Sustainability: Italy’s Recovery and Resilience Plan

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The winds of change are blowing in Italy – the economy, innovation, and sustainability will all be affected. The Green Revolution has the potential to change much of the country. On 29 April 2021, Italy's parliament overwhelmingly approved the government's huge European Union-funded pandemic recovery plan. Days before the deadline for submission to Brussels.

Italy's post-COVID Recovery Plan, the National Recovery and Resilience Plan (PNRR), will amount to 221.5 billion euros of support, including 191.5 from the EU's Recovery Fund and 30 billion from a complementary fund.

The Draghi government's project, widely endorsed by parliament, is very ambitious and aims to make Italy a sustainability leader in Europe. Investments of approximately 191.5 billion euros are planned, of which 138.5 billion are reserved for new projects. Of these funds, around 42% relate to the energy transition of the country still strongly anchored to thermoelectric power and imports. On the one hand, this is an attempt to make Italy more energy self-sufficient. While, on the other hand, the commitment is designed to push the country towards more efficient energy consumption and more renewable and sustainable production.

The Green Revolution

Within the Recovery Fund, 59.33 billion euros will be allocated to the Green Revolution. The plan provides for a specific allocation of resources for each of the following areas:(i) Sustainable agriculture and circular economy, (ii) Renewable energy, hydrogen, grid and energy transition and sustainable mobility, (iii) Energy efficiency and building renovation, and (iv) Protection of the territory and water resource.

Italy's Recovery Fund Allocations: Green Revolution Pie Chart

There will be added a further 9.3 billion euros from a separate fund, for a total of 68.63 billion euros dedicated to the Green Revolution.

The first line of investment aims to increase the share of renewable energy. The current Italian target for 2030 is 30 percent of final consumption, compared to the 20 percent preliminary estimate for 2020. To achieve this goal, Italy can leverage the abundance of renewable resources available but need to streamline the authorization process of production plants.

Modal Shift Towards Rail

Another essential action to promote the ecological transition is the "modal shift towards rail": an annual reduction of 2.3 million tons of CO2 emissions is estimated to be achieved in this way. In particular, 700 kilometres of additional railway will be built, mainly high-speed and regional lines, 216 kilometres of new tram lines, subways, and trolley buses. In addition, the plan calls for the modernization of the existing rail fleet. Moreover, to improve environmental sustainability, 3.200 electric and hydrogen buses will be put into service in urban areas and 2.000 natural gas buses for extra-urban transport.

Hope For the Future

An important driving force for growth will come from structural bureaucratic reforms – i.e., streamlining the current complex labyrinth of bureaucracy. It is estimated that reforms of the public administration, justice, and competition will generate approximately 3.3 points of additional GDP growth in the long term.

There is a great hope that the plan will achieve the specified objectives, giving new life to the energy sector and achieving climate objectives (CO2 emissions reduction). Prime Minister Draghi has stated that "I am sure that honesty, intelligence and a taste for the future will prevail over corruption, stupidity and vested interests. This certainty is not reckless optimism but trust in Italians, in my people, in our ability to work together when the emergency calls us to solidarity and responsibility".

For further information, do not miss our article on the energy transition in Italy, Sustainability: The Ecological Transition in Italy.

More: Research Notes, COVID-19, National Recovery and Resilience Plan (PNRR), Sustainability

Nicolò Zanforlin