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Energy Governance in Italy

Path Dependence, Policy Adjustments and New Challenges for Sustainability
  • Maria Rosaria Di NucciEmail author
  • Daniele Russolillo
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Abstract

The chapter analyzes the structural constraints that influenced the decision-making processes and organization of the Italian energy sector. Although renewables account for over 17.5% of gross final energy consumption, the current energy system is still quite centralized, path-dependent, and hampered by discontinuous research, energy, and industrial policies.

Firstly, external and domestic drivers as well as coordination mechanisms and instruments for the energy transition are analyzed from a multilevel governance perspective. The chapter then reflects on the role the Italian incumbents played for the success of low carbon technologies, energy policies, and digitalization of the power sector. We claim that European policies will still provide a suitable model for Italian policy makers, but also that coherent measures are needed to keep fostering distributed generation or high-efficiency co-generation. Moreover, placing energy communities and prosumers at the center of the new energy model seems necessary to ensure a sustainable transition.

Keywords

Energy Energy governance Path dependence Sustainability Policy Discourse Transition 

Introduction

According to the latest International Monetary Fund figures, Italy is the world’s eighth biggest economy with a GDP of $2.18 trillion (WEF 2018). Its economic structure relies mainly on services and manufacturing, with the tertiary sector accounting for almost three quarters of total GDP. Italy has a limited amount of domestic energy resources and is a net electricity importer (50.8TWh imported; 4.5 TWh exported in 2016) (IEA 2016b). In 2015, the ratio between primary energy import/export was 76% (MSE 2017). Within the UN Framework Convention on Climate Change (UNFCCC), Italy is committed by 2020 to achieve a 18% decrease in global greenhouse gas (GHG) emissions, with a 21% reduction in Emissions Trading System (ETS) sectors and a 13% reduction in non-ETS sectors, compared to 2005 levels. This should be attained through an enlarged use of natural gas in combined heat and power plants (CHP), RES, as well as through the enhancement of energy efficiency. The National Energy Strategy (Strategia Energetica Nazionale – SEN) is more ambitious than the European goals for Italy and contains targets – with respect to 1990 emissions – of a 39% reduction to be achieved by 2030 and 63% by 2050 (MSE 2017).

Over the past decades, Italy has witnessed an extraordinary growth of renewable energy sources (RES) and has reached some EU energy goals (e.g., 17% share of RES in percentage of the national gross final energy consumption) before the deadline. However, some observers consider the achievement of some of the 2020 European targets to be due to the effects of the economic crisis, rather than to the implementation of coherent policies for the promotion of renewable energy and energy efficiency (Deloitte 2015; Di Nucci and Russolillo 2017; Galgóczi 2015). Whereas the EU-renewables directive set a goal of 25% by 2010, in the future plans of the EU, the goal for Italy is 32% by 2030. This goal is within reach, as the share of RES to the gross-electricity-generation amounted in 2015 to approximately 32% (TERNA 2016b).

Although Italy is on a transition path from fossil energy to a low-carbon energy system, oil and natural gas are still the dominant energy carriers. The country has a well-developed natural gas sector, in all its upstream, midstream, and downstream segments and represents the third greatest natural gas market in Europe after the UK and Germany (Eurostat 2017a).

Final energy use has been declining in recent years. If it is true that part of this result can be ascribed to the economic crisis, it is also true that part of this decrease can be traced back to improvements in electric generation performance, as well as the active adoption of numerous energy efficiency measures (i.e., white certificates, fiscal measures, etc.). Indeed, energy efficiency is key to achieving the SEN energy policy objectives. However, it should be noted that in comparison with other EU countries, Italy is one of the Member States with the lowest energy intensity level of about 100 kg of oil equivalent (kgoe) per 1000 EUR of GDP in 2015 against almost 110 kgoe per 1000 EUR of GDP of the average for the EU-28 group (Eurostat 2017b). The relatively low energy intensity in Italy can in part also be attributed to the tariffs structure for energy. Energy prices in Italy are among the highest in the EU, especially for electricity in the industrial sector. Italian prices are the second highest after Liechtenstein, because of the role of taxes and levies besides value added tax (VAT) (Eurostat 2016). In Italy, tariffs have traditionally been a powerful energy policy instrument; however, the liberalization of the energy market somehow restricted the potential impact of this instrument. Incentives for renewables also have a significant impact on electricity prices together with regulatory costs, including tariffs (to dismantle nuclear plants, conduct system research and support special regimes) and other subsidies topping all together at least 20% of the energy bill for final uses in the residential sector. In 2016, the national energy authority calculated that the incentives to RES reached €13.6 billion, up 8.8% from the year prior (AEEGSI 2017).

The industry sector no longer accounts for the largest energy consumer. While the energy consumption of the residential sector has almost remained constant in the last 30 years, the transport sector has increased steadily along the same timeframe (IEA 2016a). This trend is expected to continue into the next decade.

The chapter, starting with an overview on path dependence, will analyze external and domestic drivers as well as coordination mechanisms and tools for the energy transition from a multilevel governance perspective. Peculiar elements, such as the discourse on the energy issues and the role of the Italian incumbents for the success of low carbon policy and technologies, will also be assessed. The concluding remarks will underline some new trends such as the digitalization in the power sector and electro-mobility.

General Conditions of Energy Governance in Italy

Path Dependencies

Path dependence is a useful concept to illustrate the historical but also structural continuities that influenced the decision processes and structural organization of the Italian energy sector. The Italian energy system was/is subject to a path dependence, especially because of technological (hydrocarbons also used in power plants for electricity generation), infrastructural (large projects), institutional (centralization), and instrumental (subsidies) lock-ins. These lock-ins have proved to be strong barriers to affect changes in the energy system towards more sustainable paths and had serious implications for sustainable and timely policy responses.

The present energy system is burdened by the legacy of over 60 years of discontinuous and incoherent research, energy, and industrial policy (Di Nucci 2007; Di Nucci and Russolillo 2017). Contradictory political decisions aimed largely at strengthening the role of one or another industrial group or state-owned enterprises (mostly supported by various political parties) in research and development (R&D) and technology as well as industrial policy. These steered the development of the energy sector in a particular direction and provoked a strong dependence on hydrocarbons. Thus, in the case of Italy, it can be claimed that not only “history matters,” but also that “energy incumbents matter.” The two national champions in the electricity, oil, and gas field ENEL (Ente Nazionale Energia Elettrica) and ENI (Ente Nazionale Idrocarburi) played a pivotal role to set the direction of energy policy and ENEL is now playing an even larger role to set the future direction.

As elsewhere in Europe – and more because of a lack of domestic resources – in the post-World War II period, energy issues were constrained and ruled by energy security concerns and the need for a sufficient supply of fuels to enhance the “economic miracle.” For this reason, energy became a subject of international policy and geopolitics. This matter has to be brought together with the surge and consolidation of the national champion in oil and gas, ENI. For over a decade, a daunting concentration of domestic and external interests developed that attributed Italy to the role of the refinery of Europe. Indeed, fossil energy carriers in particular oil – and later gas – played a pivotal role in the Italian energy mix and set the frame for long-run equilibria of a process that still shows its legacies today in the power relations present in the energy system. In the last 50 years, ENI has been a significant player in the development of the energy sector in Italy. The state-owned enterprise was transformed into a joint stock company in 1992 and today is still controlled by the Italian Ministry of Economics and Finance, and for a very small (<1%) by the Treasury, with a 30.11% stake (ENI 2017).

A relevant milestone along the Italian development path was achieved in 1962, as the nationalization of the electricity sector was completed and the national electricity monopolist ENEL was established. By that time, hydropower, predominantly located in the Alpine regions, had still the lion’s share in the generation of electricity. Due to the growing political and economic power of ENI, political forces pushed for an energy policy that gave priority to the exploitation and the massive use of oil also for power generation. Thus in the early 1960s, hydroelectric plants were substituted by oil-fired power plants. Following the first oil crisis in 1973, the vulnerability of this system became evident and a new path was pursued in order to diversify the energy balance. However, this mainly occurred through the substitution of oil with natural gas and via the diversification of foreign producers. The existence of this path dependence is somehow proved by the fact that in 1975, as the first oil crisis showed the vulnerability of Italy’s energy system and the price of crude oil had already more than quadrupled; the largest order in Europe for oil-fired power plants was placed in Italy (Di Nucci 2006).

