Energy Competition in Italy's Green Transition: From Fossil Fuel Hub to Regional Energy Security Challenge

What Happened?

Italy has taken significant green transition measures over the past decade, but the current government is still committed to positioning itself as the Mediterranean "gas hub," clearly demonstrating its deep ties to fossil fuels. Researchers and NGOs have criticized the vagueness in its documents for the EU 2030 climate goals regarding key issues (such as phasing out oil, coal, and natural gas, and expanding renewable energy sources like wind and solar).

Background Analysis: Italy's energy transition presents some unique contrasts. It remains one of the EU's most import-dependent countries, has no nuclear power, and limited domestic fossil fuel reserves, making imported natural gas central. Unlike Germany, Italy does not face massive coal phase-out pressure, but unlike Spain, it has not fully tapped its renewable energy potential, despite being an early leader in solar power. The balance between energy security, affordability, and decarbonization is particularly delicate in Italy.

Emission Trends: Since 1990, Italy's total emissions have decreased by 26%, and emissions from the power sector have dropped by 64%, but road transport emissions have increased, highlighting persistent challenges.

Energy Structure and Import Dependence: Italy relies on imports for over three-quarters of its EU energy needs, with about 44% of electricity supply depending on natural gas. Geopolitical changes have altered the natural gas supply landscape, with Algeria becoming a major source (34% of import volume in 2024), but this dependence exposes its sensitivity to price fluctuations and makes energy security a key driver for policymakers.

Renewable Energy Progress: Italy was an early leader in solar power in the early 2000s, but development is geographically uneven: hydropower dominates the Alps, while solar and wind are concentrated in the south and islands. Grid bottlenecks and permitting delays are slowing expansion. Although the European Commission approved a €23 billion national aid plan for renewable energy deployment in 2026, analysts warn that the plan lacks detail and credible implementation measures, and the current installation rate is far below the pace needed to meet 2030 targets.

Revisiting Nuclear Energy: After the 1987 referendum, Italy closed the last few reactors, and the 2011 referendum reaffirmed public opposition. However, the current Meloni government has reactivated the nuclear debate, proposed nuclear scenarios in the National Energy and Climate Plan (NECP), and plans to put small modular reactors (SMRs) and advanced modular reactors (AMRs) into operation between 2033 and 2034, expecting nuclear power to account for 11%-22% of the energy mix.

Industrial Risk and Policy Tension: Frequent changes in government mean that climate policy changes are often incremental rather than fundamental.Industrial Risk and Policy Tension: Frequent changes in government mean that changes to climate policy are often gradual rather than fundamental. The right-wing alliance emphasizes energy security and affordability, warning that climate rules could lead to "industrial desertification." The Italian automotive industry is a typical example: without clear electric vehicle policies, car production and 90,000 jobs could lose up to 58% by 2030. Although the government has provided subsidies of several thousand euros (up to 10,000 euros) for scrapping old cars, only about 4% of newly registered pure electric vehicles in 2024 is compared to the EU average of 14%.

Response to Energy Crises: The 2022 energy crisis triggered a rapid diversification drive, including new long-term natural gas agreements with Algeria and Azerbaijan and the expansion of LNG capacity. This improved short-term security but may lock in fossil fuel infrastructure.

Tension of Green Pacts: In Italy, the current government criticizes the EU "Green Deal," warning it could lead to "industrial desertification." The Prime Minister calls for a revision of the "ideological" approach, emphasizing technological neutrality, the importance of hydrogen and biofuels, and measuring emissions by life-cycle accounting rather than just tailpipe standards. Meanwhile, many businesses and investors urge the European Commission not to weaken sustainability rules, stressing that regulatory certainty is key to mobilizing green investment.