A platform for the extraction of natural gas in the Adriatic sea, Italy. Credit: PJPhoto69/ iStock/ Getty Images Plus.
Gas prices in Europe have soared over the last 18 months. Driven by the impact of the Russian invasion of Ukraine, they have increased by more than 300% since May 2021. Consumers struggle with huge energy bills and the prospect of even higher prices in the coming winter, while oil and gas companies bank record profits. The European Union has underscored the need to diversify energy imports, especially in countries, such as Italy, that heavily relied on Russian gas.
Short-term actions in Italy have focussed on securing gas supply from North Africa or building regassification capacity to import liquified natural gas from elsewhere. But a study in the Journal of Cleaner Production shows that the most economically sound strategy would be to move quickly towards clean energy, rather than diversifying sources of fossil fuel energy1.
The article, which uses Italy as a case study in Europe, uses mathematical simulations to investigate how gas consumption could be reduced in Italy over the next year or two, mostly by increasing energy efficiency and by a fast deployment of available renewable technologies.
The key message is that “decarbonizing costs less than diversifying,” says lead author, Lorenzo Mario Pastore, at the Department of Astronautical, Electrical and Energy Engineering at Sapienza University of Rome.
Pastore and his colleagues employed a widely used computer tool for the analysis and configuration of future renewable energy systems, and obtained more than 2,000 scenarios based on varying energy mixes, investments in renewable technologies and prices of natural gas. In particular, they considered the addition of solar panels up to 10 GW and 5 GW for utility and residential systems respectively, of wind power plants up to 10 GW, and a 15% increase in the share of buildings that use heat pumps. Each scenario includes simulations of energy consumption, energy costs, as well as the occupational impact of installing new renewables.
The researchers found that an investment of €20 billion on renewables would be enough to reduce gas consumption by almost 40 TWh, with an ‘abatement cost’ (the cost of producing a unit of energy with renewables instead of fossil fuels) of €45/MWh. The maximum implementation of the strategies proposed in the article would require 80 billion in total investment, and would lead to a reduction of 75 TWh/year of gas consumption at an average cost of about €70/MWh. This cost would seem high compared to ‘normal’ natural gas prices, that for years were below €20/MWh, but not to recent ones, which have been above €80/MWh since the spring, with peaks over €120/MWh.
The researchers have also found that investing €80 billion would create 640,000 temporary jobs for manufacturing, construction and installation phase of renewable sources, and 30,000 permanent jobs for operation, maintenance and production. Moreover, those measures would reduce annual emissions from the Italian energy system of 21.5 megatons of CO2.
Recent actions by the newly elected Italian government move in the opposite direction, by promoting drilling in the Adriatic and opening regasification units, which can result in expanding the use of fossil fuels, just as climate science and international institutions are clear on the necessity to phase them out.
Pastore’s article underscores how large investments in gas plants and infrastructure could become 'stranded assets” and delay and hinder the deployment of renewable technologies.
New pipelines and regasification plants, the authors write, represent “a long-term investment that contradicts the need for rapid decarbonisation of energy systems,” and can “take capital away from green investments.” The paper also underscores how the implementation of gas represents a “barrier for the transition process towards renewables and sustainable energy systems.” Pastore says that delaying decarbonization because of the energy and inflation crisis is a missed opportunity, not just from an economic point of view.
