Portugal and Spain with France by 2030. This initiative received a boost in January 2023 when Germany joined project.

ENEL Green Power is involved in green hydrogen projects abroad as well. While ENI and SNAM engagements are also driven by energy security considerations, ENEL activities are driven mainly by industrial and commercial objectives and target countries outside the MENA region (see Fig. 3). In October 2020, ENEL signed an agreement with the Chilean electricity utility AME for developing a green hydrogen project at Cabo Negro (linked to a wind power park). In December 2020, then, ENEL signed a Memorandum of Understanding with NextChem for developing green hydrogen projects in the US. Finally, in February 2021, ENEL, through its subsidiary Endesa—the major Spanish electricity utility—planned investments for almost €3 billion for green hydrogen projects in Spain.

Fig. 3

Source Author’s elaboration based on companies’ websites. Note: green letters = green hydrogen projects; black letters = green and blue hydrogen projects

Italian state-owned companies’ hydrogen engagement abroad.

4 Conclusions

The development of hydrogen in Italy is still in its infancy. With the NRRP a more robust policy on hydrogen has emerged. However, an important gap in terms of projects exist with respect to the other major European countries. A similar gap exists also with regard to R&D expenditure, where Italy lags behind European frontrunners such as Germany, France and the UK (FCH-JU, 2020). In both cases, some catching up is expected with the implementation of the NRRP. But it is still too soon to understand whether these measures can really accelerate hydrogen development in Italy. So far, the country has not been able to issue a comprehensive hydrogen strategy nor to launch detailed hydrogen diplomacy initiatives. The government’s attention to the matter, however, has certainly increased in parallel with the EU expanded policies and targets on green hydrogen. In the drafting of the new National Energy and Climate Plan, expected for 2024, the right-wing government led by Giorgia Meloni set a goal of green hydrogen consumption for 0,25 Mton per year by 2030 (80% of which produced domestically) and of 3 GW of electrolyser capacity (NECP, 2023). In addition, as illustrated, important national industrial actors are increasing their hydrogen-related activities. Particularly, state-owned energy companies like ENI, SNAM and ENEL are taking the lead. This can be an important asset to overcome the problems related to an industrial system otherwise composed by small and medium companies, which can suffer competition from frontrunners. However, a certain divergence exists among ENI and SNAM and ENEL, with the latter focused on green hydrogen and the other two (also) on blue. Additional problems in the view of developing green hydrogen in the country are related to the difficulties in expanding renewables production, owing a fragmented and incoherent regulatory and policy framework and longstanding problems of permitting and local acceptance for wind and solar installations (e.g. Legambiente, 2023; Prontera & Lizzi, 2023).

Externally, Italy has supported all the European and multilateral initiatives on hydrogen. Italian energy companies are member of the major bodies involved in shaping hydrogen development. The main focus of the Italian international approach, however, is linked to the hydrogen hub concept. This concept has received a further push after the Russian invasion. This vision is supported especially by SNAM and ENI, which are also the main vehicle for the Italian external action in the MENA region. Conversely, ENEL’s engagements abroad, focused on green hydrogen, are driven mainly by commercial and technological considerations. As for the natural gas hub concept (see Box 1), however, the challenges are numerous. On the one hand, the Italian hydrogen hub vision is included in the ‘European Hydrogen Backbone’ initiative and it is backed by the European Commission’s RePowerEU Plan as well as by other large member states, such as Germany. Without similar support it will be difficult to implement this vision, which requires cooperation to coordinate the (potential) Italian transit’s role with the role of consumers that should be played by other EU member states in Central and Northern Europe. Diplomatic and financial backing by the EU could also help Italy to better engage those North African partners that should produce relevant volumes of green hydrogen for export. On the other hand, past experience has shown the (very) limited impact of the EU’s external action in promoting stability in the region. This political instability—as illustrated by the 2021–22 crisis in Tunisia—remains a key issue that could undermine any serious effort to transform North African countries into green hydrogen producers and exporters. The risk is that the investments planned for the upgrading of the South-North gas pipeline network will be more instrumental in expanding gas imports—in order to reduce dependency on Russia—rather than in opening green hydrogen corridors.