Nuclear power played a marginal role but has a turbulent history (characterized by stop-and-go policy decisions), which has left strong legacies and whose fortunes depended on the goodwill of the oil lobby and the parties supporting it (see section “Discourse on Energy Issues”).

Composition of the “Energy” Mix

The energy balance of Italy is characterized by a relevant quota of imports (see Fig. 1) that account for almost 94% of the gross inland consumption. The energy mix of such imports is illustrated in Fig. 2 where it can be noted that coal is still being used and in 2016 accounted for 15% of primary energy for electricity generation. The last National Energy Strategy (MSE 2017) foresees the political commitment in 2025 to stop thermoelectric generation with coal. In terms of final uses, the civil sector tops 38% of the national final energy consumption (see Fig. 1). The energy production by source is illustrated in Fig. 3 where the recent growth of wind, solar, biogas and waste, with a relevant role of the last two sources, is evident.
Fig. 1

Italy’s energy balance 2016. (Source: Official national energy agency data (www.arera.it/it/dati/bilancio_en.htm) with further elaboration (and translation) by the authors)

Fig. 2

Italy’s import/export of energy in 2016. (Source: IEA World Energy Balances 2017)

Fig. 3

Energy production by source, 1973–2015. (Source: IEA 2016a)

Italy makes use of renewable energy sources (RES) mainly to generate electricity and to a lesser extent for heating and cooling and to produce bio-fuels. At the end of 2016, RES had a very important role within the national electricity system. It contributed to around 44.5% of the totally installed gross power in Italy (TERNA 2016b) and to 33% of the total gross electricity production (see Fig. 4).
Fig. 4

Electricity gross generation in 2016. (Source: TERNA (2016a) and further elaboration by the authors)

The overall Italian installed gross electricity at the end of 2016 reached 117.1 GW (more than double the average daily maximum power load). This increase is mostly due to the installation of PV systems, wind parks, hydropower, and also small-size thermoelectric plants that has compensated for the halt of large traditional thermoelectric power stations. Against the background of such an over-dimensioned capacity, a decrease in final consumptions and in wholesale energy prices as well as a strong decrease of working hours of natural gas fired plants (e.g., 4.120 h/year in 2007 as opposed to 2.633 h/year in 2011), and following a disruptive audition at the Senate in 2014, ENEL announced in 2016 the closure of 23 power stations for a total of almost 23GW (Agostinelli 2016). This decision, albeit disliked by the trade unions, was considered a strong opportunity for the whole country to steer the domestic energy system towards sustainability. Moreover, ENEL announced a zero-carbon company balance to be achieved by 2050. These decisions by ENEL are helpful to clarify the large role the incumbent plays to set directions in energy policy. The national regulatory framework matched the trend with the definition of a national capacity market that was finally approved by the EU Antitrust Directorate at the beginning of 2018 after a 7 years legislative and regulatory process (ARERA 2018).

Due to its natural potential, Italy together with France and Hungary has also a leading position in the European geothermal production (EC 2017).

Discourse on Energy Issues

While the legacies we treated above refer to the “material” basis of energy governance, there are discursive aspects of energy governance that also played an important role. As elsewhere in the EU, in Italy debates related to energy policy also concentrated on various general principles and frames. The most relevant ones are:
  1. (a)

    Energy security and the role that nuclear power could have in reinforcing it (this was a recurrent argument for over three decades).

     
  2. (b)

    Competitiveness, stressing the importance of affordable energy as an economic location factor and liberalization as a means to achieve it (this was initiated in the 1990s).

     
  3. (c)

    Ecologic sustainability, emphasizing a “clean” energy supply that relies on RES (this discourse started in the 1980s and is still ongoing). Centralization versus decentralization paths.

     

The sequence of these principles corresponds also to the temporal succession of framing these issues and their anchorage in the societal debate.

The Security of Supply and the Nuclear Discourse

The rigidity created by the use of large thermal oil-fired power plants and the strong industrial interests related to them represented a serious legacy for the modernization of the energy sector in Italy. In the 1960s, the age of such power plants, the high cost of oil following the Suez crisis, and the ensuing shortage of power encouraged a rapid construction of nuclear power plants (NPP). Political and economic interests facilitated the engagement in the development of nuclear energy as a means to acquire energy and technological autonomy (see Di Nucci 2006; Baracca et al. 2017). The Comitato Nazionale per le Ricerche Nucleari (CNRN), established in 1952, was restructured and the National Nuclear Energy Agency (CNEN) was created in 1960. Plans were made to install 6000 MW by 1965, the technology to be chosen from the British gas-graphite (Magnox) reactor and the US Light Water Reactor (LWR) technology. Three power plants of various technologies were ordered. As a result of the bilateral agreement signed with the UK, a Magnox plant to be located at Latina, near Rome, was followed by the purchase from General Electric of a 165 MW Boiling Water Reactor (BWR) ordered by SENN (a 75% state-owned utility) to be located near the Garigliano River, between Rome and Naples. Edison Volta, a major electric utility went for a larger size and, through its subsidiary SELNI, ordered a 270 MW Pressurized Water Reactor (PWR) – to be located at Trino-Vercellese (Di Nucci 2006, 2009). The interest the electric utilities showed in nuclear power was also shared by the private manufacturing industry, eager to enter a new field and to gain capabilities in a technology just in its infancy stage, with prospects for large economic opportunities. However, the interests of the oil lobby spoilt the “nuclear ambitions.” In particular, the pro-USA social democratic party headed by Giuseppe Saragat later elected third President of Italy organized in 1963, 1 year after the entering on line of the first NPP, a scandal-mongering campaign, resulting first in the suspension and then incarceration of the president of the Secretary of the Italian Commission for Nuclear Energy (CNEN) Felice Ippolito for administrative irregularities (see Baracca et al. 2017). By 1965, when the first three power stations were all operating, Italy covered 13.8% of the world’s installed nuclear power capacity (excluding the socialist block) as against 3% of France and 0.5% of Germany, and represented an attractive market for both the American and British nuclear industries. With the nationalization of the electricity sector, ENEL’s creation in 1962 and the drop in oil prices, the interests of the former electric utilities shifted to expanding sectors such as petro-chemicals. From 1964 to 1966, the ownership of the nuclear power plants at Latina, Garigliano, and Trino was transferred to ENEL (Di Nucci 2006). The last commercial order for the construction of a NPP in Italy (at Caorso) was placed in 1966. Further plans for nuclear power development were abandoned (Di Nucci 2006). The nuclear option, which was discarded rather quickly in the 1960s, was reanimated following the first oil crisis in 1973. A national energy plan to cope with the problems provoked by the first oil shock was only worked out in 1975 (Piano Energetico Nazionale – PEN 1975) and remained largely ineffectual. Following the second oil crisis of 1979, an entirely new plan was prepared in 1980 and revised in 1981. This foresaw a reduction in consumption through energy saving measures, coal, nuclear power, and also RES. Against this background, in 1974–1975, an intensive nuclear program was announced, envisaging 20 GW by 1985 and 40 GW by 1990. Such an initiative, taken at a time of a harsh economic crisis, although provoking objections from some of the left-wing political parties and some trade unions, was welcomed by a large majority. Regardless of which particular technology might be adopted, any project was viewed as a source of industrial growth and employment opportunities. These massive nuclear development programs were never realized (Di Nucci 2009).

Following the Chernobyl disaster in 1986, the public debate on the implications of nuclear energy became a highly political issue. In November 1987, three referenda promoted by environmental associations blocked any further activity in the nuclear field. Soon afterwards, the Italian government put a 5-year moratorium on all nuclear activities, including research reactors and extended it there since. Following the results of the referendum, in December 1987, the Parliament passed a motion calling for the final shut down of the Latina and Garigliano NPPs and to stop any construction work (Di Nucci 2009). The phase-out of all four NPPs started in 1991. However, the debate on the need for nuclear power in the Italian energy system continued for two decades and was justified also on the grounds of CO2 reduction, security of supply, and vague technological advantage arguments. The media accompanied this debate and announced in regular intervals of time the renaissance of nuclear power. In 2008, a change of government revived the debate on the nuclear option and a feasibility study investigated the construction of three to four NPPs to be located for the most part on already existing sites. The pro-nuclear Berlusconi government introduced a package of nuclear rulings and by-laws, which included measures to simplify the licensing of siting and construction. The new legislation was passed in July 2009 and envisaged 6 months to select sites for new NPPs (Di Nucci 2015). It was not until the Fukushima accident that Italy, by a second national referendum in 2011, definitively abandoned the nuclear option. In the meantime, the decommissioning of four reactors and the disposal of nuclear waste remain unsolved with pernicious environmental and health hazards implications (Baracca et al. 2017; Di Nucci 2015).

