Energy crisis key to Italian elections – but not conservation

Associated Press

MILAN (AP) — Giambarini Group factories in northern Italy must maintain zinc baths that superheat rust-proofing steel and iron parts 24 hours a day, seven days a week, an energy-intensive process that has become exponentially more expensive as natural gas prices rise.

Methane to create molten zinc that forms a protective coating on skyscraper support beams and wrought iron fencing used to account for only 3% of operating costs, but now accounts for up to 30%. The family business has passed on some of the extra costs to customers, but business is uncertain as rising commodity prices freeze the construction industry that Giambarini supplies.

“We don’t know the future. We don’t know if it will get worse or better because customers don’t know if they will have work,” said CEO Alberto Giambarini, the third generation of his family to lead the company. He has orders for the next 10 days, instead of until Christmas, as in the past. “We live day to day.”

The energy crisis facing Italian industry and households – like those across Europe – is one of the main concerns of voters ahead of Sunday’s legislative elections as fears grow that astronomical bills will shut down some companies, at least temporarily, and force household rationing by winter. Prices started to rise a year ago and have only been exacerbated as Russia cut natural gas used to generate electricity, heat and cool homes and run factories as the Europe supports war-torn Ukraine.

Already in July and August, industrial energy consumption fell by double digits, mainly due to the reduction in production, which, according to experts, could affect economic growth and employment in the coming months.

At the same time, three-quarters of Italian households expect even more pain this autumn with higher bills, according to the pollster SWG. Already, 80% report significant sacrifices to pay for energy costs, such as delaying vacations, major purchases and dining out.

Never in an Italian election campaign has energy been such a central topic of discussion. The candidates have argued over whether debt-ridden Italy, which has already spent more than 60 billion euros to help families, businesses and local governments, should take on even more debt to fund further relief. They also question whether Italy should consider investing in new nuclear technologies.

But neither side is discussing mandatory conservation measures, like many of Italy’s European neighbors.

“It’s remarkable how much all of these people comment on the energy. Before the current situation, no one mentioned the problem. But at the same time, they are neglecting if not completely ignoring the climate aspect of this,” said Matteo Di Castelnuovo, an energy economist at Bocconi University in Milan. “No one will talk about rationing or reducing consumption.”

Most of the major parties, including the far-right Italian Brothers of Giorgia Meloni and the centre-left Democratic Party of Enrico Letta, largely follow the strategies pursued by the outgoing government of Prime Minister Mario Draghi. They both advocate a European Union cap on natural gas prices, despite the failure of a European consensus in months of discussion, as well as various formulas to help families and offer tax relief to companies.

Pollsters and energy experts say these similarities have made it difficult for voters to be affected by energy policy.

Overall, the campaign focused on continued investment in natural gas.

For the Democratic Party, plants that regasify liquid natural gas are positioning themselves as a bridge to other technologies, as it sets a goal of adding 85 gigawatts of renewable energy by 2030 in a country that for decades years, produced on average only 1 gigawatt per year. The center-right coalition that Meloni’s party leads wants to expand gas pipeline deliveries to Italy, part of a longer-term strategy to make Italy a gas hub for the Europe, but does not meet the EU’s 2030 emissions reduction target.

The right-wing coalition and smaller centrist parties also advocate a return to nuclear power, which the Italians rejected in two referendums decades apart. Adding to societal resistance, the technology would take at least two decades to implement, too late to help Italy’s engagement with wealthy Group of 7 economies to fully decarbonise by 2035, said said Matteo Leonardi, executive director of environmental think tank ECCO.

Much of the policy debate is focused on lowering gas prices, but not on diversifying or discouraging households from consuming resources that would better support the industry, Leonardi said.

“The answer to this crisis, as they say in the rest of Europe, is renewables and efficiency,” Leonardi said. “You cannot face a war without weapons. You can’t send the message that the state will take care of it, consume what you want.

Italy’s famous textile industry, which gives French and Italian fashion houses their luxury edge, is also suffering. Small and medium-sized operators who form the backbone of the system risk closure without a quick and systemic response from Europe and Italy, said Sergio Tamborini, head of the SMI Italian Fashion System association.

“The bills that came in June and July were explosive,” Tamborini said.

Italy’s textile industry – along with leather and accessories with a turnover of 100 billion euros a year – is a luxury niche which Tamborini says will be weakened by cheaper markets if costs are not not reduced.

Dyeing and printing textiles is particularly energy-intensive, Tamborini said, and for some, “it’s a survival issue.”

“We should have had help already in September. We cannot wait for the next government to be active, because it could be Christmas or even after,” he said, given the fractured nature of Italian politics.

Meanwhile, Giambarini said his company had no immediate plans for the short-term layoffs of 250 workers, but the outgoing government has been discussing new layoff schemes to give businesses a way to avoid energy costs. paralyzing.

Halting even temporarily would be devastating, taking months to revive, Giambarini said, adding he was still deciding which party to back.

“We are waiting for the elections and hope that we will have a government that will show a better way out of this period of crisis,” Giambarini said.