Gatta: Italian renewables target ‘unreachable’

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Enzo Gatta, chairman of the Italian Association of Electricity Enterprises (Assoelettrica), says Italy’s renewables target of 17% is too high, particularly given the limitations to trading in renewables certificates. He spoke to EURACTIV in an interview.

Mr. Enzo Gatta is chairman of Assoelettrica, the Italian Association of Electricity Enterprises.

To read a shortened version of this interview, please click here.

What was the reaction of the Italian electricity industry to the proposed renewables directive?

First of all, it must be said that the goals set by the European Council and translated into binding targets by the Commission’s proposals are extremely ambitious. A contribution of 20% of final energy consumption by renewable energy sources by 2020 means roughly 220 megatonnes of oil equivalent (Mtoe) for the 27 EU member states. This goal is hard to attain and constitutes a great challenge, which requires the mobilisation of huge economic and technological resources. If we put this all together with the EU Emissions Trading Scheme (ETS) review, the challenge is even greater.

Will Italy be able to reach the renewables targets assigned by the Commission?

According to the renewables directive proposal, the Italian contribution should equal 17% of final energy consumption in 2020, which is estimated to be around 26 Mtoe. Last September, the Italian government produced a paper showing the results of an assessment carried out with the support of several ministries, after having consulted the industry. The conclusion of this research is that the maximum theoretical potential for renewable electricity production in the Italian territory is around 21 Mtoe. Consequently the goal of 17% is de facto unreachable. 

Having made this clear, we deem it necessary that the allocation of each country’s goals be balanced. We estimate that the definition of the target for each country must take into account not only the current GDP per inhabitant, indicator of the wealth of each nation at the moment, but also the real potential for growth in renewables, as well as what has been done up to now. 

In Italy, the contribution of renewables to the mix of electricity generation is already significant: about 18% of the total electricity produced over the past five years, placing us up front among the six largest EU countries. Furthermore, the criteria used for the promotion of electricity, which for renewables do not take into account the primary energy consumption replaced by renewable electricity production – in Italy’s case, this would be thermoelectric production from fossil fuels – penalises the latter and notably hydroelectric power, which in Italy accounts for about 85% of total renewable electricity production nowadays.

And more specifically in the electricity sector, do you believe the goals can be attained?

I would like to stress that the issue is not only about setting ambitious targets. This is first of all a great political challenge. 

In order to reach these objectives, a tremendous effort will be needed. Although the directive proposal leaves member states the freedom to determine internally the burden sharing between the sectors of electricity, heating and cooling and transport, we have reasons to estimate the target set for the electricity sector at around 30-35% of the total national consumption. This would be a record level for the contribution of renewables, if one considers that current levels are at around 18%. 

The maximum theoretical effort envisaged by the Italian government foresees a growth in renewable electricity of around 50 terawatt hours (TWh). The maximum theoretical sectoral potential by the year 2020 is thus around 104 TWh. 

Whether feasible or not, this will in any case require a rather significant financial effort and will likely engender an increase in energy prices. 

Despite this, by 2020 Terna (the Italian transmission system operator (TSO)) foresees an annual consumption of between 390 and 420 TWh: this means that the renewables contribution will in no way exceed 24-25% of the electricity consumed in Italy, a level well below the effort requested. 

If we consider that a realistic estimate of potential which could actually be exploited is around 90 TWh, the renewable contribution to the share of final energy consumption will necessarily be even smaller. 

In only one case could the renewables share be stronger, at least to a limited extent: where policies limiting electricity demand are implemented, based on further improvements in energy efficiency and greater energy savings.

Do you favour virtual trading in renewables certificates?

Absolutely. There is no alternative available to meet the targets, as solely national renewables production would not in any case be sufficient, for a very simple lack of potential. 

Trading is a necessity as long as the goals set at the EU level remain out of reach with the real possibilities of renewables development. Certificates trading within a functioning market is therefore of paramount importance, in particular if virtual trading is allowed and extended to third countries. 

Indeed, it seems to me that Italy is not the only member state considering its own potential to be well below the target it was assigned, which means that we could face a shortage of guarantees of origin available for trading. 

The trading provisions of the Commission’s final proposal, however, are themselves watered down in comparison to previous versions, following very strong lobbying by a few countries. This makes it basically impossible to recur to certificates trading if not only to a very limited extent, meaning that several member states can expect to face infringement procedures which, curiously enough, will not be due to a lack of will by the industry, but rather to badly-written legislation.

Setting ambitious goals is not enough per se, as we have no magic wand. One also needs to have the means to reach such targets. It is therefore imperative to clearly outline a development plan, through a series of effective, equitable and shared policies. This will be very difficult without a clear commitment on the part of all the political authorities, be it on the community, national, regional or local levels.

What are the main obstacles to the uptake of renewables in Italy, including at the different governance levels you mention?

The potential I mentioned earlier refers indeed to an optimal theoretical situation, where no obstacle prevents the further development of renewable energy sources. 

Unfortunately, this is not the case. 

The Italian operators must face a situation which often makes it impossible to have the long-term certainties necessary to invest in further capacity. Two main kinds of obstacles exist. 

First of all, bureaucracy: obtaining the necessary authorisations to build wind, photovoltaic, or biomass power plants requires several months, at times even years. 

Secondly, the lack of a national policy based on strict goals set at the regional level, given that the local administrations, following recent changes to the Italian Consitution, are solely competent in energy matters. This justifies a lack of accountability on their part and favours the emergence of the so-called ‘not in my backyard’ or NIMBY effect. 

We therefore strongly welcome the provisions contained in the directive proposal on this aspect, whose implementation – we hope – should streamline the authorisation mechanisms.

Concerning carbon capture and storage (CCS), the Commission expects it to be commercially viable and deployable on a large scale by 2020. Do you think this technology is safe and environmentally friendly?

Experts and technicians widely promote CCS as it does not present any particular problem for the environment. Its actual technical feasibility also seems to be widely acknowledged. I therefore believe that the very issue here is about the costs of CCS. 

I do not doubt that the technicians are ready to offer us reliable solutions between now and 2020, yet at present we are not in a position to foresee exactly how much this will cost. 

From this point of view, it is important to define a regulatory framework which enables the building up of installations and the adequate valorisation of CO2 emissions not released into the atmosphere. It seems to me that the provisions contained in the CCS and ETS directive proposals go in the right direction.

Current estimates set the price of carbon at about €23 a tonne. Is this figure high enough to compensate for the investments necessary to develop CCS? 

This question is at the heart of the matter. 

It is still premature to make medium or long-term forecasts, because these are on the one hand too tied to technological evolution, and on the other hand to future energy scenarios. 

Yet it is also important to signal the importance of a communication strategy targeting the wider public to prevent the NIMBY syndrome from emerging, since it may significantly postpone or even prevent the development of long-needed and long-awaited infrastructures, especially in Italy. This is absolutely necessary if we want to avoid a situation where, in a few years, we have an environmentally and economically viable technology, but we can not make any use of it because of public opposition.

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