Accelerating decarbonization, a solution that’s good for the climate and the economy

Accelerating decarbonization, a solution that’s good for the climate and the economy

A study by the Enel Foundation and The European House – Ambrosetti, which was presented at the Forum in Cernobbio, shows that immediately accelerating investments in decarbonization will actually cost less and will have significant positive impacts on the economy, the population and the environment. There’s a particular focus on Italy and Spain.

“We hope that countries like Italy and Spain choose to be more ambitious, because being ambitious costs less than one might think,” commented Francesco Starace, Enel CEO and General Manager, on the surprising results of a study on decarbonization presented on September 3 at the Forum in Cernobbio outlining how more decisive acceleration would in fact cost less than an unambitious scenario.

The study Net Zero E-conomy 2050 conducted by the Enel Foundation and the European House – Ambrosetti in partnership with Enel, opens with a stark finding: unless Italy and Spain ramp up their plans and investments, they will not manage to achieve the decarbonization goals set by the European Union, the so-called Fit for 55 Plan – for 2030 and further goals for 2050.

Continuing at the current pace, Italy would achieve its targets in 2109, Spain in 2154, explained Valerio De Molli, Managing Partner & CEO at the European House – Ambrosetti. But, as we all know, the climate crisis waits for no one.

A decisive commitment would, however, ensure greater economic benefits as well as jobs and increased energy independence at European and national level, compared with the less ambitious scenarios.


Changing pace in Italy and Spain

 “This study is based on existing available technologies, not on those which will arrive in 2040 and in 2050. We are not betting on someone inventing something that does not yet exist,” Starace added. “The study represents a conservative estimate because we know that in the next 10, 15, 20 years there will be improvements in technologies and further reductions in costs compared with what we can legitimately predict today.

In spite of the initiatives of the EU and the Member States, as well as the efforts made by the private sector, the study states that results can, and must, be improved substantially. European economies are still far from the right track toward climate neutrality, while dependence on imported natural gas actually increased between 2000 and 2020.

The European Union depends on fossil fuel imports for 57% of its energy. Italy is in second place after Malta in the ranking of countries most dependent on natural gas (41.2%), while Spain is in eighth place (26.1%).

Regarding CO2 emissions, by 2050 the disparity between the current “inertial” trend – i.e., without any acceleration in the plans – and the targets of the respective long-term National Strategies – will amount to around 151.2 million tons of CO2 equivalent in Italy and 136.9 million in Spain.

“We need a change of pace, otherwise we will never achieve the 2050 targets,” explained De Molli. To achieve sufficiently ambitious climate goals and energy independence, it is necessary to electrify final consumption as much as possible with a massive roll-out of renewable energy production and smart grids.


The benefits of upping the pace

The study outlines that a more decisive change of pace concerning decarbonization would require fewer resources compared with a less ambitious approach. The “Net Zero” scenarios outlined for Italy and Spain include investments of 3,351 billion euros and 2,215 billion euros, respectively, in the period 2021 to 2050, which is less than the investments necessary for the “low Ambition” scenario (3,899 billion euros for Italy and 2,761 for Spain).

The benefits do not end here, however. Every euro spent on achieving the goal of “Net Zero” by 2050 will generate additional economic activity equal to 1.64 euros in Italy and 1.28 in Spain. The economic return generated would amount to 328 billion euros in Italy and 223 billion in Spain compared with the “inertial” scenario. There would also be a substantial boost to employment, respectively 2.6 million jobs created in Italy and 1.8 million in Spain, while lower expenditure as a result of pollution would amount to 614 billion euros (Italy) and 317 billion euros (Spain). Furthermore, savings on fossil fuels would add up to 1,914 billion euros for Italy and 1,279 for Spain.

Moreover, compared with today, the choice of Net Zero in both countries would ensure benefits in terms of energy security by 2050, with a reduction in the intensity of the use of gas (-94% and -92% in the gas intensity to GDP ratio compared with 2020) and energy dependence (-73.5 p.p. and -54.9 p.p. compared with 2020).


Moving beyond energy production

But it is not enough to decarbonize the production of electricity: it is also necessary to take action concerning buildings, transport, industry and agriculture.

In the medium-to-long term new business models will be developed relating to shared mobility, car pooling and multi-modal transport, encouraging a shift toward public transport, a greater and more efficient use of vehicles and a drive toward more sustainable behaviors on the part of citizens. “When we add up all of these considerations, it works out as lower investment costs for the Net Zero scenario in both countries,” the study concludes.

“First of all, it is a question of awareness. If we really want to achieve Net Zero by 2050, it would have a significantly positive impact on the economy and GDP in Italy, Spain and the rest of Europe,” Michele Crisostomo, Chairman of Enel, commented at Cernobbio. “If this is the case, then we must also be conscious that we need to begin to invest now to truly decarbonize the economy and electrify consumption in order to achieve Net Zero by 2050. Doing this will be much better for the environment and it will also enable Europe to achieve energy independence.”


The roadmap: prerequisites and proposals

The study outlines two prerequisites and various proposals for speeding up the journey toward a zero-emissions economy. The first prerequisite consists of the need to ensure stability, transparency and consistency between energy policies and measures at EU, national and local level. The second concerns the importance of supporting European and national industrial production, boosting existing green technologies, developing new sustainable solutions and eliminating subsidies for fossil fuels.

The proposals include boosting European cooperation and harmonizing the governance of the energy transition, the simplification of authorization procedures for renewable energy plants and the creation of charging infrastructure, the facilitation of interventions on the electricity grids, the promotion of demand management and the spread of energy storage systems and flexibility solutions. It is also necessary to encourage the electrification of public transport and support industry’s switch to more environmentally friendly solutions, thanks to technologies for direct and indirect electrification. Finally, when it comes to buildings, the study proposes the drafting of a fair, stable and transparent framework for the gradual elimination of fossil fuel-powered boilers in favor of heat pumps, and the creation of a one-stop shop to support the energy renovation of buildings.