The current discourse on security of supply focuses on the electricity and natural gas systems. For the former, the capacity market, and the digitalization of the energy infrastructure – also to ensure resilience and the correct management of peaks – storage and energy efficiency in final uses are indeed the most relevant issues to debate. These were fully acknowledged by the government after large consultations (MSE 2017). For the latter, the most important issue is related to new transport systems for natural gas especially to spread the import risk.

Liberalization and Competitiveness. Challenging the Old Paradigms and Creating a New Path

In spite of decades of state intervention in energy and industrial matters and public ownership of industrial groups, Italy took in the middle of the 1990s a neo-liberal stand concerning its energy market and embarked on a far-reaching liberalization and deregulation reform (see Di Nucci 2004; Polo and Scarpa 2003).

Designing and implementing policies inspired by privatization and liberalization processes started very early based on logics such as competition and market opening, factors that were incongruent with preexistent Italian culture and policy characterized by a strong state intervention and dirigisme. The liberalization of the sectors was triggered not only by the need to transpose EU directives but especially by the belief that this represented an opportunity to start a reform and put an end to direct state participation (Di Nucci and Russolillo 2017). In a way, we could talk about a “new path creation.” At the same time, the crisis of the party system that had shaped the policy of the national energy utilities in the previous decade “disadvantaged the traditional players in electricity policy making and provoked a change in the structure of relationships in the policy field” (Prontera 2010).

At the end of the 1990s, Italy’s energy sector experienced a deep structural transformation. The change was, in a way, institutionally driven. The “material” engines of these changes were three decrees in the late 1990s, which laid the groundwork for change, and also enabled to enlarge the spectrum of actors in the energy policy arena. The Bassanini decree of 1998 (Legislative Decree 112/1998) about decentralization of administration and the Bersani decree (Legislative Decree 79/1999) on the liberalization of the electricity sector paved the way for a new hierarchical reorganization of the multilevel governance and interaction of the renewable energy sector and set out a new incentive system for RES. The Bersani Decree was passed in 1999, to liberalize the electrical sector and to foster competition in the national electricity system. The Letta Decree of 2000 transposed the EU Directive 98/30 into national policy and forced a gradual opening and a modernization of the natural gas sector. The reform implied the “unbundling” of the former energy monopolies with separation between production, transport, and distribution and mandated divestments in power generation (Polo and Scarpa 2003; Di Nucci 2004).

The internal debate on liberalization had been already strongly influenced in 1994–1995 by the ongoing debate in the EU – especially in the UK – before the EU set up a new legal framework with the Directive 96/92/EC. The Italian reform took place in a political context characterized by great instability and loss of influence of traditional state actors. In this case, one can paraphrase Radaelli (2004) and claim that Europe represented the “solution” to legitimatize the willingness to reform and change paradigm (from state intervention to competition). Subsequent to sectoral EU directives (96/92/EC and 2003/54/EC), Italy’s electricity market underwent a steady process of liberalization with a restructuring process that lasted many years and witnessed adjustments and novel developments regarding market rules, new market actors, and new institutions. The debate on the reform in Parliament and in wider circles has been characterized by an “anomalous” actors’ cohesion on the necessity to transpose the EU directive into domestic legislation embracing conservative parties as well as the leftist parties and the trade unions opposing the reform. Both the technocratic Dini government and the center-leftist Prodi government (with his Industry Minister Bersani) became part of an “implicit” coalition of interest that achieved in relatively short time a radical unbundling of the national electricity monopolist ENEL (Di Nucci and Russolillo 2017). In 1999, the so-called Bersani Decree changed the situation both on the supply and demand side. The Decree was issued to transpose the European Union’s Directive 96/92/EC but actually acted as a “framework law” for restructuring the Italian electricity sector and brought about the most radical changes also for the development of renewables.

Another momentous event was the enactment of Law N.112/98, which transferred competencies on local energy planning and RES exploitation to regional governments. It is not coincidental that the first stage of sustained diffusion of wind power in Italy occurred in a time in which the transfer of powers from the central state to the regions took place, especially in matters concerning government of the territory and energy planning. Regions started to grant capital cost subsidies to promote the setting up of competitive RES-E plants, in addition to the available incentive mechanisms. However, the Regions did not seem to be sufficiently prepared and played a minor role and in a way, the involved municipalities were left alone to manage a complex and delicate phase, which for some aspects is still ongoing.

Sustainability, RES, and “Clean” Energy Paths: Centralization Versus Decentralization

From the beginning of 1997, a general political consensus emerged on the need for enhancing renewable energy paths and reorganizing the whole incentives system and to identify new mechanisms promoting the RES sector (Di Nucci 2007). Even though the societal debate in Italy has not been as pervasive as in Germany with the “Energiewende” (energy transition), the public discourse on sustainable energy paths indicated a bias towards clean energy, anticipating the results of the referendum following the Fukushima disaster in 2011 and banning any further nuclear development. This discourse could also be interpreted as a systemic struggle between centralized and decentralized energy solutions. Brondi et al. (2014, p. 46) assumed that Italy’s energy transition is exemplified by a hard link to a technocentric perspective and a soft – even weak – link to societal goals such as citizens’ awareness and participation that pushes for technical and societal transformations. They point out that discourses in the parliamentary debates and the national press issues about centralization are more present than decentralized governance, suggesting a “traditional” approach to energy issues. If one considers the parliamentary debates, centralized governance is indeed the prevalent form in almost half the cases. Overall, it can be claimed that there is a very low coordination between centralized and decentralized energy policies.

The energy-policy goals of the two middle-leftist-governments in the years 1997–2000 were based on a duplication of the production-share of hydropower and other RES until 2012 and on an overall RES-E generation of 7 GW. Parallel to this, the “Guidelines for national policies and measures for reduction of GHG emissions” (approved by CIPE in October 1998) specified objectives and actions to achieve Italy’s Kyoto commitment for reducing CO2 emissions by 6.5% versus 1990 data.

A milestone of the energy policy of this period was marked in 1998 by the “National energy and environment conference,” a consultative process consisting of a hundred national and a few international hearings and workshops with all relevant stakeholders dealing with institutional, legal, economic, technical, and social aspects of the national energy structure. The outcome of this process culminated in the signing of agreements by all relevant stakeholders and institutional actors ranging from financial institutions to NGOs (Di Nucci 2007; Di Nucci and Russolillo 2017). The way to reach this objective and the RES potential was illustrated in the White Book of 1999. The great merit of the White Book was to provide a survey of RES technologies, indicate their potential, and set intermediate targets for 2002 and 2006. It was planned to increase the RES share from 2.7 GW to 3.3 GW representing a growth from approximately 17.5% to roughly 25% of the electricity generated in Italy. RES-E was to be increased from about 11.7 to 20.3 Mtoe. The White Book also specified policies, strategies, and targets and stressed the importance of the regions by regional and local initiatives and in supporting the national policies. In order to integrate RES at the local level, the White Paper envisaged the initiation of regional and local guidelines and of so-called Renewable Energy Action Plans.

Technological success is feasible when priority is given to the transition, as demonstrated by the German Energiewende. In Italy there has not been a pervasive societal debate as in Germany and the energy transformation came only recently. However, there has been a pervasive debate about the incentive system for renewables, and in both politics and society, there have been contrasting arguments concerning the costs and affordability of a sustainable and secure energy system.

Lauber and Schenner (2011, p. 508) referring to the European situation argue that “the coalition ..[.around the feed-in tariff schemes] was able to build a discourse around subsidiarity, good governance and flexibility …” This interpretation can be borrowed to describe the development in Italy.

Within 25 years (in 1992 the so-called CIP6 incentive system was introduced), Italy “experimented” with a shift of the incentive systems for renewables (see section “Instruments of the Energy Transitions” below) moving from an initial feed-in system to quota and certificates and back again to various forms of FIT differentiated according to technologies and energy sources.

