Public policy discussion: The future of CCS in Italy

At the side meeting Enel, Italy’s largest utility, highlighted its current investment in CCS research and development as part of its long term plan to convert existing oil plants to coal-fired plants given the comparatively greater economic viability of coal.
In response to Enel’s initiative, the Italian Environmental Ministry voiced its support for CCS as Italy is still far from meeting the European Union’s 2020 emission targets. The Environmental Ministry considers CCS as both “unavoidable” and “necessary.” Specifically, Italian Member of Parliament, Della Seta, called for a judicial framework for Italy that would forbid the future construction of unabated coal plants.

As things stand, however, the Emission Trading Scheme (ETS) currently in place is insufficient, as it will not create the necessary conditions for industry to produce much-needed, wide-scale investments in CCS. CO2 prices are too low and will fluctuate in the foreseeable future, thus creating a disincentive for short- to medium-term commitment to CCS.

Further regulatory certainty is needed. The Italian National Agency for New Technologies, Energy and Sustainable Economic Development (ENEA) defended the use of a mechanism such as “carbon taxing” to force a speedy innovation and act as an incentive for industry to move forward with CCS deployment. This position was echoed by the National Institute of Geophysics and Volcanology (INGV).

“An Emission Performance Standard (EPS) – already implemented in California and well regarded by countries including the UK, USA, Denmark or the Netherlands – has to be applied to CO2 emitters including, but not exclusively limited to, coal-fired energy production,’ said Bjørn Utgård of Bellona.  

Bellona considers EPS to be a “transition” tool towards the final scenario when CCS is commercially available. ETS, says Bellona, should suffice to achieve adequately low CO2 emissions in the meantime.

For Italy, EPS represents a better option than “carbon taxing” given the past ineffectiveness of carbon taxation, in addition to the fact that it is illegal in Italy to create a tax earmarked for a specific purpose such as climate change mitigation. Enel pointed out that such a mechanism could be appropriate if a level playing field were created thruoghout the EU.