published on 14 March 2016 in energy
The energy scenario in Italy
The National Energy Balance Sheet
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 years.
The National Energy Balance (NEB) 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).
Primary energy consumption
In Italy, primary energy consumption has shown a growing trend up to 2005 (with a 6.4% increase from 2000 to 2005). In that year consumption reached its highest level, equal to 197,776 ktep.
From 2005, a constant decrease in consumption has been observed, and it does not seem to stop. In 2009, a very significant drop in consumption, equal to -5.7% compared to 2008, was observed, which was mainly due to the economic crisis that hit the industrialised countries, strongly influencing the energy sector. The economic and financial crisis which began in July 2007 in the United States subsequently affected the whole world and in particular the industrialized countries, starting from October 2008. After a mild increase in energy consumption in 2010 (equal to + 2.7% compared to 2009), due to the anti-crisis policies that were adopted, and which favoured an economic recovery, starting from 2011, there has been a new decrease in the primary consumption of energy: with regard to energy consumption, in 2014, Italy returned to the values of the start of the 90s.
If, in particular, the primary consumption of energy is analysed by source, it can be noted that from 2000 to 2014 consumption of crude oil decreased 37%. 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. From 2005 to 2014, a negative trend can also be seen for the consumption of gas (-28.7%) which is particularly significant starting from the economic and financial crisis.
The sources which showed an upward trend notwithstanding the economic crisis during the reference period, are the renewable sources of energy; from 12,904 ktep in 2000, they reached 34,671 ktep, recording a 168.7% increase. 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.
If the data regarding the primary consumption of energy in 2014 is disaggregated by source, the importance of fossil fuels as the primary source of energy is quite evident. Crude oil and natural gas, in fact, cover 65% of the Italian consumption of energy. As it can be seen in the graph, renewable sources of energy and solid fuels are used almost totally for the production of electric energy (light green area), while for natural gas and crude oil the yellow area, which corresponds to final energy consumption, is predominant, and will be analysed below in detail.
It is important to point out that in 2014, for the second year, the contribution of renewable energy sources to the production of electric energy was greater than that of natural gas, in fact renewable energy and natural gas account for 50% and 26% of the production of electric energy respectively. Imports of electric energy in Italy account for 6% of the primary consumption of energy, while solid fuels and renewable sources of energy contribute 8% and 21% to cover the primary energy consumption, respectively.
Final energy consumption
The final energy consumption trend in Italy reflects that of primary consumption.
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.
From 2005, a constant decrease in consumption is observed, up to 2009, year in which there is a very significant decrease equal to -6%, compared to 2008. As for primary consumption, after a mild growth observed in 2010 (equal to +3,6% compared to 2009), final energy consumption continued to decrease from 2011.
If we focus on final energy consumption by energy source, 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.
As in the case of primary consumption, from 2005 to 2014 use of gas and crude oil showed a 27.4% and 26.7% decrease respectively, which was particularly significant in the years of the economic and financial crisis.
With regard to the renewable sources, their contribution to covering the final consumption, in the overall energy mix, is still marginal (5.7%).
Lastly it is observed that the final consumption of electric energy, consisting of imported energy and Italian national production, has remained generally constant in the period of reference.
In order to understand how each source and each sector contributes to the total final consumption, we shall analyse the data of 2014. Fossil fuels dominate all the economic sectors, and in particular, the marked predominance of crude oil in the transport sector, with 35,326 ktep, and natural gas in the civil sector with 21,018 ktep, is observed. In fact natural gas has gradually taken the place of crude oil as a source of fossil fuel in the electricity generation sector, in the industrial sector and also in the civil sector, for heating buildings. Natural gas and electric energy (which we must remember is mostly produced from renewable sources and natural gas) are used mainly in the civil and industrial sectors. With regard to the sources of renewable energy, these are mostly used in the civil sector and transport, and in small parts in industries and agriculture. Lastly solid fuel is used almost exclusively in the industries.
The graph regarding final energy consumption, per sector, from 2000 to 2014, shows a marked decrease in consumption in the industrial sector, starting from 2004. The decrease, which was restrained up to 2008, became significant in 2009, with a 20% decrease recorded in energy consumption in the industrial sector. In Italy, in fact, due to the world financial crisis, there was a net drop in energy demand in the industrial sector, due substantially to the suspension of the production of a number of plants, specially in sectors with a high intensity of energy. The fall in energy consumption in the industrial sector has been the most significant from the end of WWII to date. Apart from a mild recovery in the industrial sector in the years 2010 and 2011, the negative consumption trend continued in the years 2012, 2013 and 2014.
From 2000 to 2014, consumption in the civil sector has increased (+9.3%), while consumption in the industries, transport and agriculture have decreased 30.5%, 8.2% and 15.7% respectively in the reference period.
In 2014 the transport sector, with 38,117 ktep accounted for 32% of total consumption. Industries instead, with 27,929 ktep accounted for 23% of total consumption of energy, while agriculture with 2,718 ktep accounted for only 2%.
We can note, lastly, that consumption in the civil sector has not registered a decrease like consumption in the industrial sector and transport. The fluctuations that can be observed in the graph, in fact, are probably due to climatic factors that influence the consumption of energy to condition room temperature. In 2014, the civil sector was confirmed the sector that consumed most energy, with 43,416 ktep, equal to 36% of total final energy consumption.
* Data processed by the Italian National Energy Balance (NEB), for the years 2000 to 2014. All the NEB annual data are available in the website of the Italian Ministry of Economic Development (Ministero dello Sviluppo Economico)
Written by Benedetta Palazzo