2022 Italian Budget Law: What's new in energy matters
With the 2022 Italian Budget Law, published in the Italian Official Gazette on 30 December 2021, several measures were introduced to promote the competitiveness of the national production system and concerning, among other things, tax deductions for energy efficiency and renewable sources, as well as special funds, some established ex novo, other re-financed. Below are the most relevant measures:
- Superbonus extension: The Superbonus for certain categories of beneficiaries has been extended to 2023 at 100%. For 2024 and 2025, however, the rate will fall to 70% and 65% respectively.
- Extension of other deductions: All other tax deductions provided for construction works, such as Ecobonus and Sismabonus have been extended to 2024.
- Assignment and invoice discount: Beneficiaries will continue to be able to use both the tax credit assignment and the invoice discount. However, Superbonus beneficiaries will retain them until 31 December 2025, other beneficiaries only through 31 December 2024.
- Tax credit for power storage systems: For the year 2022, individuals will be able to access a tax credit for documented expenses related to the installation of power storage systems integrated into power production plants powered by renewable sources, even if that system already exists.
- Italian Climate Fund: In 2027, an "Italian Climate Fund" will be established and managed by Cassa Depositi e Prestiti, which will finance interventions in favor of private and public entities. It is aimed at contributing to the achievement of the objectives established under international agreements on climate and environmental protection to which Italy is a party.
- As to mobility and transport, with the objective of strengthening and modernizing the national infrastructure and mobility systems with a view to sustainable development, the Fund for sustainable mobility strategy to combat climate change and reduce emissions has been established. The relevant resources are intended to be used, among other things, to renew the local public transport fleets, the purchase of hydrogen trains, the adoption of alternative fuels for the powering of ships and aircraft, the renewal of vehicles used for road transport.
- Industrial Transition Support Fund. The relevant resources are intended to be allocated to companies for investments for energy efficiency, the reuse of raw and recycled materials for productive uses, as well as for the capture, sequestration and reuse of CO2.
The 2022 Italian Budget Law is available through this link.
Electricity market: Sostegni ter Decree published in the Official Gazette
On 27 January 2022, Law Decree No. 4 of 27 January 2022 ("Sostegni ter Decree") was published in the Italian Official Gazette (Gazzetta Ufficiale), entitled :Urgent measures in support of businesses and economic operators, labor, health and territorial services, related to the COVID-19 emergency, as well as to contain the effects of price increases in the electricity sector.
Title III of the Sostegni ter Decree is exclusively focused on measures to contain high energy prices. In particular, the Sostegni ter Decree provides that the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) will cancel, for the first quarter of 2022, the rates on general system charges applied to users with available power equal to or greater than 16.5 kW, including those connected to medium and high/high voltage or for public lighting or electric vehicle recharging in places accessible to the public. It also introduces a tax credit of 20% of the expenses incurred for the energy component, purchased and actually used, in the first quarter of 2022 in favor of electricity-intensive businesses referred to in the Decree of the Italian minister of economic development ("MiSe") of 21 December 2017. It is then envisaged that, from 1 February 2022 to 31 December 2022, a two-way compensation mechanism on the price of energy entrusted to the Italian Energy Services Manager (GSE), will be applied to electricity produced by photovoltaic plants with a capacity of more than 20 kW that benefit from fixed tariffs derived from the Conto Energia mechanism, which do not depend on market prices, as well as to electricity injected into the grid by plants with a capacity of more than 20 kW powered by solar, hydroelectric, geothermal or wind power that do not access tariff incentive mechanisms (so-called "merchants"). In particular, the GSE will calculate the difference between current prices and the average prices of energy produced through 2020 by solar, hydro, geothermal and wind plants incentivized under old systems. Producers will have to pay the GSE the difference on these extra profits, or collect it if the difference is negative. In practice, they will have to pay a difference calculated taking into account fair pre-crisis prices.
The Sostegni ter Decree also provides that within the (non-mandatory) term of 30 days from its entry into force (i.e., 26 February 2022), ARERA will regulate the methods of implementation of the compensation mechanism as well as the methods of payment of the related proceeds into a special fund established at the Cassa per i Servizi Energetici e Ambientali.
The introduction of such a compensation mechanism has raised a number of concerns among the operators in the sector, as it is difficult to understand why this contribution would only apply to plants powered by renewable sources and not also to polluting plants or plants utilizing raw materials have not suffered a price fluctuation. Furthermore, it is considered that the decision to subject all plants powered by renewable sources to a levy, even if they are not subsidised, would be likely to engender mistrust among investors, which would also be detrimental to the objectives set out in the NRRP. Moreover, it should be noted that with the intervention in question, the State is essentially introducing a capped energy price, thereby regulating a liberalised market - an approach that in principle runs counter to the relevant European Union and constitutional principles.
The Sostegni ter Decree is available through this link.
