Natural Gas In Italy's Industrial Sector: Powering Manufacturing And Beyond

Essay By Marco Brun | CEO & Chief Commercial Officer | AleAnna  

Natural gas is a cornerstone of Italy’s industrial sector, providing a reliable and efficient energy source for manufacturing, processing,  and other industrial operations. With industries contributing approximately 23% to Italy’s GDP as of 2022, natural gas plays a pivotal  role in ensuring economic stability and competitiveness. As the country strives to balance industrial growth with sustainability goals,  the strategic use of natural gas is central to this equation. 

The Role of Natural Gas in Italy's Industrial Energy Mix  

Italy’s industrial sector consumes roughly 30 billion cubic meters (bcm) of natural gas annually, accounting for nearly 40% of the  nation’s total natural gas consumption. Key industries such as chemicals, metallurgy, ceramics, and glass production heavily rely on  natural gas due to its high calorific value and efficiency. For example, the ceramics industry in Emilia-Romagna, which represents over  80% of Italy’s ceramic tile production, consumes nearly 3 bcm of natural gas annually. 

Natural gas also supports Italy’s industrial energy-intensive processes, such as steam generation and combined heat and power (CHP)  systems. CHP systems, which generate electricity and heat simultaneously, have an efficiency rate of up to 80%, significantly higher  than traditional power generation methods. As of 2023, CHP systems powered by natural gas contribute approximately 20% of the industrial sector's energy needs.

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Enhancing Competitiveness in Key Industries  

The availability of natural gas at competitive prices has been a key factor in Italy’s industrial success. For example, the petrochemical  industry, concentrated in regions such as Sicily and Lombardy, uses natural gas as both a feedstock and an energy source. This sector  alone accounts for €40 billion in annual revenue and employs over 100,000 workers. 

In the steel industry, natural gas is replacing coal in direct reduced iron (DRI) production, reducing CO₂ emissions by up to 50%. Italy,  as the second-largest steel producer in Europe, produces approximately 23 million metric tons of steel annually, with DRI accounting  for 25% of total output. This shift not only enhances environmental performance but also aligns with EU emissions reduction targets. 

Supporting Sustainability and Emission Reductions  

While natural gas is a fossil fuel, its cleaner combustion compared to coal and oil has made it a transitional fuel for Italy's  decarbonization efforts. Between 2010 and 2020, Italy’s industrial sector reduced its CO₂ emissions by 18%, driven in part by a shift  toward natural gas. The adoption of advanced technologies, such as carbon capture and utilization (CCU) systems, is further enhancing  the environmental sustainability of natural gas usage. For example, pilot projects in Lombardy aim to capture and reuse 1 million tons  of CO₂ annually by 2030. 

Moreover, natural gas is being integrated with renewable energy sources in hybrid systems. In Veneto, a pilot project combining  biogas with natural gas has demonstrated a 15% reduction in overall greenhouse gas emissions while maintaining energy output. These hybrid systems are expected to be scaled nationwide, further reducing the carbon footprint of industrial operations. 

Economic Benefits and Energy Security  

Natural gas not only supports industrial output but also contributes to economic resilience. Italy imports approximately 90% of its  natural gas, with key suppliers including Algeria, Russia, and Azerbaijan. To enhance energy security, Italy has invested in infrastructure  such as the TAP pipeline, which delivers 10 bcm of natural gas annually from Azerbaijan, and LNG terminals, which handle 15 bcm of  liquefied natural gas imports annually. These investments ensure a steady supply of natural gas for industrial use, even amid global  energy market volatility. 

The cost-effectiveness of natural gas has also shielded Italian industries from the full impact of rising energy prices. In 2022,  government subsidies and strategic stockpiling helped stabilize natural gas prices at an average of €120 per megawatt-hour, compared  to €200 per megawatt-hour in other European countries. 

Challenges and Opportunities  

Despite its advantages, reliance on natural gas presents challenges, particularly in the context of rising geopolitical tensions and supply  disruptions. Italy's heavy dependence on imports makes it vulnerable to price fluctuations and supply shortages. However,  diversification of supply sources and investments in renewable natural gas (RNG) production offer promising solutions. By 2030, Italy  aims to produce 10 bcm of RNG annually, equivalent to one-third of current industrial consumption. 

Technological advancements, such as hydrogen-ready pipelines, are also opening new opportunities for decarbonizing industrial  energy use. Hydrogen blending, where up to 20% hydrogen is mixed with natural gas, is being piloted in industrial clusters in northern  Italy, reducing emissions and preparing the infrastructure for a future hydrogen economy. 

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Conclusion  

Natural gas is a vital component of Italy’s industrial sector, powering manufacturing processes, enhancing competitiveness, and  supporting sustainability goals. With industries consuming 30 bcm annually and contributing significantly to the national economy,  the role of natural gas cannot be understated. As Italy transitions to a greener future, integrating natural gas with renewable energy  and adopting innovative technologies will be crucial in balancing industrial growth with environmental stewardship. By leveraging its  strengths and addressing its challenges, natural gas will continue to drive Italy’s industrial success while laying the foundation for a  sustainable energy future.