In order to understand the reasons why there has been a continuous change in support schemes, it is important to consider how the major stakeholders framed the issue and – to put it as Lauber and Schenner (2011, p. 512) “discussed the topic into discursive issue networks,” which are “kept together by a common ‘argumentative strategy’ or ‘interpretative scheme and frame.

The green economy set into motion by the RES boom is still developing slowly, but steadily. The Italian green economy companies make up for 27% of all Italian companies and are responsible for almost 40% of new jobs created in Italy in 2017 (Brizzo 2018). The activation of the capacity payments in 2018 (ARERA 2018) will surely trigger the emergence of new actors, such as energy aggregators and other service providers exploiting the digitalization trend of the sector. This should benefit the final users and enhance distributed generation.

Political Institutions and Actors

In the first half of the last century, the Italian energy policy arena was dominated by only a few actors: the two state-owned energy enterprises for natural gas and electricity ENI and ENEL, the Ministry of Industry (changing its name regularly), later in 1986 joined by the Ministry of Environment and the national nuclear Energy Agency CNEN, later in 1994 transformed into an agency for alternative energy and sustainable development (ENEA). The implementation of planning efforts was regularly hampered by a plethora of regulations, often contradicting each other, by the absence of a statutory power to enforce the various plans, by technical weaknesses of the political and ministerial bureaucracy, and by representatives of the political parties serving as presidents or CEOs in state enterprises.

Today Italy has a rather complex decision-making system, exemplified in some cases by a large number of entities and by a high level of fragmentation both vertically at the government level and horizontally at the sector level. Energy policy is characterized by an entangled system of interactions among the most important institutional actors and a rather complex subdivision of responsibilities. The key competencies for energy policy remain within the Ministry of Economic Development (MSE, Ministero dello Sviluppo Economico). Its department for energy and mining is also in charge of renewable energy policy. The Environment Ministry coordinates the activities concerning greenhouse gas emissions, the transposition of the EC-directives for emission trading, and the solar-programs and is also the co-signer of policy measures promoting renewable energy and energy efficiency within the responsibility of the MSE. The responsibility for biomass lies within the Ministry of Agriculture that promotes the utilization of RES in agriculture sector and provides financial backing for the cultivation of energy crops. Beside these institutions, some responsibilities also rest within the Ministries of Transport, Finance, Culture and National Heritage, 19 Regions and two autonomous Provinces. Additionally, there are a number of governmental organizations like the National Research Council (CNR) and the National Agency for New Technologies, Energy and Environment (ENEA). The latter deals with R&D of technologies in the field of energy-efficiency, renewables, and their dissemination. Furthermore, CIPE (Inter-ministerial Committee for Economic Planning) chaired by the President of the Council of Ministers is responsible for the co-ordination and horizontal integration of national policies. Its competencies, among many others, include climate change. The committee approves national GHG emissions reduction programs. In addition, there is also the Inter-Ministerial Technical Committee for Emissions of GHGs (CTE) established in 2012 to support the CIPE’s climate-related work.

New actors were made necessary through the liberalization process. Law 481/95 (also known as “Authority Law”) laid out the rules for competition and for the regulation of public utilities, in line with the European reform. It created a new regulatory authority, at the time named AEEG, only involved in electricity and natural gas regulation. Later its mission (including the setting of tariffs, service quality standards, and the technical and economic conditions for access and interconnections to the networks) was enlarged to include also water and the regulator was renamed in AEEGSI. This is a strong, independent, and capable watch-dog and can be considered as the most robust motor of the energy system transformation in Italy. The commissioners (one president and four members) in charge for 7 years are nominated by a decree of the President of Italy. Currently the Authority is named Authority for Energy, Networks and the Environment – ARERA.

The decentralization of the public administration brought about by the so-called Bassanini-Decree (Nr.112/98), and an amendment of the Constitution have strengthened the role of the “Regioni.” A shift of responsibilities for energy policy has taken place from the central ministries to the regional administrations. However, there is a blurred distribution of competencies between State and Regions, which has often resulted in differing energy policies. Feliziani (2013) speaks of fragmented regulatory frameworks. Italian regions have competencies for economic development, but their capacity for policy action remains limited, and central government still plays an important role in regional development issues. The role of the regions in policy matters has been strengthened especially as a result of progressive devolution and of the EU regional policy. Against this background, it is not surprising that the first stage of sustained expansion of renewables occurred in a time in which the transfer of powers from the central state to the regions took place, especially in matters concerning governance of the territory and energy planning. Regions started to grant capital cost subsidies promoting the setting-up of competitive RES-E plant, in addition to the available incentive mechanisms. The Regions, however, have no responsibility for fundamental policy decisions that are still in the jurisdiction of the national state. The amendment of the national law on Environmental Impact Assessment 104/2017 establishing uniform rules has for example affected a sort of “re-centralization” of procedures on infrastructure and energy projects and has affected changes in the distribution of administrative tasks between State and Regions and in regulatory competencies. Another example showing a “re-centralization” tendency was the failed attempt to establish the supremacy of “strategic national interest” for the case of “production, transport, and distribution of energy” (by amending via a referendum in December 2016 an article of the Constitution).

Within the government, energy policy is supervised by the inter-ministry committee for economic planning (CIPE) that is responsible for guidelines on a national level.

The Competition Authority (AGCM, Autorità Garante della Concorrenza e del Mercato,) is the independent antitrust body, established by Law in of 1990. The AGCM enforces rules against anticompetitive behavior also in the electricity and natural gas sectors, and recently even in the district heating sector.

The liberalization of the energy market enlarged the spectrum of the relevant actors and established an independent transmission system operator, TERNA, responsible for managing electricity transmission and dispatching, as well as issuing technical rules for planning and operating connections to the grid. The Gestore dei Sistemi Energetici (GSE) is the state-owned company in charge with fostering RES. GSE is also the parent company of:
  • Acquirente Unico (AU) is in charge of serving as a national wholesaler to protect energy consumers.

  • Gestore dei Mercati Energetici (GME) in charge of the electronic platform to exchange power, natural gas and energy tradable certificates (e.g., white certificates for energy efficiency).

  • Ricerca sul Sistema Energetico (RSE) in charge of R&D.

Additionally, there are over 30 regional and local energy-agencies, established in the framework of the SAVE-Programs of the EC, dealing mostly with energy-efficiency, renewables, information, and counselling at local level. The complexity of the current governance is illustrated in Fig. 5.
Fig. 5

Energy governance in Italy – The current stakeholders’ ecosystem (elaboration by the authors)

In the electricity market, the major actor continues to be the ex-monopolist ENEL, which was privatized in 1992 and transformed into a joint stock company. Through the reform, ENEL was mandated to reduce its vertical integration in electricity transmission and to divest about a third of its total 56,000 MW of generation capacity and some distribution networks. Today, the Italian power market is fairly dispersed, but power generation is still dominated ENEL and the power distribution market is concentrated with ENEL Distribuzione operating almost 80% of the network despite the existence of more than 130 local operators.

In the gas sector, ENI controls primary distribution, storage facilities, and gas imports, while Snam Rete Gas (ENI holds 50.07% of the shares) still dominates the transport network. The existing barriers to access appear to prevent the full development of competition. The market is strongly integrated and the former monopolists still enjoys a dominant position in the whole value chain.

Coordination, Instruments, and Issues of the Italian Energy Transition

The analysis of the coordination among different scales has been a rather neglected subject. Coordinated actions are a prerequisite for low-carbon paths. Following Sarrica et al. (2018), we can claim that there is a coexistence of top-down and bottom-up processes of translation connecting supranational regulations and targets with policies and discourses implemented at the national and even local level. In fact, there is a strong integration of EU, Italian (national state level) and regional/local policy and energy and environmental issues. The case of Italy allows us to underline that a European policy can provide a model around which to redesign a domestic policy, but for this to take place, the actors able to exploit adaptational pressures are indispensable (Di Nucci and Russolillo 2017).

