Italy looks to slow green transition drive to shield local firms

Italy's Prime Minister Meloni attends question time at the lower house of parliament, in Rome
Italy's Prime Minister Giorgia Meloni attends a question time at the lower house of parliament in Rome, Italy March 15, 2023. REUTERS/Remo Casilli/File Photo
  • Italy reneges on 2021 pledge on fossil fuel funding
  • Industry needs safeguarding, government says
  • Critics say policy is blinkered and harmful

ROME, March 27 (Reuters) - In power for just five months, Italy's right-wing government is pushing back on an array of initiatives aimed at greening the economy, arguing that local business can ill-afford previously agreed transition goals.

Since the start of the year, Italy has demanded that the European Union water down a directive aimed at improving the energy efficiency of buildings, re-write plans to phase out combustion engine cars and questioned a drive to slash industrial emissions.

Last week it unexpectedly reneged on a 2021 pledge to stop financing international fossil fuel projects, arguing that the energy crisis sparked by Russia's invasion of Ukraine meant the government had to be more cautious with its objectives.

"The problem is that we cannot help the environment by destroying our industries," Prime Minister Giorgia Meloni told reporters on Friday at the end of an European Union summit in Brussels.

"The road to a green economy must be socially and economically sustainable," she said.

Climate activists have denounced the erosion of green ambitions and warned that the backtracking in Italy could persuade other nations to follow suit.

"It is shocking," said Simone Ogno, a campaigner with the Italian environmental group ReCommon. "The government is using the recent energy crisis to justify everything, but we are talking here about the future of the planet."

Italy's reticence to sign up to green directives has also annoyed the European Commission, which has warned that Italian industry will end up losing out if it does not lead the drive in developing new, climate-friendly technologies.

"The transition is (aleady) here. You have to work on how to make it feasible and gain leadership in this process," said Paolo Gentiloni, the European Economic Commissioner and a former centre-left Italian prime minister.

"You don't have to be the last wagon in the train trying to hold the others back," he told an audience in Milan last week.


While Italy is still in discussion with the European Union about the fate of a number of green directives, it unilaterally walked away from a pledge made at the 2021 Cop26 summit in Glasgow to turn off the funding taps for foreign fossil fuel projects by the end of last year.

The country's export credit agency SACE said in a statement that it would continue to support oil distribution projects until January 2028, and oil storage and refining programmes until January 2024.

It declined to set any timetable to withhold funding for gas projects in these three areas.

"The Italian Climate Policy takes into account both climate objectives ... as well as the current energy crisis," SACE said, adding that further investments maybe needed "to diversify sources of supply, in particular in relation to gas".

The U-turn was announced just two days after the United Nations urged wealthy nations to slash emissions sooner than planned after a new assessment from scientists said there was no time to lose in tackling climate change.

Prior to the 2022 war in Ukraine, Italy imported 40% of its gas from Russia. Over the past year it has sourced alternative supplies from other nations, including Algeria, and is looking to become a major energy hub in its own right, carrying gas from North Africa and Mediterranean to the rest of Europe.

Critics say this will take a massive investment in new infrastructure and warn that by the time the pipelines are operational, the gas would no longer be wanted because of European caps on fossil fuels.

The European Union has among the most ambitious climate change policies of major emitters, having committed to cut its net greenhouse gas emissions 55% by 2030, from 1990 levels, and eliminate them altogether by 2050.

Luca Bergamaschi, co-founder and executive director of the Italian climate change thinktank ECCO, said the risk was that Rome would invest heavily in old technologies and fail to build the sort of industrial network needed to take advantage of the ecological transition in areas such as batteries.

"The government is trying to protect things for a short while, but this is ultimately destructive because it is not creating anything new," he said.

Additional reporting by Valentina Za in Milan; Editing by Sharon Singleton

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