Global Energy Optimization Trends and Policies in Italy

Overview

Figure 1: Final energy consumption by sector (with climatic corrections)

The final energy consumption climate corrected in 2022 was 112.7 Mtoe, almost in line with pre-COVID pandemic consumption in 2019 (-1.2%) and below the consumption in 2000 (-5.6%). In 2022 the largest consuming sector was transport with 32% of total final energy consumption (1 percentage points decrease since 2000). Over the period 2000-2022 the share of residential and services sectors grew by 4.4 and 5.4 percentage points, respectively: the building sector, comprising residential and services sectors, represents 43% of total final energy consumption in 2022. The share of industry decreased from 31% in 2000 to 22% in 2000 (-12 Mtoe).

Figure 2: Technical Energy Efficiency Index

In July 2024, Italy submitted the final update of the NECP with a significant reduction in primary and final energy consumption due to the planned measures: in particular, increase in the rate of renovation of buildings (in line with Directive (EU) 2024/1275) with the electrification of consumption, insulation of dispersing surfaces, and heat pumps as the main heating system. Tax incentives will be revised to take into account investment priorities and effectiveness in terms of improvement. The Plan estimates overall energy savings over the period 2021-2030 equal to 73.4 Mtoe. L.D. n. 73/2020 transposes the EU directive 2018/2002 on the Energy Efficiency First Principle into the Italian regulatory framework. The L.D. provides incentives for SMEs for the implementation of energy management systems ISO 50001 and for energy audits every two years until 2030, extends to 2030 the National Energy Efficiency Fund and Programme for the Energy Renovation of the buildings of the Central Public Administration (PREPAC). Ministerial Decree 10 August 2022 allocated 2 billion euros for the Fund for development and cohesion (FSC 2021-2027) to finance investments to help decrease direct GHG emissions through electrification, the use of renewable hydrogen instead of fossil fuels, and the reduction of energy consumption.

Buildings

The household energy consumption per m2 for space heating has decreased by 0.7%/year since 2008 from 10 koe/m2 to 9.06 koe/m2 in 2022. The consumption per dwelling for the other end-uses has decreased rapidly since 2010 to 0.37 toe/dw in 2022 (-1.7%/year for a total of -18%). In particular the decrease was quite significant for water heating (-2.8%/year) and for appliances (-2.2%/year). The consumption per dwelling for air cooling doubled over the period 2010-2022.

The energy consumption of households grew by 2.4 Mtoe between 2000 and 2022. This increase was mainly due to two factors: more dwellings (+5.7 Mtoe) and greater comfort and lifestyle (+4.9 Mtoe, especially more appliances per dwelling). The effects of energy consumption increase were counterbalanced by energy savings (-5.6 Mtoe) and other effects (-2.1 Mtoe). These “other effects” combine two effects acting in different directions: the increasing use of ambient heat from heat pumps (+0.8 Mtoe) and behavioural changes (-2.9 Mtoe). Climate effects had a slight increasing impact of 0.3 Mtoe.

Energy consumption per employee in service sector had a growing trend over the period 2000-2022: 1%/year with the peak in 2018 due to ambient heat counting. The electricity consumption per employee grew by 1.6%/year between 2000 and 2022, with a net slow down since 2011 (only +0.3%). Since 2021 electricity consumption includes the electricity consumption for heat pumps.

The Budget Law 2025 reduced the tax deductions for building renovations from 50% to 36% in 2025 and 30% in 2026-2027. In 2023 energy savings from tax deduction amounted to 2.04 Mtoe/year of energy. The Superbonus measure has been gradually weakened from 2023. In August 2022, the Italian government added EUR 500 million to the Fund for development and cohesion (total fund EUR 2 billion). This will finance investments for electrification, use of renewable hydrogen instead of fossil fuels, and the reduction of energy consumption. These projects are divided for 80% in Southern Italy and 20% in the Centre and North Italy. The Component C3 of Mission 2 of NRRP allocated 15.36 billion euros for buildings renovation across 3 lines of action: energy efficiency improvements of school buildings and judiciary buildings, energy efficiency improvement and seismic renovation of public and private residential buildings, district heating. The renovation will affect over 100,000 buildings, for over 36 million square meters.

National Recovery and Resilience Plan

M2C3.1:

– Investments for the renovation of 195 school buildings for over 410,000 m2 with a reduction in energy consumption of at least 50%, 3.4ktoe/year, and a reduction in greenhouse gas emissions of 8.4 ktCO2/year. 

– Energy efficiency interventions on 48 judicial buildings by mid-2026, 290,000 m2, with annual energy savings of 0.7 ktoe and a reduction in GHG emissions of 2.4 ktCO2. 

M2C3.3:

finances projects for the construction of new networks or the extension of existing district heating networks: the projects concern efficient district heating from renewable sources, waste heat or high-efficiency cogeneration plants. The objective is the Page 1/2 development of 330 km of efficient district heating networks and the construction of plants or connections for the recovery of waste heat for 360 MW with a primary fossil energy savings of 20 ktoe/year and a reduction in greenhouse gas emissions of 0.04 MtCO22/year in non-ETS sectors.

Conclusion

Italy’s recovery and resilience plan supports the green transition with key investments in:

• energy efficiency in residential and public buildings (€ 16.9 billion).

• sustainable mobility (€ 34.5 billion).

• development of renewable energies and the circular economy and improvement in waste and water management (€ 24.7 billion).

Those investments are accompanied by important reforms aimed at:

• improving the efficiency in the use and management of water resources and local public services.

• increasing recycling rate.

• deploying of charging points for electric vehicles.

• increasing competition in the electric market.

• improving the functioning of concessions in Italian ports.

• simplifying the various legal frameworks for the acceleration of energy efficiency interventions and transport infrastructure projects.

The modified plan, including the REPowerEU chapter, has further strengthened the focus on the plan on the green transition, devoting 39% of the available funds to measures that support climate objectives (up from 37.5% in the original plan).