On the one hand, there is an ongoing process of decentralization of energy policy and planning procedures; on the other hand, there has been a tendency in the last few years for a re-centralization of legislative and administrative competences in the energy field. Thus, although the various governance levels in matters of energy coexist, there is now a sort of renaissance of positions supporting the supremacy of the national governance level which has been reinforced in the last few years. A part for the examples of a failed amendment of the Constitution and of changes in the Environmental Impact Assessment regulations mentioned above in section “Political Institutions and Actor,” another example for a shifting of competences at the national level is the so-called Sblocca Italia (Unlock Italy) law (Legge 164/2014). This enhances and streamlines permitting for infrastructure projects of national interest such as transmission lines for natural gas and electricity, onshore and offshore oil, GNL conversion systems.

A number of programs and initiatives have paved the way for the transition to a low carbon future, which evolved at both central and regional/local level and acted as drivers. In the following, we discuss briefly these external and domestic drivers and describe the instruments mix.

Drivers of Energy Transition

We can distinguish between external and domestic drivers for energy transition. European policy has been a major driving force for initiating the energy transition in line with other European countries. Amongst the domestic drivers, the most notable ones are regulatory drivers and eventually the propulsive role of some “change agents.” In this respect, a key question is to what extent the Italian incumbents played important influences, negative or positive, for the success of low carbon technologies and policies.

We can claim that in Italy, external (EU) as well as internal dynamics (political parties, NGOs, regional political actors and economic interests) determined new priorities (e.g., in RES) and drove a change towards low carbon development paths and enhanced the transition. These have taken place at a central as well as a regional level. In some policy areas, which are also relevant for renewable energy policy such as regional and cohesion policy, cooperation and coordination mechanisms at EU levels set through more deeply. In this case, the pressure of the EU was exerted through the allocation and administration of the cohesion and structural funds. The case of competition policy is even more significant, since the realization of the internal market for energy and the subsequent liberalization of the energy markets has transported EU influence and mechanisms into the Italian energy arena.

It is important to point out that participation in EU programs, especially in EFRE and cohesion programs, pushed participating regions to adapt to the changing institutional environment. The case of RES-T and bio-methane, however, shows that where the EU-induced policy practices were conflicting with the actors’ interests, they tended to adjust only “formally” without changing their preferences or internalizing the new requirements. By contrast, when EU-imported practices were compatible with the actors’ goals and preferences, mechanisms of Europeanization through learning and horizontal diffusion of what is considered a “good practice” could also be initiated and entangled with the motivation for adjustment (e.g., RES-E incentives) (Di Nucci and Russolillo 2017).

From the institutional and regulatory point of view, the decentralization of administration (the Bassanini Decree) and the already mentioned Bersani Decree (liberalization of the electricity sector) – both released in the late 1990s – can be considered as the major institutional/regulatory drivers and as the landmarks for change. They paved the way for a new hierarchical reorganization of the multilevel governance and interaction of the (renewable) energy sector. Thus in the late 1990s, there was a concomitant adaption of polity and policy, and the radical changes through the Bassanini Law and Bersani Law have represented the point of departure for a Europeanization of politics, policy, as well as of polity (a good example is the creation of the energy regulator) in line with the creation of European regulators (Di Nucci and Russolillo 2017).

The Bassanini Law of 1998 (Legislative Decree 112/1998) about administrative decentralization transferred several RES policy tasks and competencies on local energy planning to regional administrations whereby regions were empowered to establish funds to promote RES in an autonomous way. The Bersani Decree (Legislative Decree 79/1999) about the liberalization of the electricity sector set in motion the liberalization of the electricity market and established a new incentive system for RES. A major driver for energy transition is certainly the sustained deployment of RES. The current development has taken place in a context where domestic and European policies evolved together. The adjustment to European policy implied a continuous calibration between national differences, various pressures to adapt, and different processes of mediation and responses. An example is the changing choice of instruments to support renewables that moving from a sort of FIT regime opted for quota and certificates and then following the European trend returned to a FIT scheme. However, the actors in the RES arena presented evolving strategies over a time horizon of 20 years. For this reason, it is difficult to separate the net effect and role of the EU and the domestic mechanisms through which changes were set into motion.

In that respect, it should be underlined that the Italian regulation of the power market could not “promote a coherent strategy for the transition towards a decentralized paradigm, in spite of the unquestionable economic and environmental benefits related to the deployment of distributed energy resources” (Gaspari and Lorenzoni 2018). An open question remains whether in Italy there is a dominance of the technocentric perspective with regard to energy transition and whether developments of smart grids and distributed generation has acted/can act as a driver towards a sustainable transition. In the case of the Italian electricity incumbents, the realization and exploitation of the smart grid (primarily for a better load management and future capacity market management) has helped avoid lock-in situations. Starting in 2001, Italy was among the first European countries to deploy smart meters, and now the DSOs are preparing the second wave of rollouts (Di Nucci 2014). The DSO of the ENEL group alone is planning to install almost 40 million second generation meters (enabled to provide innovative services for the final users) by 2030, with a first milestone of 13 million by 2019 (Ryberg 2017).

Instruments of the Energy Transitions

Flanagan et al. (2011) pointed out that analyzing a policy mix means more than a combination of policy instruments; it also includes the processes by which such instruments emerge and interact and the continuous adjustment between actors and systems. This observation is useful while analyzing the Italian “instrument mix.” In particular, the Europeanization in Italian RES policies shows a continuous calibration between national distinctness, various pressures to adapt, and processes of mediation and response (Di Nucci and Russolillo 2017). Amongst the instruments that determined changes, we can find regulatory instruments, incentive-based instruments, GHG emission reduction goals, and elements of soft governance. The wealth of these instruments, especially those supporting RES, seems to suggest that with each of them there has been an attempt to meet different policy objectives and that different stakeholder groups might have been actively taking part in designing policies.

Long-Term Strategies and Programs

At a national level, there are a number of specific support plans. The most important ones are: the National Energy Efficiency Action Plan; the National Renewable Energy Action Plan; the National Energy Strategy (NES); and the National Reform Program.

The 10-year plan released in November 2017 by the Italian government (MSE 2017) represents a milestone for addressing the adjustment of the national energy system towards sustainability at the same time guaranteeing security of supply and industrial competitiveness. The National Energy Strategy is more ambitious than the European goals for Italy and contains a target of a 21% decrease in global GHG emissions. This strategy defined four main objectives to improve the competitiveness and sustainability of the Italian energy sector by 2020: reducing energy costs by aligning prices to European average prices; meeting and going beyond European targets set out in the 2020 European Climate-energy package and Italy’s National Action Plan of June 2010 (NAP); improving security of supply, with a reduction in foreign dependency from 84% to 67% of total energy needs; enhancing growth and employment by mobilizing investments in the “green economy” (MSE 2017). The novelty of this document is that it is the outcome of a participation process in which the Italian Parliament, the Regions, and approximately 250 stakeholders were involved. Another novelty is that the strategy for the long-term energy transition is no longer based on setting sectoral targets but also indicated measures and fields for coordination. In general, the NES is aligned with the content of the Clean Energy for All Europeans Package, confirming our analysis of Europeanization driven changes.

Regulatory Instruments

For a long time, despite favorable support conditions, the Italian green energy sector witnessed a stalemate-situation. In spite of promising market prospects, the sector, in a state of insecurity for years, suffered from a sort of paralysis of the national market, characterized by many announced measures that, however, failed to materialize or were implemented with delay. Moreover, the different positions of the political parties on energy strategies, but especially the influence of local politicians “[..] transformed the procedure of localization for new power plants [including renewables] into an exhausting negotiation between central and local government” (Prontera 2010, p. 498). Overall, the major obstacles for RES expansion have been the plentiful bureaucratic and institutional barriers.

One of the most important regulatory instruments is the so-called single authorization” (Autorizzazione Unica) for large installations (Legislative Decree No. 387/2003). This helped with streamlining and accelerating authorization procedures and halving the time for issuing the single authorization (AU) (Legislative Decree No. 28/2011). Additionally, in 2012 there were introduced administrative simplifications concerning strategic infrastructures and plants for the supply of key services (including biofuel production) (Law No. 35). From 2014 onwards, there were bureaucratic and procedural simplifications for the so-called Thermal Account” (Law No. 164/2014).

