News

Green hydrogen: decree on subsidies published in the Official Journal

On 21 September, the Ministry of Ecological Transition adopted a new decree concerning the "conditions for access to subsidies on the consumption of renewable energy in electrolysis plants for the production of green hydrogen".

The measure implements what was already provided in the PNRR 2 decree, which introduced the exemption from the payment of the variable portion of the general charges related to the electricity system for the consumption of electricity produced by renewable energy sources (RES) and used in the electrolysis process of green hydrogen production plants.

The decree specifies that the exemptions will apply to green hydrogen production plants that comply with the following requirements:

  • are connected to electricity production plants from RES via a grid with a third-party connection obligation; and
  • use electricity from RES power plants directly connected to the electrolyser

The subsidy will be granted on an ex post basis, as compensation for the charges previously paid and it will be possible to cumulate it with other subsidies granted in connection with green hydrogen.

Within 30 days from the entry into force of the Decree, the Regulatory Authority for Energy Networks and Environment (ARERA) will determine how the facilitation is to be used and how the general system charges.

The text of the decree is available at the following link.

Competition bill approved, novelties for hydropower and res

On August 2, 2022, the final text of the new Competition Law was approved by the Senate, leaving the text already approved by the House of Representatives unchanged in the parts related to hydroelectric concessions and the delegation to the government for simplifying the authorization process for new RES.

Specifically, the decree establishes that the regions will remain in charge of setting the criteria for awarding tenders. Thus, the procedure for renewing the concessions for hydroelectric power plants, which will start on 31 December 2023, will remain unchanged. With reference to plants whose concessions expire by the end of 2024, regions will have the power to grant an extension until September 2025 at the latest, pending the completion of new assignment procedures. Outgoing concessionaires will also be entitled to compensation on investments made and not fully amortized.

The power of the Ministry of Infrastructure and Sustainable Mobility to exercise substitutive powers and call for tenders for the allocation of hydroelectric concessions in case of regional inertia, which was contemplated in the text approved by the Senate, has not been amended.

The other relevant point of the new decree concerns the delegation of authority to the government to reorganize the RES regulation in accordance with certain criteria, including comprehensiveness, clarity and simplicity. Article 26 provides that the government will have to exercise the delegation by adopting supplementary and corrective measures within one year from the entry into force of the decree. Also, the decree mandates the Government to scale down environmental/landscape authorization requirements by identifying exemptions and/or simplified authorizations for minor RES plants.

The text of the bill is available at the following link.

Renewable energy communities: a "bottom-up" solution against the current crisis

In the last months, we have witnessed an increase in the number of discussion on possible ways to tackle the challenges brought by the current energy crisis. The European Union is studying a common strategy to cope with the imminent cut-off of gas supplies by Russian gas producers. One solution could come from renewable energy communities, first introduced by the 2018 RED II directive and regulated in Italy by Legislative Decree no. 199 of 2021, the regulation of which will have to be completed by some implementing decrees, expected in the coming months.

Through renewable energy communities, citizens, businesses and local authorities can join to produce and consume energy at reduced costs, according to principles of energy democracy and subsidiarity. In essence, some stakeholders produce energy and are able to offer other members of the community the excess over their consumption and this process will be incentivized by a bonus of 110 euro per MW/H, which should guarantee a saving of more than 20-30% on the related bill.

The new regulation stipulates that each plant can have a maximum power of one MW and all users connected to the same primary cabin can be a part of the community.

This latter feature, combined with the fact that the National Recovery and Resilience Plan (NRRP) will provide up to 2.2 billion euro in incentives for municipalities with up to fifty thousand inhabitants, underlines the important role that local authorities will be called upon to play in promoting renewable energy communities. It will therefore be up to the foresight of local governments to use this powerful weapon to tackle the energy crisis "from below" and contribute at the same time to a sustainable transition, favouring the production of renewable energy and encouraging virtuous and solidarity-based behaviour among members of the same community.

The Legislative Decree is available at the following link.

