Energy: Italy, economic recovery in the 3rd quarter triggers consumption (+18%) and emissions (+20%)

ISPRED index improves (+42%), trade deficit in low-carbon technologies on the rise (+40%)

A sharp rebound in energy consumption (+18%) and CO₂ emissions (+20%) in the third quarter of 2020 compared to the low recorded in the previous quarter [1], as a consequence of the recovery of the economic cycle (GDP +16%, industrial production +18%), is reported in the latest issue of ENEA's Quarterly Analysis of the national energy system, which shows a marked improvement (+42% in the first 9 months of the year compared to the same period in 2019) in the ISPRED index, which monitors safety, prices and emissions, thanks to the alignment of Italian electricity tariffs to European ones and a dramatic fall in emissions (-14%).

The analysis also zeros in on the critical issues in the oil refining sector -affecting the security of supply- and a growing trade deficit in the field of green technologies (+40% in the first half of 2020 compared to the previous year).

"A figure related to the acceleration of the decarbonisation of the Italian energy system", explained Francesco Gracceva, the ENEA researcher who coordinated the analysis, available at www.enea.it. "In just the first six months of 2020, the negative balance rose to 422 million euro, compared to 530 million in 2019, almost entirely on account of the import of electric and hybrid vehicles and lithium-ion batteries [2]" he said.

In the overall scenario there are also positive signs and, in particular, a drop in emissions, “with a trend allowing us to predict, by the end of 2020, a trajectory consistent with the 2030 reduction targets”, Gracceva said. The situation of renewable sources is more complex and a persistent slowdown in the construction of new plants hinders the achievement of the 2030 goals", the expert pointed out.

In detail, the Analysis shows that, in terms of energy sources, the lower consumption in the third quarter of 2020 compared to the same period of 2019 (-7%) is largely due to a  drop in oil demand (-12%) and to a lesser extent coal (-30%) and net electricity imports (-26%). Remains broadly stable the demand for gas (-1%). Renewable sources show a positive change (+ 2%).

"After the drastic decline in energy consumption in the second quarter (-29% in April compared to the same month of 2019), the economic rebound in the previous quarter spurred a parallel cyclical rebound in energy consumption, which, however, remained lower than 2019 levels [3] ”, Gracceva pointed out.

"As regards emissions, about 2/3 of the decrease recorded in the first three quarters is due to a fall in GDP, the rest to a growing weight of renewables on total consumption, an acceleration of the decarbonisation in the electricity sector and a reduction of the energy intensity of the economy ”, he said.

Moreover, again in the third quarter, electricity consumption fell by 3% compared to the same period of 2019, mainly due to the July figures (-7%) with demand returning to last year levels in September.

The drop in domestic production was smaller than the decline of demand on the grid, as a result of a sharp reduction in imports, whereas renewable sources returned to less than 40% of demand, after the 50% recorded in the second quarter.

Summary of 3rd Quarter 2020 Analysis.

[1] In the last decade, the average cyclical variation in energy consumption between the second and third quarters of the same year was near zero.

[2] 98% of the 2020 deficit is attributable to green mobility, while in previous years the percentage was between 60% and 75%. Furthermore, an additional risk factor is the geographic concentration of these products worldwide: for instance, Asian manufacturers hold 80% of global sales of batteries used in electric cars.

[3] In September -4% and in October -1% approximately (preliminary estimates) compared to the same months of 2019.