Italy’s drive to wean itself off Russian gas and replace it with north-African imports has put the government of Giorgia Meloni on a collision course with its international climate agreements.
The government last week published its policy for phasing out public financial support for coal, oil and gas projects overseas, but climate change experts say the new rules are filled with loopholes.
The UN COP26 climate summit pledge in 2021 committed more than 30 countries, including Italy, Germany, the UK and the US, to end all new public financing for fossil fuel projects overseas by the end of 2022.
But the war in Ukraine and the months-long energy crisis last year upended those plans, with EU governments and the European Commission extending funding plans for gas infrastructure and scrambling to secure deals with countries around the world in a bid to reduce the continent’s reliance on Russian gas.
Germany, whose prewar reliance on Russian gas was higher than Italy’s, is yet to publish its new policy for public fossil fuel financing overseas. People familiar with the talks last year have expressed concern about potential backsliding on its COP26 pledge.
Italy’s policy for its export credit agency, Servizi Assicurativi del Commercio Estero (SACE), will permit the continued support of gas exploration and production until 2026, as well as oil transport, storage and refining until 2024 and oil distribution until 2028.
Rome’s new funding policy carves out a wide range of exemptions for the continued support of fossil fuel projects beyond the stated deadlines on energy security grounds, including projects deemed “strategic for Italian energy and economic security”.
Prior to the invasion of Ukraine, Russia provided around 40 per cent of Italy’s total gas consumption, but that dropped to just 16 per cent last year. Gas imports from Algeria and Azerbaijan have been increasing.
Still, climate experts have expressed dismay that Rome is backsliding on its international commitments. Instead of seeking to replace Russian gas with gas from elsewhere, they argue Italy could have doubled down on renewables and improving energy efficiency to reduce consumption.
“It’s very disappointing,” said Luca Bergamaschi, co-founder of Ecco, an Italian climate change think-tank. “It sets a terrible precedent for other countries.”
Italy’s export credit agency said it had no comment beyond what was written in the policy.
Eni, the Italian state-owned energy company, in January signed an $8bn deal for an offshore gasfield with Libya.
Earlier this month, Meloni visited India to discuss energy, among other issues, and agreed to “explore partnerships” in areas including gas transportation and energy storage.
When announcing its new energy funding policy, Italy said it had considered both climate goals and the energy crisis. It noted that the country “may potentially require further investments . . . in particular in relation to gas”.
Italy’s policy release coincided with a warning from the world’s top climate scientists in a UN report last week, which found that global warming was “more likely than not” in the near term to reach a 1.5C rise, and that achieving net zero emissions would require a “substantial reduction” in the use of coal, oil and gas.
Non-profit campaign group Oil Change International said Meloni’s government “has broken a major climate pledge to end public financing for international fossil fuel projects, instead producing the worst policy among countries that signed the 2021 commitment”.
One person close to the COP26 initiative said Italy’s new policy was “pretty awful . . . worse than not having a policy, as it essentially green lights ongoing fossil fuel investment”. The country was “hiding behind national energy security as a justification . . . [but] this is about maintaining support for commercial interests”, they added.
In a speech in parliament earlier this month, Meloni said her government did not deny the reality of climate change, but believed in a “pragmatic approach” to the green transition that would not hurt the economy, or cause widespread job losses.
Italy was among the European countries hit by a severe drought last summer, which affected not only agricultural harvests but also the country’s hydropower generating capacity.
Further water shortages and droughts are expected following a relatively dry winter. Meloni’s government is also drawing up plans to tackle the long-term water crisis.
Climate scientists are clear that extreme weather events will become more common and severe as the world warms beyond the 1.1C already experienced since pre-industrial times.
In addition to backsliding on the climate goals, Italy has been pushing back on several components of the EU’s ambitious green deal, including by resisting a planned ban on the sale of combustion engines in cars, alongside Germany, and criticising a plan for energy efficiency improvements in housing.
Ecco’s Bergamaschi also said many of Italy’s planned large gas investments may prove misdirected, given EU projections for a sharp drop in European gas demand in the coming years. “We don’t need those investments for energy security reasons — we have alternatives,” he said.
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here
Source: Financial Times