Italy is betting on gas in Libya, as it did in Algeria. But in 2022, renewables overtook fossil fuels. If we want the transition, the moment is now.
Eni and Giorgia Meloni's "energy" tour of North Africa continues. After striking agreements with Algeria, it is now Libya's turn. At the heart of the contracts signed between Eni and the Libyan Government of National Unity is an Italian investment of 8 billion focused on the extraction and production of gas — destined for Italy — at the Mellitah complex in Tripoli, plus the construction of a carbon capture and storage (CCS) facility.
The Libyan agreements demonstrate how Italy has once again chosen to bet on fossil fuels, on gas in particular, entrenching itself behind the argument that gas represents the only energy source capable of guaranteeing energy security in the short term. Yet the figures paint a different picture: in Europe in 2022, for the first time, generation from renewable sources overtook generation from gas. So what sense does it make to turn Italy into a "gas hub" when electricity production is moving towards clean sources? It is clear that neither sustainability nor security of supply is the actual objective of these agreements.
Let us start with the energy context: the news of renewables' historic overtaking of gas emerges from the annual study by research centre Ember — essential news for contextualising the "Piano Mattei", the government's gas bet that has been much discussed in recent days.
The report reveals that in 2022, for the first time, generation from renewable sources — wind and solar (22 per cent) — overtook generation from gas (20 per cent). But above all, Ember also estimates that electricity generation from fossil fuels could collapse by 20 per cent in 2023, double the previous record set in 2020.
According to estimates, the two fields in Libya on which Eni and Italy have placed their bet should together hold reserves sufficient to supply 8.7 billion cubic metres of gas per year for the next 25 years. But taking Ember's data into account, this means Italy has staked 8 billion euros on a loss-making resource, not to mention that the two Libyan fields will not be operational for another three and a half years.
According to Ember's analysis, in 2022 Europe faced a triple crisis in the electricity sector: just as it was scrambling to cut ties with Russia, its main fossil gas supplier, it found itself confronting the lowest levels of hydroelectric and nuclear energy in at least two decades, creating a deficit equivalent to 7 per cent of Europe's total electricity demand in 2022.
It was renewables that helped ease this deficit: solar generation recorded the fastest increase, with a record growth of 24 per cent in 2022 — almost double the previous record — which helped avoid 10 billion euros in gas costs. Twenty European Union countries set new solar energy records in 2022.
Of course, the fall in electricity demand also contributed to reducing the deficit. Mild weather was a decisive factor, but cost pressures likely played an important role too, along with improvements in energy efficiency and citizens acting in solidarity to reduce energy demand at a time of crisis.
The current energy context is also favourable for saying goodbye to coal. For one thing, only one sixth of the nuclear and hydroelectric deficit mentioned above was covered by coal. This means that in 2022, coal generation increased by 7 per cent but things could have been much worse: wind, solar and the fall in electricity demand prevented a far more significant return to coal.
More broadly, coal generation across the entire Union declined in all four of the final months of 2022, with a 6 per cent year-on-year fall. Despite the EU having imported 22 million more tonnes of coal in 2022, it used only a third of it: "the shocks of 2022 caused only a small ripple in coal energy and a huge wave of support for renewables," according to Dave Jones, head of data insights at Ember. "Any fear of a coal comeback is now dead."
But the most striking finding to emerge from Ember's report is that gas generation remained almost unchanged (+0.8 per cent) in 2022 compared to 2021, despite record prices. Gas generated 20 per cent of Europe's electricity in 2022, compared to 19 per cent the previous year. And things are about to change.
The latest industry signals suggest that in 2023 Europe's transition towards wind and solar will accelerate in response to the energy crisis, while French hydroelectric and nuclear capacity will recover. As a result, Ember estimates that electricity generation from fossil fuels could collapse by 20 per cent in 2023, double the previous record set in 2020. Coal generation will fall, but gas generation, which is expected to remain more expensive than coal at least until 2025, will be the one that falls most rapidly.
"Europe's energy transition emerges from this crisis stronger than ever," Jones added. "Not only are European countries still committed to phasing out coal, but now they are also striving to phase out gas. The energy crisis has undoubtedly accelerated Europe's electricity transition. Europe is racing towards a clean and electrified economy, and this will be fully visible in 2023. Change is coming fast and everyone needs to be ready."
Against such a backdrop, no one would aim to become a gas hub for a continent that, by the numbers, is going all-in on renewables. No one, except Italy. The government led by Giorgia Meloni, together with Eni chief executive Claudio Descalzi, has already made two trips — first to Algeria and then to Libya — to define how much gas to extract from North Africa and how to transport it to Italy and Europe.
Gas is not only unsustainable from an environmental standpoint but also from an economic one: as Proxigas explains, the newly formed Confindustria association that brings together gas companies (but not Eni), transporting natural gas to Italy from abroad involves on the one hand the emission into the atmosphere of a quantity of climate-altering gases that on average is six times higher than that emitted by gas extracted on national territory, and on the other hand it is also more expensive: for every 1,000 cubic metres of gas coming from abroad, 120 additional cubic metres must be extracted and are consumed in transport.
It is no coincidence that the agreements between Italy and Libya on gas do not cover gas alone. Indeed, considerable space has been devoted to the issue of migrant flows from the African coast towards Italy. On this subject, Italy has renewed its memorandum with Libya ahead of the February deadline, which provides for the delivery of five patrol vessels. For years, the so-called Libyan coast guard has been financed and trained by Italy and the European Union to reduce migrant departures from the Libyan coast.
An arbitrary form of patrolling, given that, as demonstrated on several occasions by multiple NGOs, the Libyan coast guard rescues whom it chooses, using methods that are often violent but above all, far too often, returns people intercepted at sea to traffickers and to the managers of migrant detention centres, where torture and rape are, unfortunately, systematic. In short, once again the fate of fossil fuels is bound up with that of violated human rights.