The National Energy Strategy (adopted in March 2013 in its first version) comprised measures for energy planning which included further upgrading of the governance system, to improve and simplify national-level horizontal coordination. These measures concern mainly the interaction between the energy matters under the remit of the different Ministries and relations between the Government and the ARERA in the regulated sectors, and interaction with network and service operators. The energy strategy stresses the need for better coordination between the national government and the regions regarding legislative functions and between the national government, the Regions, and the local authorities regarding administrative functions, in order to generate reliable rules and to render authorization procedures simpler and faster.

RES Support Instruments and Incentives

The support of RES-E in Italy has been characterized by a contradictory, discontinuous development and there is still a controversial debate on the instruments and the “best mix” of instruments to promote RES. It is commonplace that one of the grounds for the steady growth of renewables is the rather generous incentive policy.

The present system of incentives is very complex and differentiates according to size and technologies. Depending on the renewable energy source and the size of the plants, RES-E plant operators may be obliged to opt for a certain system or may have more options. In the last 25 years, there has been a transition from a sort of FIT (so-called CIP 92) to quota and certificates and back to a FIT (feed-in tariff) premium regime and back again to market-based instruments. The Italian government adopted in March 2011 a legislative decree implementing the EU Directive 2009/28/EC. The new ruling covered issues such as administrative permits, grid improvements, incentives, control and penalties. The law – as the Government declared in a statement – aimed to “strengthen and rationalize the renewable energy subsidy system and to reach the double objective of increasing renewable energy production in line with European objectives and reducing the linked subsidies which are ultimately passed-through to the consumer” (LOC 2011). In 2005, the Italian government introduced the first “Conto Energia” scheme, a specific feed-in tariff system for PV generated electricity (and also CSP, i.e., concentrated solar power). The payments were designed to be made over a 20-year period and to encourage both smaller and larger producers to invest in the installation of photovoltaic systems. Between 2005 and 2013, five different “Conto Energia” schemes were introduced by ministerial decree. Each scheme had differing terms and conditions and tariffs provided to prosumers and industrial operators. The evolution of the RES support schemes is illustrated in Fig. 6.
Fig. 6

Overview of RES support systems in Italy 1992–2015. (Source: IEA 2016: 83)

Instruments to Support Energy Efficiency

In 2014, Legislative Decree No. 102/2014 transposed the Energy Efficiency Directive 2012/27/EU into national legislation, with the aim of achieving the 2020 energy saving objective of 20 Mtoe of primary energy, equivalent to 15.5 Mtoe of final energy. A plan is devoted to the energy upgrading of the national stock of buildings in order to activate investments and the National Plan for Nearly Zero Energy Buildings. The Italian policy package also contains the definition of minimum energy performance standards and energy performance certificates. With respect to residential housing, fiscal and financial schemes such as tax allowances and low interest loans are main elements in the Italian energy efficiency instruments in the building sector. Italy has implemented various measures to increase the energy efficiency of appliances.

Legislative Decree No. 102/2014 that transposed the Directive 2012/27/EU on energy efficiency also establishes the National Energy Efficiency Fund at the Ministry of Economic Development to foster energy efficiency projects implemented by public authorities, ESCOs and businesses to increase the energy efficiency of the buildings, industrial installations and production processes. This Fund is endowed with €490 million in the period 2014–2020 (Trotta et al. 2015).

White Certificates

A number of EU Member States are implementing energy efficiency policy portfolios that consist of energy saving obligations imposed on some category of energy market operators, in some cases coupled with a trading system for energy efficiency certificates (known as white certificates, often shortened in WhCs). The energy efficiency market opening has relied on White Certificates with some positive results, surely they “help internalize energy-use externalities and address information gaps, organizational inefficiencies and liquidity constraints that hamper energy efficiency investments” (Giraudet and Finon 2014, p. 24).

White certificates were introduced in Italy in 2005 and trading them is justified in the case of energy market operators that fall short of their predefined target. They are allowed to buy certificates from operators that exceeded theirs or from other subjects, such as ESCOs, whose market growth has always been a goal of the White Certificates scheme. This has often been confirmed publicly by the current public system operator (GSE). In Italy, the system imposed the obligation on to energy distributors (power and natural gas). Albeit some governance and regulatory changes that saw, among other things, the leading role being shifted from the national energy authority (that remains in charge of regulatory issues) to GSE (in charge of the evaluation), the system has remained substantially the same so far. In 2016, GSE issued a total of 5.5 million WhCs, equivalent to almost 1.7 Mtoe of primary energy savings, with a growing trend with respect to previous year (GSE 2016).

Economic and Fiscal Incentives

For RES, there are also fiscal regulation mechanisms which act as incentives to invest in RES-E facilities. Renewables are supported at a national level as well as by regions, provinces, and local authorities. Furthermore, RES promotion in southern regions benefit from additional fiscal support. Tax deductions (topping 55%) for the energy upgrading of buildings were introduced in Italy by the Budget Law 2007 and are still in force. These fiscal deductions have been key drivers of energy efficiency improvements in the housing sector. Nevertheless there are some flaws, as “the main drawback of income tax incentives is that the taxpayer must pay the efficient equipment’s up-front cost and recoup a part of that cost later through tax deductions or credits” (de la Rue du Can and Leventis 2014).

The total number of actions implemented have been decisive to achieve the energy saving goals. Tax deductions (for both residential and commercial buildings) consist of reductions of IRPEF (personal income tax) and IRES (corporate income tax) in respect of actions to improve the energy efficiency of existing buildings, in particular for expenses for reducing heating demand by upgrading of the building’s energy performance; improving the building’s thermal insulation (replacement of windows, including blinds or shutters, and insulation of roofs, walls and floors); installing solar thermal panels; replacing heating systems (with condensing boilers or heat pumps); replacing electrical water heaters with heat pump water heaters.

The key policy instruments analyzed are summarized in Table 1, using three macro categories: regulatory, economic, and fiscal instruments.
Table 1

Sample of key policy instruments in Italy for the energy sector

Sector

Regulatory instruments

Economic incentives

Fiscal incentives

Electricity supply

Reform of the electricity market and liberalization (Legislative Decree No. 79 of 16 March 1999)

Smart meter and smart grids deployment (2001-onwards)

Open-up of the wholesale market (2004-onwards)

Liberalization of the retail market (2007-onwards)

Single authorization decree streamlining and accelerating authorization procedures (Legislative Decree No. 28/2011).

Yearly National Energy Strategy (2013-onwards)

National capacity market (2018)

CIP6/92 for renewables and so-called assimilated energy sources

Green certificate scheme (2003–2012)

PV incentives (2005–2013)

All inclusive Feed-in Tariff (2008–2012)

Ministerial Decree 6.7.2014 and 23.6.2016 introducing new schemes for FIT and the use of auctioning systems

Lower VAT (10%) for PV systems (2007-onwards)

Heat supply

Inclusion of District Heating and Cooling sector amongst the target of the national energy agency (2014-onwards)

Thermal energy production from RES (2012-onwards)

Fiscal credits for district heating systems with biomass (2001-onwards)

Energy efficiency

(industry, households, buildings

White certificates scheme (2005–2013)

Building regulations

Nearly zero energy buildings (Law no.90/2013) from 2018 – onwards (for new public buildings) and 2021- onwards (private buildings)

Legislative Decree 102/2014° (ref. 2012/27/EU and national Energy Efficiency Fund)

White certificates scheme (2013-onwards)

Bureaucratic and procedural simplifications for the so-called Thermal Account (Law No. 164/2014).

National Energy Efficiency Fund (Ministry of Economic Development) to foster energy efficiency projects implemented by public authorities

Fiscal incentives for energy efficiency retrofitting (Ecobonus, 2014-onwards)

Reductions of IRPEF (personal income tax) and IRES (corporate income tax) for activities improving the energy efficiency of existing buildings, in particular for investments aimed at reducing heating demand by upgrading of the building’s energy performance

Transport

Energy Authority decisions (ARG/elt 56/10 and RG/elt 242/10) to jump start the EVs recharging stations (2010-onwards)

Legislative Decree no. 257, 2016 (EVs charging stations for new buildings)

Interministerial decree 2 March 2018 (promotion of biomethane for transport)

 

Fiscal incentives for VAT account owners with regards to LPG, Hybrid and EVs (2018)

Soft Governance

Soft forms of governance including the diffusion of best practice and information campaigns may also have played a role in driving the transition. If one takes into consideration the number of cooperative EU projects in which Italian institutions and economic actors participate(d) and the levels of funding received, the beneficial role of dissemination activities and coordinating actions are apparent. Active participation in such programs facilitated policy transfer from the EU to domestic level and meant that policy learning was a continual and reflexive process. EU Programs (Framework Program, Intelligent Energy Europe, INTERREG, EFRE) and projects as well as approaches to policy and the transfer of best practices were key and were positively endorsed by the broadest range of actors in a wide variety of institutions.

