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The future of energy

  • Venice
  • 7 October 2023

        The Italian energy system managed to weather the perfect storm of 2022 generated by the spike in gas prices following the Ukraine war and the simultaneous reduction in hydroelectricity production caused by drought. That was made possible by replacing Russian gas with supplies from other sources, thanks to the national energy authority and the efforts of multi-utility companies. Still, much remains to be done to increase the country’s resilience to both geopolitical and climate crises. Flexibility is key, and it will be even more pivotal in confronting the insecurities that continue to beleaguer the sector, with a view to balancing energy security and economic and environmental sustainability.

        It is also necessary to consider the balance between efficiency and redundancy, understood as strategic supply sufficiency in moments of crisis.  The solidarity among countries envisaged by European storage regulations could be the key to finally establishing energy security as a common continental asset. Yet this is a step that calls for Europe to shoulder responsibility – a difficult task given the current scenario, in the absence of Union decision-making reforms. Meanwhile, the EU is moving forward with ambitious plans for promoting renewables, but its leadership role in this field is sharply reduced by its dependence on technologies and rare earth minerals – sectors in which China dominates. 

        For the European transition to be a true “green deal”, opportunities must be optimized through industrial policies that foster growth in technologically advanced sectors where Europe is capable of playing a prominent role part as compared with the scale economies of other productive markets; at the same time increasing the quota of raw materials that recycling can yield.

        In that way, European manufacturing can evolve into an energy security infrastructure, while a solid industrial policy – i.e., one with clear priorities capable of balancing subsidies and penalties and of steering the market – remains the main path to generating growth. Unfortunately, here too the EU lacks a continent-wide strategy, with every member independently weighing China’s preeminence against America’s determination to protect essential industry for the sake of national security.

        Moreover, given the new energy scenario currently fueling geopolitical tensions, Europe must reinforce its relations with other countries, particularly on the strategic continent of Africa. The challenge is a complex one: Italy and Europe are faced with extremely ambitious goals in the context of an energy transition that differs entirely from those of the past. Indeed, the climate crisis has become the central player in a transition that calls for a cultural change on the part of citizens and the increased awareness of operators.

        From the industrial standpoint, research and development needs to go toward concrete solutions for the generation of “green electrons” as well as the diffusion of “green molecules” capable of decarbonizing the amount of energy consumption that is not electrical, and that can also not be decarbonized in the near term. Unfortunately, there is no catch-all solution, and separate projects are needed to focus on each technology. The creation of a means for producing vegetal oils in Africa, to be placed on the market with bio-refining to be carried out in Italy, as well as the national level development of bio-methane, are solutions that call for the transformation – not least digital – of existing infrastructure with a view to making them more intelligent and flexible. That also means developing an investment-friendly market design capable of impacting on volatility and on the numerous uncertainties and bureaucratic barriers that continue to encumber renewables. The debate over decarbonization technologies intersects that of late-generation nuclear; the solutions available complicate the modulation essential to co-existing with renewables, while those in the course of development seem locked into a timeline that goes beyond the emissions reduction goals set by the European Union.

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