Mite publishes interpretative ministerial decree on access to biomethane incentives

Pending a new ministerial decree to regulate the biomethane incentives scheme in accordance with the criteria set out in the NRRP the Italian Ministry of Ecological Transition (Mite) published an interpretative ministerial decree on 5 August, providing greater clarity on the requirements for being entitled to incentives for biomethane production and facilitating a more gradual transition between the scheme introduced with the Ministerial Decree of 2 March 2018 and the scheme that will be established with the future decree implementing the NRRP.

In particular, MITE clarified that access to incentives for biomethane in the transportation sector, under the regime provided by the 2018 decree, will still be allowed for biomethane production plants that, in addition to having submitted the relevant application within 30 days of the entry into force of the interpretative decree, will have obtained the GSE project qualification by 31 December 2022.

MITE points out that the affected plants will still need authorization to construct and operate biomethane production facilities, which must have been obtained by the date of entry into force of the interpretative ministerial decree, namely 5 August 2022. If biomethane production has not started by 31 December 2022, the plant will automatically lose its right to the incentive.

The interpretative Decree is available at the following link.

Agrisolar Parks, clarifications on NRRP investments (awaiting the call for tenders)

The Ministry of Agricultural and Forestry Policies (MAFP) has issued guidelines on the NRRP incentives for photovoltaic systems on productive buildings in the agricultural, livestock and agro-industrial sectors.

By its Ministerial Decree of 14 July 2022, which came into force on 19 August 2022, the MAFP amended its Ministerial Decree of 25 March 2022 on the implementation of the incentives provided for by the NRRP for the creation of agrisolar parks.

The NRRP includes funds for up to 1.5 billion euro for the four-year period 2022-2026, which are intended for direct farmers, agro-industrial enterprises and agricultural entrepreneurs that process agricultural products.

The announcement is yet to be published.

New NRRP fundings for agrovoltaics

On 23 August 2022, the MAFP issued a public notice detailing the procedure for submitting applications for funding for agrovoltaic plants, as provided by the Ministerial Decree of 25 March 2022. The funding rules were further clarified by the ministry. They stipulated that projects will have to be started later than the submission of the application.

The funding, amounting to EUR 1.5 billion and covering the years 2022-2026, is granted with reference to Mission 2, Component 1, Investment 2.2 "Agrisolar Park" of the NRRP and will be aimed at direct farmers, agro-industrial enterprises and agricultural entrepreneurs. More specifically, a portion of EUR 1.2 billion will be allocated for the implementation of interventions in the primary agricultural production sector, while two portions of EUR 150 million each will be allocated for the implementation of interventions in the sector of processing agricultural products into agricultural and non-agricultural products. In addition, it is planned that at least 40% of the funding will be specifically targeted to the regions of Abruzzo, Basilicata, Campania, Molise, Puglia, Sardinia and Sicily. The ultimate goal of the measure is to promote the installation of photovoltaic panels with a generating capacity of 375,000 KW.

Interested parties will have to submit an application for funding in accordance with the procedures set out in the operating regulations attached to the public notice of 23 August 2022. Submission is possible from 27 September 2022 to 27 October 2022 through the GSE's portal. The funds will be granted for the installation of photovoltaic systems on the roofs of buildings where agricultural, livestock or agro-industrial activities are carried out. In addition, asbestos removal and thermal insulation of roofs will also be eligible for the NRRP funding. The text of the public notice is available at the following link.

Management and disposal of photovoltaic panels: new operating instructions

MITE's new operating instructions for the management and disposal of photovoltaic panels of Conto Energia-incentivized plants, approved by decree of 8 August 2022, have been released on MITE's site .

Main changes include:

  • GSE's disposal guarantee fee for both domestic (below 10 kW) and professional systems being set at EUR 10 per individual photovoltaic module, which will ensure the correct end-of-life management of the latter
  • New timeframes and procedures for joining a collective system for the management and disposal of panels, as provided for by Legislative Decree 118/2020. This can also be exercised for plants under Conto Energia IV and V.

The new version of the operating instructions for the management and disposal of photovoltaic panels is available at the following link.

