The total value of subsidies paid in Italy in support of fossil fuels in 2017 was 18.8 billion euros. Subsidies for drilling, Cip6 for assimilated sources, exemptions for energy-intensive companies, public funding, contributions to plants and power stations, incentives for fossil-fuel gasification, and also lost revenue for state coffers: this, encompassing both direct and indirect financing, reductions in excise duties, exemptions and tax-deductible allowances, is the "black hole" of dirty energy, which not only pushes us in the opposite direction to that of combating climate change, but also diverts resources that should be channelled towards renewables and the ecological transition of our country.

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The Stop subsidies to fossil fuels dossier

According to the International Energy Agency (IEA), the total value of subsidies to fossil fuels in 2017 was at least 300 billion dollars, 30 million more than in 2016. 45 per cent of the total went to support oil, almost 137 billion dollars; 23 per cent to gas, around 57 billion dollars; 2 billion euros to coal. For years we have been raising with policymakers the issue of abolishing subsidies to the oil and gas sector, and we have done so again by presenting, a few days ago in Ravenna, the sixth national dossier on the subject.

The aim is to reiterate the absurd paradox whereby polluting sources responsible for the greenhouse effect continue to benefit from substantial support, and to underline how all the conditions exist to shorten the timeline for phasing out fossil fuels and keep the rise in the planet's temperature within 1.5 degrees centigrade, now that renewable sources are fully competitive for many uses. The abolition of fossil fuel subsidies was one of the key battlegrounds of the last election campaign, but the Energy and Climate Plan contains no commitment on the matter and the issue is addressed only in passing.

Legambiente @Legambiente

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Con €18,8 miliardi si potrebbero finanziare:
💶 l’istruzione scolastica e l’Università
💶 il Fondo Nazionale Trasporti
💶 la lotta al dissesto idrogeologico e l’adattamento ai cambiamenti climatici
E invece finanziamo le #fossili 😒

#STOPfontifossili 👉 legambiente.it/legambiente-pr…

♥ 28💬 3 27 mar 2019 · Apri su X →

Legambiente's proposals

For the time being, the government has settled for raising concession fees for the prospecting, exploration and extraction of gas and oil. Legambiente is calling for the subsidies catalogue to be updated and for a road map for the abolition of fossil fuel subsidies by 2025 to be included in the Energy and Climate Plan. More than 14.3 billion euros per year in fossil fuel subsidies can be eliminated — partly immediately and entirely by 2025 — while 4.5 billion euros can be restructured, within the same sector or in others, so as to drive innovation and reduce emissions. It is a matter of political will, and if it is not done it is evidently because there is a desire to continue protecting a rent from which certain companies benefit.

It is unacceptable to continue transferring billions of euros every year in support of oil, gas and coal when the entire world, Italy included, is already suffering the grave consequences of global warming. We need to increase the funds required for the operation of the National Health Service, for universities and schools, for commuters through the transport fund, and for securing territories and adapting them to climate change.

Read also: Norway's sovereign wealth fund abandons fossil fuels and invests in renewables

By reducing subsidies to road hauliers and tying resources to the purchase of more efficient vehicles; rewarding companies that opt for modal integration with rail and shipping; eliminating in minor islands the privileges enjoyed by old diesel power stations and shifting production towards solar, wind, biomethane and hydroelectric power; and scrapping the excise duty exemptions from which diesel cars and scheduled flights benefit. Legambiente's dossier lists an incredible number of subsidies and indicates how to act to reduce or abolish them and direct resources in a way that rewards innovation. Drilling subsidies are particularly significant.

Why royalties represent a critical issue

One of the most significant critical issues concerns royalties, which stand at 10 per cent for onshore extraction and 7 per cent for offshore extraction. For comparison, in Norway royalties average 78 per cent; in the United Kingdom they range between 68 and 82 per cent; in Denmark the system no longer exists and the tax levy reaches 77 per cent. Even in low-production countries similar to Italy, such as Ireland and France, the taxes paid by companies to produce gas and oil amount to as much as 50 per cent. Legambiente proposes bringing our royalties up to at least 30 per cent: instead of 117.5 million we would find ourselves with revenue of 414 million euros. Productions under a research permit are entirely free — that is, exempt from paying any rate at all. In practice, based on data from the Mise, we are talking, for 2017, about 434,580 tonnes of oil extracted (10.5 per cent of the total) and 2,202 million Smc equivalent to 38.9 per cent of the total.

This translates into approximately 58 million euros in lost revenue for the state, of which around 36.4 million euros from Eni and around 4 million from Edison. Concession fees have just been increased, in the decreto Semplificazioni, by 25 times, but the figures remain derisory. Without counting public funding for international projects, exemptions and reductions for the use of fossil fuels in various sectors, the extra costs for minor islands, and the 6,981.96 million euros that the oil&gas sector receives directly and indirectly in the form of discounts and exemptions.

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It is simply a matter of political will

Particularly absurd are the excise duty exemptions from which air transport benefits, amounting to 1.5 billion euros per year. There are also contributions to plants and power stations through the PD component of the electricity bill, which is intended to cover dispatching costs — that is, the set of services that ensure the balance between energy fed into the system and energy drawn from it. In short, it is urgent to include the road map for the abolition of fossil fuel subsidies by 2025 in the Energy and Climate Plan. It is simply a matter of political will. Not doing so means that there is evidently a preference for continuing to protect the rents from which certain companies benefit, rather than defending the interests of the environment and of citizens.