Italy eyes €19bn in EU post-COVID funds for energy investments

Rome: Italy has said it planned to use EU money to fund an investment programme worth around €19 billion to strengthen power and gas grids and make its economy greener.

The move is part of efforts by Prime Minister Giorgia Meloni to present a revised post-COVID recovery plan to European Union authorities next month.

“There will be a serious face-off with the European Commission,” EU Affairs Minister Raffaele Fitto said during a press conference.

Italy is due to receive some €191.5 billion in EU cheap loans and grants through 2026, but is falling behind schedule in terms of spending the cash it has already received and in meeting policy targets, which trigger the release of fresh payments.

Rome is by far the largest recipient of the EU’s pandemic recovery fund, and has already received €67 billion from Brussels in two instalments. The third payment is currently suspended, as Italy has fallen short of meeting a set of targets set by the European Commission to unlock it.

The country’s head of state, Sergio Mattarella, said on Thursday that a failure to fully invest the EU money would be a defeat for the nation, calling on all political parties to show responsibility.

To overcome some of the difficulties, Rome intends to remove from the post-COVID plan projects amounting to almost €16 billion that it will be unable to finalise by 2026, and replace them with others that can be completed on time, Fitto said.

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Most of the funds freed up will go to fund the investments eligible for the REPowerEU scheme, which aims to end the EU’s dependence on Russian fossil fuels and boost the green transition.

A document released by the government showed that, as part of the overall €19 billion, some €2.3 billion would go to reinforce electricity and gas networks.

Rome has earmarked more than €400 million for gas grid operator Snam’s Adriatic pipeline project.

“By the end of September or end-October we may have more information about available funds for the project we have submitted,” Snam CEO Stefano Venier said in a post-results conference call.

Other investment projects submitted by Snam include one related to the capture of carbon dioxide and the extension of the country’s gas storage system.

Venier also said he was expecting a response from Brussels before end-2023 on whether Snam’s plan to build a hydrogen pipeline linking Europe to North Africa, dubbed South H2 Corridor, would be added to the EU’s list of “common European interest” (IPGEI) projects.

But the lion’s share of the government’s funding plan goes to electricity, with €700 million to support planned investments to modernise power lines at power grid firm Terna, and €900 million for projects to digitalise power connections.

Italy’s biggest utility Enel and energy group Eni are also expected to receive EU funds.

Additional €14.8 billion are designed to boost “green transition and energy efficiency”, including some €6.3 billion in tax breaks aimed at promoting renewables.

Fitto has insisted that Italy will receive and spend all money is entitled to, adding the projects that will be removed from the post-COVID plan will not be scrapped but funded with separate EU funds.

“We have not eliminated any funding. We are not cutting anything but reorganising everything,” he told reporters.