Case Law

Lazio Regional Administrative Court rules on the legal standing of joint-stock companies on photovoltaic matters

On 3 August 2022, the Lazio Regional Administrative Court rejected the appeal brought by Bioenergia and Ambiente srl against the Lazio Region and Eg Sole srl for the annulment of the determination made by the Lazio region in 2021 concerning the environmental impact assessment on the 50 MWp ground-mounted photovoltaic plant project in Tuscany and the consequent compensation for damages. The plaintiffs challenged the absence, at the end of the plant's 30-year life, of conditions set to guarantee its removal and disposal, Eg Sole's lack of availability of the area where the plant stands, and the region's failure to assess the cumulative impact of the existing plants.

The Regional Administrative Court declared the appeal inadmissible, upholding the defence of Eg Sole and the Lazio region based on lack of standing, on the basis that the appeal appeared to have been brought by a joint-stock company operating in the same sector as Eg Sole, allegedly in competition with Eg Sole, and carrying out activities mainly aimed at constructing plants for the production and transportation of energy. The judges pointed out that it was evident that the petitioner lacked the character of a body furthering environmental interests, since no stable and formal purpose of environmental protection was found or documented for which the company was statutorily responsible. Hence, the requirements of standing developed by case law for recognizing associations' entitlement to take action in environmental matters were not met, nor could such legitimacy derive from situations of legitimate legal interest, given that, according to the judges, it did not appear that the appellant suffered any direct detrimental effects from the contested authorization measure.

In light of this, the ruling concluded that the appeal was inadmissible due to a lack of standing.

Ombrina Mare case: Italy condemned for violating the Energy Charter

On 24 August 2022, British company Rockhopper announced that it won the arbitration against the Italian State regarding the Ombrina offshore oil project off the Abruzzo coast, winning a total compensation of EUR 190 million.

The case dates back to late 2015, when the Italian Ministry of Economic Development issued a ban on offshore hydrocarbon exploration within 12 miles off the coast, which, consequently, led to the halt of Rockhopper's "Ombrina Mare" oil platform project and the denial of 27 offshore hydrocarbon exploration permits. In 2017, the British company decided to resort to arbitration proceedings at the International Center for Settlement of Investment Disputes (ICSID) for violating the Energy Charter Treaty, which provides for the possibility for companies to sue governments in the event of policies deemed unfairly detrimental to them. Although Italy decided to abandon the treaty in 2015, to this day it remains subject to the jurisdiction of private courts, as the Energy Charter Treaty provides coverage for foreign investment for up to 20 years after termination. As a result, the ICSID tribunal unanimously decided to condemn the Italian state for violating the treaty, ordering a compensation of EUR 190 million euros, plus 4% interest, in favor of Rockhopper, which should cover the expenses the British company incurred in the research, development, and decommissioning of the Ombrina Mare platform, as well as lost profits related to the extraction and sale of oil. The Italian state will have 120 days to file an opposition against the condemnation order.

The Apulia TAR rules on repowering matters

By Ruling No. 1170 of 19 August 2022, the Apulia Regional Administrative Court rejected an appeal filed by a company owner of a wind farm composed of 25 wind turbines, with a total capacity of 15 MW, which had submitted a renovation project, calling it repowering, but which had been negatively judged by the Apulia Region. According to the judges, the project could not be defined as repowering as the planned work would triple the capacity of the plant and this would result in consequent damages to the environment.

The planned changes would have resulted in a reduction of the wind turbines, from the original 25 to 16, but at the same time their height would have been tripled and they would have been placed at a greater distance from one another. In light of this, according to the administrative judges, it would be impossible not to classify the plant as new, since the innovations would produce significant and non-negligible effects on the environmental impact assessment.

Therefore, the Region made a negative assessment regarding the environmental compatibility of the project, both on the basis of technical considerations and by evaluating the potential impact of the new plant on the environment. The ruling appears in line with the case law according to which the need to develop renewable energy cannot override the need to protect the natural landscape, not even in cases where the protected area is already anthropized.

