Powering the Future: Why Energy Security is Vital for Italy's Economy, Geopolitics, and Sustainability

Essay By Bill Dirks | Executive Director | AleAnna

Italy stands at a crucial juncture in its pursuit of energy security. As a nation heavily reliant on energy imports, ensuring a stable and sustainable energy supply is vital to support its economy, safeguard its citizens, and advance its environmental goals. Energy security is not merely a technical or economic issue; it is a cornerstone of national resilience and sovereignty, deeply intertwined with Italy's geopolitical standing and industrial competitiveness.

The Role of Energy Security in Italy's Economy

Energy security is essential for the functioning of Italy's economy, which is among the largest in Europe. From manufacturing to agriculture and tourism, nearly every sector depends on reliable and affordable energy. Italy imports over 75% of its energy, exposing it to price volatility and supply disruptions in global energy markets. In 2022, Italy’s total energy import bill exceeded €100 billion, reflecting the sharp rise in global energy prices. Ensuring energy security helps stabilize costs, fostering a favorable environment for businesses and consumers alike. Furthermore, predictable energy supply strengthens investor confidence, encouraging domestic and international investment in Italy’s industries.

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Geopolitical Considerations

Italy’s geographical position as a Mediterranean hub places it at the intersection of European, North African, and Middle Eastern energy dynamics. This location presents both opportunities and vulnerabilities. The country imports approximately 40% of its natural gas from Algeria and another 20% from Russia, making it susceptible to geopolitical tensions. Diversifying energy sources and routes—such as through the Trans Adriatic Pipeline (TAP), which supplies about 10 billion cubic meters (bcm) of gas annually, and expanded liquefied natural gas (LNG) facilities—is critical for reducing dependency on any single supplier. Italy’s LNG import capacity grew to 15 bcm in 2023, with plans to expand it further by 2026. By enhancing energy security, Italy can maintain a more independent foreign policy and contribute to the broader energy stability of the European Union.

Transition to Renewable Energy

Italy has made commendable strides in renewable energy, with solar, wind, and hydroelectric power contributing significantly to its energy mix. In 2021, renewables accounted for 38% of Italy’s electricity generation, with hydropower alone contributing 15%. However, the intermittent nature of these resources necessitates robust energy storage solutions and grid infrastructure to ensure reliability. Italy’s National Integrated Energy and Climate Plan (PNIEC) aims to increase renewable energy’s share to 55% ofelectricity generation by 2030. Investing in renewables aligns with Italy's commitments under the European Green Deal while reducing reliance on fossil fuels. Expanding renewable energy projects—such as offshore wind farms with a planned capacity of 7 GW and waste-to-energy facilities—not only enhances energy security but also positions Italy as a leader in the global clean energy transition.

Addressing Vulnerabilities

The lessons of past energy crises underscore the need for proactive measures to mitigate vulnerabilities. Italy must bolster its energy infrastructure, including modernizing its electricity grid and enhancing cybersecurity to protect critical systems from external threats. Strategic reserves of oil and natural gas should be maintained to buffer against potential supply shocks. Italy’s gas storage capacity, currently at 18 bcm, plays a vital role in ensuring resilience during high-demand periods, particularly in winter. Collaboration with neighboring countries on energy interconnectivity can also provide mutual support in times of need. For example, Italy’s interconnection with Switzerland and Austria facilitates electricity imports when domestic supply falls short.

Social and Environmental Dimensions

Energy security has profound implications for Italian society. Reliable energy access ensures the well-being of citizens, particularly during extreme weather events or economic downturns. Simultaneously, addressing environmental concerns is paramount. Italy must strike a balance between securing energy supplies and achieving its carbon neutrality goals. Policies promoting energy efficiency, such as retrofitting buildings to reduce energy consumption by 20-30%, electrification of transport, and sustainable urban planning are essential components of this strategy. Additionally, the push for electric vehicles (EVs) has seen promising growth, with over 200,000 EVs sold in Italy by 2023.

Conclusion

Energy security is a national priority for Italy, underpinning its economic vitality, geopolitical autonomy, and environmental sustainability. By diversifying energy sources, investing in renewable energy, and strengthening infrastructure, Italy can safeguard its future against uncertainties in the globalenergy landscape. With an annual energy consumption of approximately 120 million tonnes of oil equivalent (Mtoe), the stakes are high. As a leader in the Mediterranean and Europe, Italy’s approach to energy security can serve as a model for other nations striving to achieve stability and sustainability in an increasingly interconnected world.