The Minister for Ecological Transition Roberto Cingolani dropped a bombshell, announcing at a meeting that in the next quarter "electricity bills for Italians will increase by 40 per cent". A very large rise, given that "in the previous quarter the increase had already been 20 per cent, with no small social impact". The crux of the matter, according to the minister, is that the price hike is due not only to the rise in energy demand, with the consequent increase in the cost of gas worldwide, but also — and perhaps, in the minister's view, above all — to the so-called CO2 allowances introduced by the European Union through the Ets (Emissions Trading Scheme) which requires every company to pay an allowance for each tonne of CO2 emitted into the atmosphere as a result of its business activities, following the "polluter pays" principle. At present, "rights to pollute" are granted at 55–56 euros per tonne of CO2. According to European Commission estimates, they could double between now and 2030.
But is this really the case? The answer, in all likelihood, is no.

How much does the cost of CO2 really weigh

Ember @ember_energy

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In fact, the chart published by Ember Climate, an independent think tank on climate and the energy transition, appears to refute the claim that the blame for price increases should be attributed to the Ets system: the curve shows how the cost of gas has risen steeply over the past 12 months, going from 20 euros per megawatt-hour to nearly 120, while the trend in the cost of CO2 can essentially be represented by a flat line.

Minister Cingolani received a direct response from European Commission Vice-President Frans Timmermans, who stressed that on the one hand "only about one fifth of the increase in energy prices can be attributed to the rise in CO2 prices". And on the other that, paradoxically, the problem is that too little has been done on renewables: "If we had had the Green Deal 5 years earlier we would not be in this position, because we would then have less dependence on fossil fuels and natural gas". In any case, Timmermans added in an interview on Radio Rai, Italy is one of the European countries making the best use of the Ets mechanism, whose ultimate purpose is not to push up bill costs, but to commit companies and governments to investing in energy sources other than fossil fuels.

That is not enough, however, explains former Legambiente president Rossella Muroni, today one of the few environmentalist voices in Parliament: "I remember that in 2011 we installed around 10 gigawatts of new renewable capacity; in the last year we have barely managed one. If Minister Cingolani truly wants to help Italian families he must help the country to accelerate on the renewables front." The reasoning is straightforward: if there were more renewables, the cost of carbon dioxide would be driven down, precisely because with clean energy sources there is no need to purchase many "rights to pollute".

The CO2 quota market established by the Kyoto Protocol provides for companies to receive, purchase and trade emissions quotas. Those that do not use their quotas (because they have been particularly successful at reducing the dispersal of climate-altering agents into the atmosphere) can put them back on the market. An attractive objective for virtuous companies, and a deterrent for the more polluting ones. To date, installations covered by the ETS scheme have reduced their emissions by around 35 per cent between 2005 and 2019, with the aim of reaching 43 per cent by 2030.

Concerns and criticism

In practice, however, Minister Cingolani's words have, as was foreseeable, sparked a great deal of concern: if the increase were truly 40 per cent, according to estimates by the Unione nazionale consumatori the annual burden on a family would average around 247 euros: for the time being Cingolani has assured that the government "is strongly committed to mitigating the cost of bills resulting from these international conditions and to ensuring that the transition towards more sustainable energy sources is swift and does not penalise families": the idea is one of direct government intervention, currently estimated at 3 billion euros, which could shoulder at least part of the projected increase, so as not to make it fall entirely on citizens' pockets.

CINGOLANI: “SU BOLLETTE GOVERNO IMPEGNATO PER TUTELA DELLE FAMIGLIE”“I dati tendenziali sugli aumenti dei costi…
Posted by Ministero dell'Ambiente e della Sicurezza Energetica on Tuesday, September 14, 2021

The rise in gas prices and the new global strike

The other evidence emerging from the Ember chart, also confirmed by Arera in recent days, is the increase in the cost of gas as a raw material, which remains Italy's most widely used energy source. For its supply, the country depends almost entirely on imports, and at this stage purchasing conditions are far from ideal: the economic recovery driven by the improvement of the pandemic situation has caused gas demand to explode worldwide, especially in Asia, while supplies from Russia are on the decline.
Meanwhile Italy, which consumed a great deal of energy on heating over a rather cold spring, and on air conditioning owing to a particularly hot summer (consequences, of course, of climate change), waits and depends on others, as a result of its own choice to continue betting everything on gas.

The overall situation is explained clearly by Simone Molteni, scientific director of LifeGate: "The price of gas has exploded because, driven by the transition, far less has been invested in creating new gas capacity, and this leads to a great deal of demand but less supply: but this is a good thing, because in the long term we do not want new gas infrastructure to be built. Then there is the rise in the cost of CO2, but this too is a good thing: CO2 must be paid for, because otherwise we will never solve the problem. What has been missing is what should have been done around all this — the failure to carry out the energy transition sooner." Today Italy uses alternative energy sources for 40 per cent of its needs, better than other European countries, but it is still not enough.

To reinforce this very point, the new global climate strike conceived by Greta Thunberg is already scheduled for 24 September. "It will be us who pay for the delay of politics in addressing the climate crisis," protest the members of Fridays for Future Italia. "We are paying for the heavy influence of the fossil fuel industry on political decisions, for their disregard for the common good and for the power they have to slow down the transition and obstruct the shift to increasingly affordable renewables." What we are paying for, then, is above all the accumulated delay.

How much does the cost of CO2 really weigh on the likely rise in energy bills