Specials
The energy scenario in Italy
written by Benedetta Palazzo
Every year the Italian Ministry of Economic Development publishes the country's National Energy Balance. This gives us the opportunity of analysing data regarding the demand of energy in Italy, focusing in particular on the energy scenario that has characterised the last ten years.
The National Energy Balance (Bilancio Energetico Nazionale, BEN) consists in a collection of data on how energy is generated and utilised in a country over a lapse of time of one year. As in all balance sheets, even the energy balance sheet gathers information on all the inputs and outputs, in this case focusing on energy. On the balance sheet, the energy derived from oil, coal, natural gas, renewable and other sources is expressed in the same unit of measurement – the tonne of oil equivalent (TOE) – that represents the energy contained in a tonne of crude oil.
One of the entries contained in the Energy Balance is the total energy supply, known as primary energy consumption. This data indicates how much energy is directly available for use in the country (such as electricity imported or produced by hydroelectric power plants), or indirectly available after having been converted into products to be sent to the end market (such as crude oil, which goes to refineries to be transformed into petrol or diesel oil) or having been transformed into electricity (for example, fossil fuels utilised by thermoelectric power plants to produce electricity). Moreover, the National Energy Balance indicates how a country uses the primary sources available, that is, it gives us information on final energy consumption. In fact, part of the energy available from primary energy sources has to be opportunely transformed before it can be utilised; for example, part of the renewable energy is used to produce electricity. Hence, passing from primary energy requirement to final energy consumption the share of the each energy source changes because some decrease, such as fossil fuels, while others, such as electricity, increase. Final energy consumption includes consumption in the civil sector, transport, agriculture, industry, non-energetic uses and bunkering. Bunkering consists in supplying ships with fuel for their consumption (motors for the propulsion of ships and for on-board energy production).
In Italy, primary energy consumption (see graph "Primary energy consumption in Italy" on the left menu) has shown a growing trend up to 2005 (with a 6.4% increase from 2000 to 2005). In fact, consumption reached a record high in 2005, equivalent to 197,776 ktep. From 2005 to 2009 consumption constantly decreased; in 2009 there was a relevant drop, of 5.7% respect to 2008, associated with the most acute phase of the international financial crisis. In fact, the decline in consumption registered from 2008 to 2009 can be mainly ascribed to the economic crisis that hit the industrialised countries in those years and that strongly influenced the energy sector. The economic and financial crisis, originated in the United States in July 2007, subsequently affected the whole world, and from October 2008 particularly the industrialised countries. Taking the historical energy demand trends into consideration, one has to go back to 1949 in order to find a percentage decrease that can be compared to that of 2009. In 2010 there was a 2.7% increase in energy consumption respect to 2009, that was the result of the anti-crisis policy measures adopted that favoured the recovery of the economy.
On analysing primary energy consumption by energy source (see graph "Primary energy consumption by energy source in Italy" on the left menu), it can be observed that in the last ten years the consumption of crude oil has decreased by 21.7%. This reduction, particularly pronounced in the second five-year period (-15.4%), is mainly due to the energy policies implemented in Italy that have privileged natural gas as the primary source of energy for the civil sector and for the generation of electricity. In fact, from 2000 to 2005 the consumption of natural gas increased by 22% registering a peak of 71,169 ktep in 2005. However, from 2005 onwards, there has been a fall in gas consumption (though the drop was less than that of crude oil consumption in the same period) which was particularly marked in the years of the economic and financial crisis. In fact, in 2009 there was an 8.1% decrease in gas consumption respect to 2008. In 2010 gas consumption started growing again with a 6.3% increase respect to the previous year*.
For more detailed information on crude oil demand in Italy and in the world read the Special “Ten years of oil demand”.
The sources that, notwithstanding the economic crisis, have shown a positive trend in the period taken into consideration are the renewable ones (+73%). However, it must be underlined that their contribution to the overall energy mix is still modest.
Lastly, we can point out that dependence on imported electricity has remained basically unchanged in the ten years taken into account.
On breaking down primary energy consumption data in 2010 by energy source (see graph "Italy: primary energy consumption by source (ktoe)" and "Italy: primary energy consumption by source (%)" on the left menu), the importance of fossil fuels as a primary energy source is clear. In fact, oil and natural gas make up for 76% of Italy's energy requirements. Looking at the graph, it can be observed that renewable energy sources and solid fuels are almost totally used to produce electricity (green area), while for natural gas and oil the yellow area predominates, which corresponds to final energy consumption, which will be analysed later in greater detail. Natural gas turns out to be the most common primary energy source used in the production of electricity.