Coordination Mechanisms and Multilevel Governance

As Florini and Sovacool (2009: 5239) remarked “…international energy markets suffer from lack of appropriate governance. Price signals in these markets are distorted by national government policies on both the supply and the demand side. Investment in future energy supply is often inadequate and fails to serve the public interest, leading to extreme price volatility. Because national governments see energy services as crucial to national security and national power, they intervene in the sector to promote energy “independence” or at least to assure supplies. Yet governments largely fail to regulate energy in other key international aspects, such as climate change…” In order to accomplish a transition to a low carbon economy at a political level, new paradigms are needed. Energy transition is a multi-level task. From the multilevel perspective (MLP), government and firms, as well as other stakeholders, have a central role to play in a system’s change and in the diffusion of low carbon technologies (Foxon 2011). It has been advocated that in complex adaptive systems, policy-makers should manage the dynamics of possible transitions and avoid early lock-ins (van den Bergh et al. 2011). Rogge and Reichardt (2016) purport that policy mixes are embedded in multilevel governance systems spanning supranational, national and sub-national levels of governance.

Smith et al. (2010, p. 446) noted that “the MLP provides a useful heuristic for considering the temporal aspects of transitions. It does this by considering multi-level processes of socio-technical structuration constituting specific functional spaces (e.g. mobility, energy, housing).” Moreover, coordination mechanisms imply a discussion of the struggle/balancing of centralization and decentralization within multilevel governance. However, it appears that in Italy centralized and decentralized energy systems do not necessarily exclude each other. At different levels, technological, organizational and regulatory governance and social mechanisms are involved in both systems and a transitional, sustainable energy system might combine centralized elements – such as large-scale technological infrastructures – together with community-owned generation plants and microgeneration (Brondi et al. 2014). Sarrica et al. (2018, p. 444) analyzed political debates and newspaper reports and carried out interviews to elicit how “alternative views associated with energy sustainability are translated, supported or resisted, across different scales.” They discovered both coherence, but also inconsistencies between discourses on energy sustainability taking place at different governance levels. They concluded that there is a need to consider bottom-up inputs in national and regional strategies by enhancing participation and public engagement in energy governance. Participation issues have been taken adequately into consideration in the National Energy Strategy 2017. Consultations included 40 meetings with the stakeholders and one online consultation. In the online consultation, 14% of the total contributions received (251) came from citizens while 10% from academic institutions and research centers (MSE 2017).

The Supranational Level

We argued that European directives offered the “solution” to legitimatize the willingness to reform and change energy paradigm and challenge some path dependence (strong centralism and dirigisme) (Di Nucci and Russolillo 2017). We did not find evidence that the transformation of the energy system induced by the Europeanization acted as a driver for changing the balance between interest groups. There are signs for the existence of mediation factors such as actors and institutions (e.g., new actors such as regulators; “reformed” political parties, etc.) who can facilitate adaptive pressures at the national level.

For example, in the late 1990s, there has been a concomitant adaption of polity, policy, and politics. A good example is the creation of the regulatory Agency for Electricity and Gas AEEG, in line with the creation of European regulators.

The National Level

The governance at the national level is very complex and two key ministries, i.e., the MSE and the Ministry for the Environment, Land and Sea (MATTM) oversee the energy policy arena in Italy and hence most of the EU directives’ reception. The competency of each ministry is clear but often various institutions belong to such ministries and interact in the energy field. This appears to result in coordination difficulties and higher transaction costs than may otherwise be the case. In the past, overlapping measures evolved, which have also changed several times in the recent years. This has contributed to unnecessary complexity and regulatory uncertainty for sector stakeholders (IEA 2016a).

The Regional Level

In the past, regional policy has mostly concentrated on north-south disparities and promoted industrial subsidies, investment in infrastructure, and state-owned industrial activities under the coordination of a special agency (Cassa per il Mezzogiorno). Later this agency was abolished and the institutional infrastructure for regional policy was reorganized. Europeanization of the Italian regional policies has promoted an increased participation of Italy in EU decision-making processes in this area, especially due to a stronger engagement of regions in Brussels. Thus the participation of Italian regional actors in the programs and definition of the EU cohesion and structural policy constitutes an interesting case (also for the RES field) showing a timid shift from a top-down to a bottom–up approach, or – to put as Brunazzo (2010) – from the role of a “policy-taker” to that of a “policy-shaper.” Up to the end of 2012, investment co-financed by the European Regional Development Fund (ERDF) in the period 2007–2012 resulted in a cumulative RES-E capacity of 625.8 MW, of which 250.8 MW in the period 2011–2012. Moreover, if we look at the Italian participation in typical EU dissemination and near-to market RES project such as ALTENER within the Intelligent Energy Europe program, we can see that in the period 2005–2014 the regional participation in these projects increased notably with a peak in Lombardy, Latium and Tuscany. On the other hand, projects in energy within the INTERREG program regions, such as Abruzzi, Liguria, etc., were also very active.

Following Graziano (2010) we can consider the EU cohesion policy to have “[..] reinforced the ‘politicization of the regional territory’ and further legitimized the regions as political arenas due to the development and support of regional interests in connection with the availability of EU resources for development.” In fact, in the period 2000–2006, an exceptional amount of financial resources corresponding to 70% of the total Structural Funds available for Italy was allocated to the various Italian regional administrations that were involved in projects and regional programs in the RES field. It is important to point out that for example participation in EU programs, especially in EFRE and cohesion programs pushed participating regions to adapt to the changing institutional environment. Renewable energy generation has a positive impact on economic growth at the regional level (Magnani and Vaona 2013). This is somehow also confirmed by Corsatea (2014). By identifying the key drivers of renewable energy patenting activity, he analyzed data from 1998 to 2007 in 20 Italian regions and discovered not only that local researchers and regional public research subsidies contributed enormously to the development of innovation activities but also that regional characteristics, such as regional energy dependence and political orientation of regional councils, have played an important role.

Recent research is showing some interesting issues related to spending efficiency of regions (Meleddu and Pulina 2018). In fact, special statute regions and southern ones are performing best in term of technical efficiency. Nevertheless, the review of the first regional Energy Plans required by the Law 112/1998 (Art. 30) and issued between 2003 and 2010 is still considered a matter of national energy governance.

Municipal Level

Affiliation to European and international or national climate/energy networks is a good indicator for the role played by municipal actors in this policy field. City alliance networks (Energy Cities, Climate Alliance, Cities for Climate Protection, etc.) play an important role to engage local decision makers in initiating sustainable energy paths at the municipal level and provide some technical support, especially tools.

The Covenant of Mayors (CoM), launched in 2008, can be considered an interesting example of multi-level governance in which local and regional authorities take the lead in increasing energy efficiency and the deployment of RES and try to meet the EU 2020 targets in their territories through Sustainable Energy Action Plans (SEAP). With the help of SEAPs, cities implement sustainable measures in a structured way and monitor their effects. “A SEAP is also an instrument for cities to communicate to stakeholders – both locally and beyond – the importance of energy and climate protection and to encourage citizens and other relevant actors to take a part in the city’s ambitions” (ICLEI 2011).

Italy is the country with the highest share of cities integrated in the CoM. New signatories pledge to reduce CO2 emissions by at least 40% by 2030 and to adopt an integrated approach to tackling mitigation and adaptation to climate change. As of November 2017, according to the CoM website (http://www.covenantofmayors.eu/about/covenant-in-figures_en.html) out of 7755 signatories, 3981 Italian signatories representing 71% of the Italian population joined the network. Of these, 3775 (95%) have submitted SEAPs and 106 (3%) monitor them. These data indicate the responsiveness of the Italian local governments to the issues of energy efficiency and renewable energy.

