Accelerating decarbonisation to ensure more effective investments and greater benefits from the Net Zero E-conomy 2050

September 03, 2022

The 2022 edition of the joint research carried out by the Enel Foundation and The European House-Ambrosetti in collaboration with Enel, “Net Zero E-conomy 2050:  Decarbonisation road maps for Europe: focus on Italy and Spain”,  has just been presented at the Forum held at Villa d’Este in Cernobbio. Today’s press conference that introduced the study was attended by Valerio De Molli, Managing Partner & CEO di The European House-Ambrosetti, Francesco Starace, Enel CEO and Chairman of Enel Foundation, and Andris Piebalgs, Professor at the European University Institute, previously European Commissioner for Energy.

The study analysed the trajectories of the energy transition and decarbonization in Italy and Spain and quantified the gaps with respect to the targets for reducing greenhouse gas emissions, expanding the use of renewables and improving energy efficiency.

It shows how a firm commitment to achieving decarbonisation objectives guarantees greater economic, employment and energy independence benefits at European level compared to scenarios with reduced ambitions.

The study defines two scenarios for decarbonisation by 2050 in Italy and Spain, the investments required and the economic, social and environmental benefits. It identifies two prerequisites and five policy proposals to overcome the difficulties of the energy transition in the European Union, Italy and Spain.

"Two years since the outbreak of the COVID-19 pandemic, with its significant implications on the global economy, the war in Ukraine has made concerns about the sustainability of the current energy system more urgent than ever. While the need to tackle climate change alone is more than enough reason to pursue an energy transition, the vulnerability of our oil- and gas-dependent economies has made this urgency more pressing than ever," said Francesco Starace, CEO and Chairman of Enel Foundation. “This study strongly highlights the excessive dependence on gas of some economies of EU countries, namely Italy’s significant dependence and the very clear advantages that an accelerated reduction in the use of fossil energy sources can bring precisely to those who make excessive use of them today."

"It is now more necessary than ever to implement timely decisions and actions to facilitate a rapid change of course. This is the basis of the ‘Net Zero E-conomy 2050’ study. The analyses identified two decarbonisation scenarios (‘Low Ambition’ and ‘Net Zero’) for Italy and Spain. The ‘Net Zero’ scenario envisages investments of €3,351 billion in Italy and €2,215 billion in Spain over the 2021-2050 period, lower than the investments required for the ‘Low Ambition’ scenario," commented Valerio De Molli, Managing Partner and CEO of The European House - Ambrosetti. "The ‘Net Zero’ scenario involves not only lower investments but also more benefits. When compared to the counterfactual trend, the ‘Net Zero’ scenarios in Italy and Spain are associated with significant benefits by 2050, in terms of economic returns (+€328 billion and +€223 billion), employment (+2.6 million jobs and +1.8 million jobs), reduced pollution (-€614 billion and -€317 billion in health-related costs and lower productivity) and savings on fossil fuel costs (-€1,914 billion and -€1,279 billion). Compared to today, moreover, the ‘Net Zero’ scenarios in both countries guarantee benefits in terms of energy security by 2050, enabling a reduction in gas intensity (-94% and -92% in the gas intensity of GDP index compared to 2020) and energy dependence (-73.5 p.p. and -54.9 p.p. compared to 2020).”

The research highlights the importance of policies capable of accelerating the energy transition and achieving a zero emissions economy by 2050, priorities that are essential not only for ensuring the planet’s sustainability, but also for attaining greater energy independence and security while creating economic value and employment. The study analyses progress in the energy transition in Italy and Spain, quantifying the shortfalls with respect to objectives for the reduction of greenhouse gas emissions, the increased use of renewables, and improvements in energy efficiency. It defines the decarbonisation scenarios for 2050 in the two focus countries, identifying the investments necessary and the economic, social and environmental benefits that can be obtained. It identifies 2 prerequisites and 5 policy proposals to overcome current shortcomings in the energy transition in the European Union, Italy and Spain.

Here are the main findings of the study and here is the full report.

The current energy crisis, with soaring prices on international energy markets driven by the outbreak of conflict between Russia and Ukraine, has further highlighted the EU's vulnerability and energy dependency on imported fossil fuels. Europe is 57% dependent on energy imports and in the 20-year period 2000-2020 this share has remained virtually unchanged. Italy ranks 2^nd in the index of dependence on natural gas among EU countries. Therefore, the decarbonisation process is a key tool to achieving energy independence. In the last 10 years, the reduction of energy dependence in Italy and Spain (-9.1 p.p. in both countries) has been accompanied by an increase in the rate of electrification (+1.5 p.p. in Italy and +3.3 p.p. in Spain) and in the spread of renewable energies (+2 p.p. in Italy and +4.7 p.p. in Spain) in final energy consumption.

To accelerate the path to a zero-emission economy, the study focused on two prerequisites and five policy proposals: one proposal covers all the economic sectors analysed across the board, while the other four are sector-specific initiatives.

The prerequisites are:

I. Ensure the stability, transparency and consistency of European, national and local energy policies, with mechanisms that encourage companies and consumers to switch to green solutions.

II. Support European and national industrial production in scaling up existing technologies, developing and adopting new green solutions and halting fossil fuel subsidies.

The cross-sectoral policy proposal is:

1. Ensure greater cooperation and harmonisation in the governance of the energy transition at European level.

The four sectoral policy proposals are:

2. In the sector of power, simplify authorisation procedures for RES plants and grids and increase their social acceptance by straightforward procedures for receiving authorisation.

3. In the sector of transport, promote the deployment of electric vehicle charging infrastructures by simplifying administrative procedures.

4. In the industrial sector, leverage legal frameworks such as ETS (free allowances) to support the technological shift of industry towards greener technologies (green hydrogen).

5. In the sector of buildings, define the phasing-out of fossil fuel boilers in heating, level tax on heat pumps, optimise implementation procedures, increase citizens’ energy efficiency awareness and create one-stop shops where citizens can be guided through the renovation process.