Italy depends on electricity imports for 5% of its primary energy consumption, while solid fuels and renewable energy sources provide for 7% and 12% respectively.
Lastly, one can see how the consumption and losses of the energy sector (red area) relative to crude oil are clearly greater than those of other energy sources and represent 84.5% of the total.
The final energy consumption trend in Italy reflects that of primary consumption (see graph "Final energy consumption in Italy" on the left menu) . Even final energy consumption had a positive trend up to 2005 (with an 8.7% increase from 2000 to 2005). In that year consumption reached its highest level, equal to 146,591 ktep. A constant decrease in consumption can be observed from 2005 to 2009 when there is a relevant drop, equal to 6%, respect to the previous year and which coincides with the most acute phase of the international financial crisis. In 2010 there was a 3.6% increase in energy consumption respect to 2009.
If we focus on final energy consumption by energy source (see graph "Final energy consumption by energy source in Italy" on the left menu), we can observe that from the year 2000 to 2005, oil and natural gas consumption show an increase of 3.7% and 15.9% respectively. The substantial increase in natural gas consumption is mainly due to the Italian energy policies: in fact, natural gas – also as a consequence of the environmental benefits that it offers – has gradually taken the place of oil as a fossil fuel energy source for electricity production, industrial production and for household heating. However, from 2005 there has been a negative trend in both natural gas and oil consumption (-7.2% and -9.2% respectively), which was particularly marked in the years of the economic and financial crisis. In fact, in 2009, there was a 3.7% drop in natural gas consumption and a 6.7% drop in oil consumption respect to the previous year. In 2010, consumption started to rise again, with a 7% increase for natural gas and only a 0.8% increase for oil*.
As far as renewable energy sources are concerned, their contribution to final energy consumption is still marginal in the global energy mix. In 2010, over 80% of renewable energy resources was used to produce electricity, the remaining part was put to other uses.
Lastly, we can observe that the final consumption of electricity, made up of both imports and domestic production, has remained basically the same in the ten years under study.
In order to understand the contribution of each energy source and each sector to total final consumption, we have to break down the data relative to 2010 (see graph "Italy: final energy consumption by source (ktoe)" and "Italy: final energy consumption by source (%)" on the left menu). Fossil fuels dominate all economic sectors; in particular, the transport sector is heavily dependent on oil (39,828 ktep) and the civil sector on natural gas (27,709 ktep). ln fact, natural gas – also as a consequence of the environmental benefits that it offers – has gradually taken the place of oil as a fossil fuel energy source for electricity production, industrial production and even in the civil sector, for heating systems. Natural gas and electricity – which, it must be said, is generated in large part from natural gas – are used mainly in the civil and industrial sectors. As far as renewable energy sources are concerned, they are used primarily in the civil and transportation sectors and only a very small part is used in industry and agriculture. Nevertheless, as has been mentioned earlier, their contribution is negligible respect to that of fossil fuels. Lastly, fossil fuels are utilised almost exclusively in the industrial sector.
The graph regarding final energy consumption by sector from 2000 to 2010 shows an appreciable reduction in energy consumption by industry from 2004 onwards. The drop, that was limited until 2008, became significant in 2009, when there was a 20% decrease in industrial consumption. In fact, as a result of the global financial crisis, in Italy there was marked fall in energy demand in the industrial sector basically due to the fact that the production in many plants was suspended, especially in those sectors with high total energy intensity. This decrease in the energy consumed by the industrial sector has been the most significant of the postwar years. In 2010 the industrial sector started to grow again (+5.5%) and its consumption, equal to 31,610 ktep, was 23% of total consumption.
From 2000 to 2010, consumption of the civil and transport sectors increased (21.5% and 3.3% respectively) while that of the agricultural sector, whose annual variations are almost undetectable, suffered a slight reduction (-0.9%).
As far as transportation is concerned, analysing the energy demand trend in detail, a drop in consumption can be noticed in the years of the crisis (2008-2009), that can be attributed to the increase in the price of oil. In fact, the price of oil per barrel in the year 2000 was 28 dollars, while in 2008 the price was nearly 80 dollars. In 2010, the transport sector started to grow again (+0.9%) and its consumption, 42,893 ktep, was 31% of the total.
Lastly we can observe that consumption in the civil sector has not suffered a decrease of the same entity as that of industry and transportation. In fact, the fluctuations that can be seen on the graph are probably due to climatic factors that influence energy consumption for air-conditioning systems. In 2010, the civil sector remains the sector that consumes the most energy with 48,262 ktep, equal to 36% of final energy consumption.