EU

New European Council Regulation to reduce gas demand by 15%

Amid the recent tense international landscape, the European Council has adopted a regulation aimed at achieving a 15% reduction in gas demand to deal with possible disruptions of supply from Russia during the winter. Specifically, the regulation stipulates that the reduction will take place on a voluntary basis during the period between 1 August and 31 March 2023, but leaves open the possibility for the council to activate a "State of Union Alert," upon a proposal from the commission. The commission may submit this in the event of a risk of gas shortage or exceptionally high demand, or upon the request of five or more member states. In such case the reduction will become mandatory. In order to take into account certain special conditions of Member States and to ensure that gas reductions will still allow a sufficient level of security of supply in the EU to be achieved, the regulation establishes certain exemptions and provides for the possibility of applying partial or total derogations to the mandatory reduction target. To this end, for example, an exemption from the reduction obligation has been established in favor of those member states that are not interconnected with the gas grids of other Member States as well as in favor of those States whose electricity grids are not synchronized with the European electricity system and depend primarily on gas for power generation. Member states also agreed to prioritize demand reduction measures that do not affect protected customers or essential community services, opting instead, among other things, for awareness campaigns, measures to encourage businesses to switch to other fuels, and targeted heating and cooling reduction obligations. These measures are to be included in the national contingency plans of the member states, which will report periodically to the commission on the degree to which they are meeting their targets.

The regulation is an exceptional measure that, as such, will remain in effect for one year, subject to extension by the commission in light of international developments.

The text of the new regulation is available at the following link.

CSR Directive and new sustainability reporting to be implemented soon

The process of amending the Non-Financial Reporting Directive (NRFD) that began in 2021 is coming to an end: the new Corporate Sustainability Reporting Directive (CSRD) is in fact expected by the end of summer 2022, and member states will have 18 months to transpose it and adapt their domestic laws to the new reporting rules.

A first change concerns the terminology used, as the previous term "non-financial reporting" will be replaced by the more explicit term "sustainability reporting." However, the changes extend further, starting with the scope of application: the new directive will be applicable to large companies, banks and insurance companies, both listed and unlisted, in addition to all listed companies, with only micro-listed companies being excluded. Furthermore, company groups will also have to prepare a consolidated sustainability report, while subsidiaries will be exempt from this obligation to the extent that the report is prepared by the parent company in accordance with European standards or equivalent rules.

Subsidiaries belonging to non-European groups will also be required to prepare the new report if their annual turnover generated in the EU territory is greater than EUR 150 million. It is estimated that the number of companies affected by the NRFD will be increased from the previous 11,000 to about 49,000.

The new sustainability reporting will have to be included in a special section within the management report, thus becoming an integral part of the financial statements. The report will have to be prepared in accordance with the principle of dual materiality, so that stakeholders can fully understand not only the impacts that the company produces toward sustainability matters, but also how these affect the company's economic performance. In addition, an important new feature introduced by the directive concerns intangible assets, such as human, social and relational capital, which will have to be included within the sustainability report to the extent that they are not included within the balance sheet.

The report will have to be prepared in electronic form, using the XHTML and XBRL languages, as is already the case for the financial statements.

The scope of reporting is also expanded, as the reporting requirement will have a greater focus on the value chain of companies, requiring them to report on scope 3 emissions and the protection of working conditions and, in general, the human rights of workers along the value chain. The financial statements will have to be audited for compliance by a licensed and independent certifier. Initially this will be a limited assurance audit, with the prospect of achieving reasonable assurance as quickly as possible.

The due date for the new reports will be 1 January 2024 for companies that already produced the non-financial Statement, and 1 January 2025 for companies that did not produce such a document but will fall under the scope of the new directive.

The text of the CSR directive is available at the following link.

Soil: sustainable management and energy production. The EU Strategy

In line with the EU Soil Strategy 2030, to achieve the objectives of the European Green Deal, such as climate neutrality, food security and water protection, the commission intends to present a specific legislative proposal on soil health by 2023.

The commission has therefore opened a consultation in view of the legislative proposal to ensure the same level of protection for soil as for water, the marine environment and air in the EU. The consultation is intended to complement the commission's impact assessment on soil health legislation: In the questionnaire, among other questions, respondents are asked to indicate the extent to which unsustainable energy production contributes to soil degradation.

The questionnaire, which will be open until 22 October 2022, is aimed at all citizens and at stakeholders with specific expertise in the field.

More information can be found at the following link.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.