How Italy and the UK tackle industrial energy efficiency
The UK and Italy, two of Europe’s industrial heavyweights, take very different approaches when it comes to hitting their yearly energy efficiency targets.
The Energy Efficiency Directive, issued in 2012 by
How Italy and the UK tackle industrial energy efficiency
The UK and Italy, two of Europe’s industrial heavyweights, take very different approaches when it comes to hitting their yearly energy efficiency targets.
The Energy Efficiency Directive, issued in 2012 by the EU, requires all energy companies across Europe to achieve annual energy savings equivalent to 1.5% of final sales.
Member States are free to take whatever steps they deem best to achieve these targets for their particular country. Interestingly however, the UK and Italy, both countries with long and well-established traditions of fossil-fuel based, energy-intensive industries, have taken radically different approaches to hit these goals.
Trading white certificates
In the UK, industrial energy efficiency is addressed primarily through carbon emission reduction, whereas Italy favors a scheme of white certificates. In fact, from 2013 until 2016 Italy has produced 80% of the white certificates from the industrial sector.
The white certificates are, in effect, a system by which companies that achieve a certain energy saving are presented with a certificate. Electricity and gas distributers with more than 50 000 customers are obliged to achieve yearly quantitative primary-energy saving targets, expressed in tonnes of oil equivalent (known as TOE) saved. There are also volunteer parties – companies that are highly energy efficient – that can achieve energy savings and obtain white certificates. The exchange of certificates between obliged and volunteer parties takes place on a trading platform in Italy. In this way very energy efficient companies can exchange their certificates with those who are less so, so that the overall target for energy efficiency is achieved by the country as a whole.
“Italy is leading in white certificates,” says Dr Jurgita Malinauskaite, an expert in commercial law at the Brunel University London who has recently published a paper comparing the energy efficiency policies of the UK and Italy. “On one hand it’s good to have that trade element, it has additional incentives. But on the other hand, some scholars think that it might serve some disadvantage as the obliged parties may not invest in energy efficiency projects knowing that they can buy the certificates on the market to meet their targets for energy savings.”
There are additional problems with the pricing of white certificates in Italy.
“Initially, when [the white certificates] were introduced, they were capped at a specific amount decided by the government. But then they just removed the cap. So the price went up by 150% from early 2016 to mid 2017,” she explains.
“There are some concerns with regards to white certificates in this respect because there would be some uncertainties for investors.”
The Regulatory burden
Another issue with Italy’s system is that there is the complex web of regulators that companies must report their energy efficiency to.
“There are lots of institutions involved where the industry has to report on their energy savings,” says Dr Malinauskaite. “Some members from the industry say that they find it creates a bit of a regulatory burden on them.”
In Italy, there are two separate government ministries in charge of designing energy and environmental policies who need to be reported to. Then there are two agencies, ENEA, a national agency for new technologies and sustainable economic development, and ARERA, the Italian Regulatory Authority for Energy, Networks and Environment. Companies also have to report their energy efficiency to RSE (Ricerca sul Siste