Fossil energy, Italy will continue to give public subsidies to the industrial sector that produces by polluting

ROME – The Italian government and its export credit agency SACE – reads a document published by recommon – association that fights against abuse of power and looting of territories, in Italy, in Europe and in the world, believing that people come before profit and fighting against violations of human rights – we renege on the commitments made COP26 of Glasgow: they will continue to finance overseas coal, oil and gas projects until at least 2028.

The most inadequate policies. Italy’s implementation policies are the most inadequate among those adopted so far. A bad signal, which came in the days in which the Intergovernmental Panel on Climate Change published the final summary of the sixth report on the climate crisis, which shows that Italy is among the most vulnerable countries. The Secretary General of the United Nations, António Guterres himself, affirms the need to cease “all licensing or financing of new oil and gas installations”, just the opposite of what SACE is doing.

Adherence to the Glasgow Declarations. In November 2021, on the occasion of the Glasgow climate conference34 countries and five public financial institutions have signed a joint commitment (“Glasgow Declaration”) to end new international public financing of fossil fuels by 31 December 2022. Italy, which shared the chairmanship of the COP26only joined the Glasgow Declaration at the last minute. To understand the extent of Italian subsidies to the extractive sector, it is worth remembering that SACE, controlled by the Ministry of Economy and Finance, ranks sixth globally and first in Europe among public lenders of the fossil industry. Between 2016 and 2021, SACE issued guarantees (project insurance or loan guarantees for project implementation) for the oil and gas sectors amounting to 13.7 billion euros, which represent an important share of the so-called “ environmentally harmful subsidies” Italians.

They were just commitments without constraints. Although the Glasgow Declaration can be considered a key step in the fight against the climate crisis, it is still a voluntary and nationally based commitment, including its implementation policies. Seven of the main countries supporting the fossil fuel industry through public money have adopted policies that largely live up to the promise made in Glasgow: the United Kingdom, France, Canada, Finland, Sweden, Denmark and New Zealand. Others, such as the Netherlands, Spain and Belgium, have implemented the Declaration with weak policies, which leave ample room for financial support to the oil and gas sectors. As ReCommon already denounced in November 2021, the initiative was far from perfect, with a series of loopholes that would have appealed to the Italian system, which is based on the private finance-fossil industry-public finance triangle. So it exactly happened.

The decision in January, but only announced yesterday. The first serious fact to highlight is that the Italian commitment was adopted in January 2023, but only made public yesterday evening (download the pdf document here) from the social channels of the international coalition Export Finance for Future (E3F) of which the Italy is part, not from the official ones, of SACE or the Ministry of Economy and Finance. All this represents yet another confirmation that, when it comes to Italian public finance institutions, transparency is the first victim.

The second casualty is the climate. The second victim of Italian politics is obviously the climate, starting with what concerns fossil gas. First of all, it is defined as a transition fuel, strategic for Italian energy security. Secondly, gas exploration and production projects can be financed until January 2026, and the existing exemptions could postpone the final date even further. For transport and storage projects, on the other hand, the deadline is not really mentioned because it has to be “still defined”. A formula that seems to mean “forever”.

The empty mantra of energy security. To understand how empty the mantra of energy security is, an example can be cited: with this policy, some projects could require financial support from SACE even in 2025. The proposing multinationals, with the support of the constructors, could complete them in 2030 and the gas produced will arrive in Italy from 2031. It is difficult to believe that eight years is such an emergency period of time as to invoke “energy security”. Not to mention that only a small part of the gas produced will arrive in Italy, as demonstrated by Eni’s Coral South FLNG project: financially supported by SACE, the first gas tanker from the Mozambican project ended up in Bilbao and certainly not in Italy. “It seems clear that – reads the document of recommon – behind the mantra of energy security, the interests protected are those of energy multinationals, credit institutions and export credit agencies such as SACE”.

Contexts of instability. More often than not, multinationals and, consequently, SACE, enter contexts crossed by strong socio-political instabilities, exacerbating them, or operate in close contact with the governments that fuel them. In both cases – continues the writing of recommon – the oil and gas industry has a leading role, as in the case of the Russian Federation, Mozambique and Egypt. “If the position on gas weren’t enough, we also find approval for experimental and already bankrupt technologies such as carbon capture and storage, not to mention the exceptions envisaged for the final dates for financing oil projects”, adds Ogno. “We expected poor implementation policy, but this is like not having it at all,” he concludes.