New resources are coming for the green and digital transition of SMEs and start-ups
The MiSe has defined a EUR 2.5 billion plus package to support and reinforce investment in innovative start-ups and small and medium enterprises (SMEs) "to foster the growth of an ecosystem of innovation and accompany the processes of ecological and digital transition." MiSe assigned the resources to CDP Venture Capital Sgr, 70% controlled by the Cassa Depositi e Prestiti group. These resources will be added to the EUR 550 million provided by the Italian National Recovery and Resilience Plan (NPRR) and the EUR 750 million already allocated by MiSe for companies that carry out industrial, agro-industrial and craft services and research centers that invest in ecological transition.
The MiSe press release is available through this link.
ARERA: Approval of the new Strategic Framework 2022-2025
On 13 January 2022, by Resolution 2/2022/A, ARERA adopted the Strategic Framework 2022-2025 ("Strategic Framework"), which sets out the goals that will guide the development of ARERA's regulation over the next four years in the electricity, gas, water, waste and district heating and cooling sectors. At the heart of the Strategic Framework are consumer protection and awareness, through tools and communication, digitalization and the "just" and sustainable energy transition (as defined by the European Commission in the Green Deal) across the energy and environmental sectors, and improvement of infrastructure, services and competition. The new Strategic Framework also addresses the new issues of energy communities, electric mobility, decarbonization with renewables and clean hydrogen. In order to orient its strategic regulation toward goals of social, economic and environmental sustainability and to increase its accountability to stakeholders in this regard, ARERA has decided to associate the goals of the Strategic Framework with one or more of the targets for sustainable development set out by the 2030 Agenda.
The Strategic Framework is available through this link.
Progress toward national convergence of territorial waste management: Consolidated Act for the regulation of the quality of the municipal waste management service has been approved
By Resolution 15/2022/R/rif of 18 January 2022, ARERA approved the Consolidated Act regulating the quality of the municipal waste management service (TQRIF), which sets out a set of contractual and minimum technical quality obligations for all management systems, along with quality requirements and related general standards differentiated by regulatory schemes, identified in relation to the actual starting level of quality guaranteed to users in the various management systems. The new minimum technical and contractual standards will come into force on 1 January 2023. However, the competent territorial authorities are called upon to opt for one of the four regulatory schemes envisaged on the basis of the actual starting level of service by 31 March 2022, identifying any costs associated with compliance with the obligations within the 2022-2025 Economic and Financial Plan (PEF). The measure, while aiming for convergence on common and homogeneous standards at a national level, takes into account the various local differences, applying principles of progressivity, asymmetry and economic sustainability.
The TQRIF is available through this link.
Setup of the NPRR NIECP Technical Commission
On 18 January 2022, the NPRR NIECP Technical Commission was set up. This public body is placed under the functional authority of the Italian Ministry of Ecological Transition and, pursuant to Article 8, paragraph 2-bis, of Legislative Decree No. 152 of 3 April 2006 (as amended by Article 17-undicies, paragraph 1, of Law Decree No. 80 of 9 June 2021, converted with amendments by Law No. 113 of 6 August 2021), is responsible for performing the environmental assessment procedures for projects included in the NPRR, those financed under the supplementary fund, and projects implementing the National Integrated Energy and Climate Plan (NIECP). In particular, The NPRR NIECP Technical Commission is in charge of examining projects and infrastructures considered essential for achieving the goals set out in the NPRR and NIECP, with the aim of simplifying and accelerating the procedures and managing the energy transition more efficiently.
The press release is available through this link.
Green Taxonomy: Italy against greenhouse gas emission thresholds
At the beginning of 2022, the European Commission ("Commission") began consultations with a group of experts from the Member States for the inclusion in the green taxonomy — the list of investments considered "green" and therefore eligible for European funds established by Delegated Regulation 2021/2139 of 4 June 2021 ("Delegated Regulation") — of activities involving gas and nuclear power. A heated debate has been sparked on this point and the Commission's proposal has already received negative feedback from Germany, which is conducting a strong nuclear decommissioning program, and from the EU Sustainable Finance Platform, a body of experts created by the Commission to assess the technical criteria of the technologies to be admitted to the taxonomy. Italy sent its feedback to Brussels highlighting its concerns about the restrictive greenhouse gas (GHG) emission thresholds envisaged to be authorized by 31 December 2030. Indeed, according to the Delegated Regulation, these plants will not be allowed to emit more than 270 grams of CO2 equivalent per kWh, or an annual average of 550 kg of CO2eq/kW over a 20-year period. Therefore, the Italian Government cautioned that applying these limits "could engender risks for the stability of energy systems", and stated that especially in the current phase of sharply increasing energy prices "almost none of the existing and new facilities in Italy would be aligned with the emissions limits envisaged in the draft text" - indeed, the Delegated Regulation asks to reduce "the discrepancy between Greenhouse Gas emission limits for existing and new facilities".
Finally, the Italian Government noted that not even the use of Carbon Capture and Storage (CCS) technology would be sufficient to comply with the emissions cap.
The text of the Delegated Regulation is available through this link.
The opinion sent by Italy is available through this link.
