Maguire: Italy's economic troubles have an upside for the moment, a positive climate.

The persistent economic crisis in Italy has led to the lowest emissions in its power sector for decades. Climate activists need to be aware that economic measures could cause a rapid U-turn on pollution trends.

Italy has been experiencing economic stagnation for over a decade. This has resulted in a steady decline of goods produced and exported, and lowered power consumption among many businesses.

The lower power demand by industry allowed Italy's utilities, which were once a nation that ranked among the top 10 polluting nations, to reduce fossil fuel-fired electricity output and to cut power sector emission to historic lows.

The government has responded to the persistent economic dilemma by implementing stimulus measures that aim at stimulating industrial activity. This will likely lead to higher electricity generation and emissions for the eighth largest economy in the world.

Losing Ground

Italy's economy has stagnated since the financial crisis of 2008 due to high public debt, rising labour costs and an oppressive bureaucracy. Meanwhile, Europe's economy as a whole has grown by over 20%.

The data of the International Monetary Fund shows that Italy's Gross Domestic Product (GDP), at $2.4 trillion in 2025, is about flat with 2008.

In the same period, the German economy grew by almost 25%, France by 10% and the European Union's overall economy by 22%.

Italy's government is limited in its intervention options due to the high public debt levels, which are among the highest of all major European economies.

The industry is left to fend for itself, and the production of durable goods like cars and machinery has fallen dramatically. These were previously major drivers of Italy’s economy.

POWERING DOWN

Italy's industries, on top of limited government assistance, have had to deal with a dramatic upheaval in local natural gas markets following Russia's invasion in Ukraine and some of Europe's highest electricity costs.

According to the Energy Institute, Italy imports 90% of its natural gas and over 40% of its electricity.

LSEG data shows that Italy's energy system is heavily dominated by gas. This has led to a sharp rise in its wholesale electricity costs. They are now 32% higher than in Germany, France, and Spain, and have been for the past seven years.

The sharp rise in power prices has further weakened the competitiveness and productivity of Italian businesses.

Ember data shows that between 2008 and 2024 Italy's total electrical output will decline by 15%, to 265 terawatt-hours.

Between 2008 and 2024 the production of fossil fuel-fired energy dropped by 47%, while clean energy output rose by 124%.

CLEAN GROWTH

Ember data indicates that the increase in clean electricity - mainly due to surges in wind and solar power production - resulted in Italy’s power system emission falling by half between 2008 and 2024. This amounts to 76 million tonnes of carbon dioxide.

To sustain a sustained increase in economic activity, utilities will need to increase the output of fossil fuel plants. Renewable energy sources are still too fragmented to support an overall rise in energy demand.

Many of the economic stimuli being pursued target the building of Italy's infrastructure on the assumption of positive ripples in the economy.

These projects are energy intensive and require high volumes of industrial power. They also produce substantial amounts of greenhouse gases.

The government's infrastructure plans also include large-scale battery energy storage projects, wind farms in southern regions and the largest solar park of the country in the countryside north Rome.

These projects, once completed, will allow utilities to further reduce their dependence on coal and gas for electricity, and could help limit future increases in power emissions.

In the short term, however, it is likely that the coordinated increase in industrial activity expected to boost economic growth will also raise Italy's emission levels, and halt the recent trend of pollution steadily declining.

These are the opinions of a columnist who writes for.

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(source: Reuters)