Public Policies and the Energy Mix in Italy: Where Do We Stand?

Given the almost complete energy dependency and the consequently high sensitiveness to energy security in Italy, energy efficiency and a significant renewable share in the national energy mix are key goals of energy policy. Although the energy intensity of the Italian economy is among the lowest in western countries, there is room for further improvements pursuing economic growth without increasing the energy use (decoupling). Indeed the high Italian energy efficiency has been stimulated by import dependence and relatively high energy prices, because the economic system proved to be very reactive to selective price incentives towards energy products. Notwithstanding these premises, the general coherence and efficacy of the current framework, a bundle of excise taxes, direct subsidies, feed-in tariffs and tax expenditure together with the launch of an auction-based ETS phase is highly questionable. Therefore, a progressive evolution of support mechanisms for renewables and energy efficiency to a more cost-effective and market-based system is strongly encouraged. This chapter outlines the current complex incentive system, highlighting incoherencies and successes, and discusses a proposal for a general reform that includes, in accordance with the European Commission proposal, a carbon taxation.