Target 2030: ACEA expects at least 7 million electric vehicle charging points in EU
According to estimates published by the European Automobile Manufacturers' Association (Acea) representing the 16 leading manufacturers of cars, trucks, vans and buses in Europe, the EU will have to provide at least 7 million charging points for electric vehicles by 2030. This is more than the 3.9 million estimated by the Commission. ACEA points out the inadequacy of the Commission's proposal compared to the need for electric vehicles in 2030 in its position paper "Proposal for the Alternative Fuels Infrastructure Regulation." Among the priorities highlighted in the document, in addition to the increase of charging points, EU Member States will have to provide an increase in the average power per normal charger (11 kW compared to 7.7 estimated by the Commission) and per fast charger (185 kW against 104 estimated). This also takes into consideration that, in the future, there will be a circulating fleet of electric vehicles that are more powerful and more demanding in terms of consumption, with an average of 20 kWh per 100 km, compared to the 12 kWh estimated by the EU.
ACEA's position paper "Proposal for the Alternative Fuels Infrastructure Regulation" is available through this link.
EBA publishes final draft of Implementing Technical Standards for disclosures on ESG risks
On 24 January 2022, the European Banking Authority (EBA) published the final draft of the Implementing Technical Standards (ITS), the implementing technical standards for environmental, social and governance (ESG) risk disclosures under Basel "Pillar 3." The standards require the disclosure of comparable information and KPIs, including a green asset ratio (GAR) and a banking book taxonomy-alignment ratio (BTAR), as tools to verify exposures to taxonomy-aligned assets, such as those consistent with the Paris Agreement objectives. Disclosure requirements on ESG risks represent an important measure to promote market discipline by allowing stakeholders to assess banks' risks and their sustainable finance strategy.
The final draft of the Implementing Technical Standards is available through this link.
European Commission launches public consultation on PPAs, renewable energy projects and authorization procedures
On 18 January 2022, the EU Commission launched a public consultation entitled "Renewable energy projects – permit-granting processes & power purchase agreements." The initiative aims to facilitate renewable energy production projects. It will focus on key permit-related and administrative barriers to implementing renewable energy projects and corresponding good practice solutions to tackle them (in order to implement the 2018 Renewable Energy Directive), including the following:
- The length of application processes and permit issuance procedures
- The complexity of rules and processes for site selection and administrative authorizations
- Constraints and best practices in relation to grid connection and repowering
- The staffing and skilling of permitting authorities
In addition, as regards PPAs, the guidance will outline the main barriers to the deployment of power-purchase agreements in Europe and will identify best practices across Member States (such as administrative facilitation/staffing, public procurement procedures, model contracts and financing/de-risking facilities), including in a cross-border context. The deadline for comments is 12 April 2022.
The press release is available through this link.
Photovoltaic: The European Court of Justice invalidates the provision of Directive 2012/19/EU that placed on producers the cost of managing waste from photovoltaic panels placed on the market before 2012
With the ruling of 25 January 2022, Case C-181/20, the European Court of Justice (ECJ) declared the invalidity of Article 13(1) of Directive 2012/19/EU on Waste Electrical and Electronic Equipment (WEEE) ("Directive"). The Directive, transposed in Italy by Legislative Decree No. 49/2014, includes photovoltaic panels among WEEE and imposes an obligation on producers to finance the costs of managing photovoltaic panels when they become waste. The Directive provided that this obligation would apply retroactively, and would therefore cover panels from non-household users placed on the market between 13 August 2005 (entry into force of Directive 2002/95/EC on the restriction of the use of certain hazardous substances in electrical and electronic equipment) and 13 August 2012 (entry into force of the Directive, which repealed the 2002 directive). In this ruling, the ECJ clarifies that Article 13(1) does not comply with the principle of non-retroactivity of legal acts in the case of subsequent amendments and violates the general principles of the protection of legitimate expectations and legal certainty, since photovoltaic panel producers before 2012 could not foresee that they would be required to ensure the financing of the operating costs of the panels themselves at the end of their life.
The text of the ECJ ruling is available through this link.
Eurostat: EU 2020 renewables target exceeded
On 19 January 2022, the EU's statistical office (Eurostat), released data on the share of gross final energy consumption from renewable sources showing that almost all Member States have met their national targets. The share of gross final consumption from renewable sources reached by the 27 EU Member States is 22%, two percentage points above the 20% target set by European Directive 2009/28/EC on the promotion of the use of energy from renewable sources, which — together with the overall EU targets — also set targets for individual Member States. According to Eurostat, with more than half of the gross final energy consumption from renewable sources, Sweden (60%) is in first place among EU Member States in 2020, exceeding its target by 11 percentage points, ahead of Finland (44%) and Latvia (42%). Croatia (31%) and Bulgaria (23%) also performed very well, exceeding their national targets by 11 and 7 percentage points respectively. Italy (20.5%) also exceeded expectations by achieving 3.4 percentage points over its national target. The only one of the 27 countries that failed to meet its targets was France (19%), which missed its target by 3.9 percentage points.
The text of the Eurostat report is available through this link.
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