Status: 04/11/2022 12:34 p.m
Italy is also heavily dependent on gas imports from Russia. Despite this, the government is open to an EU embargo. During a visit to Algiers, Prime Minister Draghi explores alternatives.
When something is very important to Italian Prime Minister Mario Draghi, he expresses it in a few words. “Do you prefer peace? Or the air conditioner on?” You have to make a decision – this is how Draghi reacted to a journalist’s question during a press conference in the discussion about a gas embargo.
With “Whatever it takes”, Draghi, as President of the European Central Bank (ECB), was ready to save the euro by any means necessary. Now it’s about the war in Ukraine, dependence on Russian gas. The 74-year-old made it clear that if the European Union proposed the gas embargo and agreed, the Italian government would be happy to follow suit. Italy has no problem until the end of October, the gas reserves are full.
Five pipelines from different routes
But the country is very dependent on Russian gas. Last year, imports accounted for 29 billion cubic meters, or around 40 percent of all imports. In the event of a stop, the first thing to do would be to replace it with gas from other countries, according to the Minister responsible for the ecological transition, Roberto Cingolani.
The advantage is that Italy has five gas pipelines coming from different routes. “Therefore, it is easier for us to diversify across the different connected countries,” Cingolani said.
Italy wants to increase imports from Algeria
During Draghi’s visit to Algerian President Abdelmadjid Tebboune, higher imports from Algeria are to be contractually agreed. The North African country already supplies 31 percent of Italy’s gas needs. Italy has also been getting gas from Libya, as well as from Azerbaijan, since the end of 2020 via the Trans-Adriatic Pipeline.
The current share of ten percent could be doubled, says Massimo Nicolazzi, professor of energy resource economics at the University of Turin. With the help of pumping stations, the pressure in the existing lines can be increased, but the construction of the stations will take time – at least two years, given the approval processes more likely four.
Further LNG terminals planned
Another step: to increase the use of liquid natural gas, i.e. LNG. Italy has three terminals, two floating facilities are now being added. For many years, the Mediterranean country produced gas itself, but domestic production has fallen rapidly, recently it was only three billion cubic meters a year. A rapid increase seems difficult given the complex legal situation and years of resistance.
Another alternative would be the revival of coal power. The government had already thought about it at the beginning of March. There are seven power plants in Italy, some of which have been shut down or are only working on the back burner. The decision to phase out coal would thus be delayed.
Hydrogen instead of natural gas in the grid?
In any case, renewable energies should now be expanded faster than previously planned. Prime Minister Draghi wants to speed up the approval process for solar parks and wind farms. Even before the Ukraine war, the government had budgeted many billions for the promotion of hydrogen.
Snam is the largest Italian gas company, and its CEO Marco Alverà has long relied on hydrogen. Snam’s pipeline network, which stretches from North Africa to Central Europe, can, he says, transport 99 percent of hydrogen, nothing needs to be changed. Alverà is convinced that green hydrogen can soon be produced more cheaply for large-scale consumption.
Serious consequences for the economy
But all alternatives to Russian gas will take time. Minister Cingolani expects complete independence in two to three years. Until then, the consequences of a gas embargo for the Italian economy would be severe. The government is currently running through various scenarios, in each case the gross domestic product would fall.
The president of the industry association Confindustria for Lombardy, Francesco Buzzella, fears the closure of companies and the loss of jobs. The Banca d’Italia calculates that inflation could rise to eight percent if Russian gas flows are interrupted and energy prices rise as a result.
Even without a gas embargo, the Italian economy has already been severely slowed down because of the war. The government has lowered its growth forecast for this year from 4.7 percent to 3.1 percent. Meanwhile, across the country, attempts are being made to use less energy. Save a degree – that’s the motto. From May, the offices of the public administration may no longer be cooled down too much on hot days, the air conditioning must be set to 27 degrees.