Outcomes, Challenges, and Prospects

Italy has already achieved its RES targets for 2020, with a 17.5% RES share of total energy consumption in 2015 vis-a-vis a 17% target to be reached by 2020. The target of a 28% RES share of total energy consumption by 2030 is ambitious but feasible. In fact, the challenge of decarbonizing the energy system and especially the electricity sector together with the ambition to drive the transition to a low carbon economy and society is at least partly mirrored in the National Energy Strategy (NSE) of 2017. Long-term policy signals are key for new investment in energy. The NSE was originated from a novel participation process, which involved all the public and private stakeholders of the sector in both its preliminary stage and during the public consultation. In line with the EU long-term targets, there is a clear recognition for the need to render the Italian energy system sustainable in the long run. The document provides an overview on how the domestic energy market should look by 2030, and therefore proposes recommendations and indicates the conditions necessary to succeed. Beyond the rhetoric of such documents, the NES is characterized by ambition and multifaceted targets, which call for coherent and coordinated energy, environmental, regional, and industrial policies. The challenges for policy makers are not trivial; they are technical, political, and societal and imply a balanced approach to combine the security of supply, sustainability, and competitiveness and may also involve institutional changes.

While, on the one side, it is reassuring that the Italian strategy is also concerned with societal aspects and the role that citizens can play through a sustainable energy use, on the other side, community engagement remains a key challenge. Citizens-as-prosumers, large initiatives, and sizing the opportunity for the flexibility of the electricity system offered by smart energy communities are still practically in their infancy. Moreover, the NSE long-term strategy is not legally binding and it is unclear whether following the change of Government in June 2018 all the measures contained in the strategy will have a chance to become law. On top of that, it remains unclear how Italy will meet the ambitious targets indicated in the NES.

The EU Clean Energy Package, including a recast of the Directive on the Promotion of RES (EC 2016), also addresses renewable energy communities (REC). The EC acknowledges that REC can bring about added value in terms of local acceptance of RES and private investment capital. Article 22 of the proposed Recast Directive, which includes definitions, criteria, and guidance for their realization, also contains new provisions to empower REC to participate in the market and to become market actors. It defines REC as entities through which citizens and/or local authorities own or participate in the production and/or use of renewable energy. A REC can be an SME or a nonprofit organization of which the shareholders or members cooperate in the generation, distribution, storage, or supply of energy from RES, fulfilling a set of criteria. The proposal also stipulates that Member States shall take into account the specificities of REC when designing support schemes. These bottom-up initiatives and energy democracy set free the entrepreneurial potential of citizens.

We identified some past energy trajectories and features of the energy system that may be useful for understanding the ongoing transition. However, it remains an open question how the political and institutional legacies we analyzed will influence this transformation.

The process of Europeanization has been without doubt key to jump starting the energy transition in Italy. The Italian RES policies show a continuous calibration between (i) national distinctness, (ii) various pressures to adapt, and (iii) processes of mediation and response. Some policy areas have played a more important role than others have, for example, the regional and cohesion policy, cooperation and coordination mechanisms at the EU level, and the latter also in relationship with the governance of the energy sector.

Among the domestic drivers, decentralization and the role attributed by the devolution to the regional governments have played an important role in enhancing the deployment of renewables and set forth more sustainable paths.

On top of the issues stated above, a number of additional open questions remain:
  • Is there a predominant technocentric perspective about energy transition concerning distributed generation, smart grids and ultimately the digitalization of the sector and is this acting as a driver towards a sustainable path?

  • What is the role of electro mobility in particular?

  • What kind of role will the incumbents play?

The topic of the digitalization process of the power sector (and of the smart technology and practices associated to it in the framework of smart cities, such as smart grids and the connected new solutions, including “Internet of things”) might rapidly add new layers and actors to the governance system analyzed in our work and also act upon the regulatory framework. Surely, the recent full start of the capacity market is a good example and is fully in line with the foreseen stronger role of intermittent RES-E in the country. The national energy strategy of 2017 seems to confirm that a technocentric perspective on energy transition can act as a driver for sustainability, also because starting from 2020 the supporting mechanisms for RES-E might evolve towards the market parity (MSE 2017), i.e., policies that will trigger more investment on renewables and hopefully a simplified regulatory framework for decarbonization.

Concerning the broad and long-term societal debate, an open question remains whether future public support may shift the focus from renewables to energy efficiency. This support regime has been heavily criticized, and Italy’s incentives system is said to introduce distortions with respect to the cost of public resources allocated for each unit of CO2 avoided. As part of the country’s energy saving incentives, the public cost of energy per MWh is now 25 times lower than the public cost to support renewables. As remarked by Deloitte (2015), this has contributed to the adoption of not-yet-mature renewable technologies. In the long term, this may not result in the most capable system for reducing emissions and may provoke a diminishing societal acceptance for certain development paths.

In Europe, Italy showed in 2017 the highest motorization index: 62.4 cars per 100 inhabitants, even higher than Germany (55.7 cars per 100 inhabitants). This record is, on the one side, responsible for congestion in traffic that costs around 1% of GDP, and on the other side, it pinpoints that a third of the Italian energy consumption derives from the transport sector. Against this background, sustainable mobility can play an important role in the national energy transition and help realizing the ambitious plan aiming at carbon reduction of 80–95% from the 1990 level by 2050. The goals are expected to be met through a reinforcement of the mechanisms put in place for the 20-20-20 energy package. Electric vehicles (EVs) are expected to contribute to CO2 abatement strategies (Perujo and Ciuffo 2010) as well as to provide a suitable solution to urban air quality, a highly sensitive topic for local administrators and policy makers in northern Italy. Although in Italy the presence of EVs and recharging stations is still negligible and both public awareness and acceptance by the final user are still underdeveloped, in 2016 the Legislative Decree No. 257 set the obligation for new buildings – excluding public real estate – larger than 500 square meters to foresee the presence and the necessary systems of charging stations for EVs. Such a focused policy might help kick-start the process as an integral element for a sustainable transition.

Some strategic energy targets have already been met also thanks to the impact of the economic crisis on the country. Deloitte (2015) warned from a competitive and economic growth point of view that the transition should not penalize the Italian economy in sectors exposed to international competition. It is, however, legitimate to question to what extent a positive economic reversal could spoil Italy’s ability to reach its efficiency objectives, especially from the starting position of good performance of the national energy efficiency as opposed to other EU countries. The 2050 Energy Roadmap could represent an important drive for structural changes on incumbents and in general on Italy’s energy markets. Incumbent energy companies are forced to invest in paths that gauge between the external pressure of accomplishing sound environmental goals (e.g., GHG reduction) and conforming to existing technology paths and especially sunk costs in infrastructures. Problems for the incumbent can emerge if such a path is broken or changed due to a change of policy (for example, affected through a change in the incentive/subsidy policy).

The most relevant role to foster a sustainable transition, considering what has been mentioned in our analysis about the incumbents, is to be expected from ENEL. For the time being, ENEL could be considered as a sort of change agent on two main directions: digitalization and electro-mobility. The establishment in 2018 of a new brand in the group, ENELX, supports this standpoint, as this is entirely focused on the design of innovative (digital) solutions for cities and households and on the promotion of electro-mobility.

Concluding, the case of Italy seems to underline that European policies can provide a model around which to redesign and adapt a domestic policy, but that for this to take place, actors or better change agents able to exploit adaptational pressures are indispensable. Coherent streamlining procedures for supporting self-generation of electricity from RES or high-efficiency co-generation, and to put the new energy communities and prosumers at the center of the new energy model for the transition are necessary. This means opening the energy market to new actors, a wide participation of prosumers either as municipally owned companies, cooperatives, or as citizens. An increasing participation of prosumers in the energy system is also a milestone for a democratization of a (ecologically and socially) sustainable energy system.

Whether the present government will be willing to continue with the new narrative around the energy transition initiated with the NSE and consequently enhance the necessary steps to such a transition is questionable. But it is also a question of whether the “change agents” necessary to drive the transition are at work and whether it is the incumbents’ or “citizens’ energy” that can take up this role. The road to be taken for the energy transition calls for improving transparency and public accountability in the energy sector. The aimed solutions and the path to be followed are going to enormously affect the process of democratization of the energy landscape as they imply also access of data to the public, involvement of the public in the allocation of benefits and in key decisions. And this may also imply new modes of governance.

Cross-References

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Environmental Policy Research CentreFreie Universität BerlinBerlinGermany
  2. 2.Institute for European Energy and Climate PoliciesAmsterdamThe Netherlands

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