Italy’s prolonged period of weak economic performance has led to a significant reduction in emissions from its electricity sector, reaching levels not seen in decades. Years of sluggish growth have dampened industrial output and reduced overall energy consumption, allowing power providers to scale back fossil fuel use. Between 2008 and 2024, fossil fuel-based electricity generation dropped by 47%, while clean energy production surged by 124%, primarily due to increased solar and wind capacity. As a result, power sector carbon dioxide emissions fell by half, landing at approximately 76 million tons.
However, the government’s plans to stimulate economic revival could disrupt this environmental progress. With GDP remaining nearly unchanged since 2008 at about $2.4 trillion, compared to substantial growth in Germany, France, and the broader EU, policymakers are introducing infrastructure-focused stimulus measures. These include road, rail, and energy projects that demand high-energy materials like steel and cement, both of which contribute heavily to greenhouse gas emissions.
Italy’s reliance on imported natural gas—accounting for over 90% of supply—has also made energy prices especially volatile since the Ukraine conflict. Electricity costs have risen sharply, averaging 32% more than in Germany and France and 70% above Spain’s rates since 2022. These high costs have further weakened industrial competitiveness and contributed to a 15% decline in national electricity output over the past 16 years.
While upcoming renewable initiatives, such as large-scale battery storage in the north, new wind installations in the south, and a major solar park near Rome, aim to strengthen clean energy infrastructure, they may not offset the near-term rise in emissions. Increased industrial activity driven by stimulus efforts is expected to boost power demand, likely requiring a temporary return to higher fossil fuel usage. Thus, while the country’s emissions have improved due to economic hardship, a recovery could reverse this trend unless clean energy deployment accelerates significantly.
— news from Reuters
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Italy’s economic woes have a climate upside, for now
LITTLETON, Colorado, Oct 2 (Reuters) – Italy’s enduring economic malaise is resulting in the lowest emissions from its power sector in decades. But climate activists should beware that planned measures to boost the economy could trigger a swift U-turn in pollution trends. n nOver a decade of economic stagnation has seen Italy’s economic growth fall far behind that of regional rivals, resulting in steadily declining goods output and exports and lower power consumption by many of the country’s businesses. n nSign up here. n nLower power demand from industry has in turn allowed Italy’s utilities to curb fossil fuel-fired power output and cut power sector emissions to historic lows in what was formerly a top-10 polluting nation. n nIn response to the enduring economic quandary, though, the government is rolling out stimulus measures aimed at reviving industrial activity that will likely trigger higher power generation and emissions in the world’s eighth-largest economy. n nLOSING GROUND n nHigh public debt levels, rising labour costs, a stifling bureaucracy and a declining population have resulted in Italy’s economy stagnating since the 2008 financial crisis, while Europe’s overall economy has expanded by more than 20%. n nItaly’s gross domestic product (GDP) in 2025 is roughly flat compared to 2008, at around $2.4 trillion, data from the International Monetary Fund (IMF) shows. n nOver that same time span, Germany’s economy expanded by close to 25%, France’s economy by 10%, and the overall economy of the European Union by 22%. n nDue to hefty public debt levels – the highest among major European economies – alongside strict European Union rules over currency adjustments, Italy’s government has so far been restricted in terms of intervention options. n nThis has left industry fending for itself and resulted in a steep decline in the output of durable goods such as cars and machinery that had previously been major drivers of Italy’s economy. n nPOWERING DOWN n nOn top of the limited government help, Italy’s industries have also had to contend with a drastic upheaval to local natural gas markets in the aftermath of Russia’s invasion of Ukraine, and some of the highest power costs in Europe. n nItaly gets over 40% of its electricity from gas-fired power plants and secures over 90% of its gas supplies from imports, according to data from the Energy Institute. n nThis gas-heavy slant to its energy system has resulted in a steep rise in Italy’s wholesale power costs, which have averaged around 32% more than those in Germany and France and 70% more than those in Spain since 2022, data from LSEG shows. n nSuch sharply higher power costs have further undermined the competitiveness of Italy-based businesses, and resulted in a historic decline in overall power demand in the country as industries curtailed output. n nBetween 2008 and 2024, Italy’s total electricity output declined by 15% to around 265 terawatt hours, data from Ember shows. n nFossil fuel-fired electricity production dropped by 47% between 2008 and 2024, while output from clean energy sources rose by 124%. n nCLEAN GROWTH? n nThe rise in clean electricity supplies – driven mainly by surges in solar and wind power output – has resulted in Italy’s power system emissions falling by 50% between 2008 and 2024, to around 76 million tons of carbon dioxide, Ember data shows. n nAny sustained upturn in overall economic activity, however, will require utilities to boost output from fossil fuel plants, as renewable energy supplies remain too patchy to properly support a consistent rise in total energy demand. n nWhat’s more, many of the economic stimulus measures being pursued are targeted at building Italy’s infrastructure, on the assumption that construction of road, rail, power and tunnel systems will send positive ripples throughout the economy. n nYet such projects require the energy-intensive production of steel and cement, which not only require higher volumes of industrial power supplies but also emit substantial amounts of emissions themselves. n nFurther development of Italy’s clean energy supplies is also targeted in government infrastructure plans, including large battery energy storage projects in northern Italy, new wind farms along southern regions, and the country’s largest solar park in the countryside north of Rome. n nOnce completed, those projects will help utilities make further cuts to their dependence on gas and coal for power, and may help limit any forthcoming rebounds in power emissions. n nBut over the near term at least, the expected coordinated rise in industrial activity aimed at boosting economic growth will likely also lift Italy’s emissions, and snap the recent trend of steadily falling pollution. n nThe opinions expressed here are those of the author, a columnist for Reuters. n nReporting by Gavin Maguire; Editing by Tom Hogue n nOur Standards: The Thomson Reuters Trust Principles., opens new tab n nOpinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.