The European Union’s new COVID-19 recovery fund gives Italy an opportunity to build a stronger and more resilient post-pandemic economy. But realizing this potential will require fundamental changes in economic policymaking and implementation, underpinned by Italians’ broad consensus in favor of fast and deep decarbonisation.
ROME – Italy was the first European country to implement a COVID-19 lockdown, and subsequently it managed the summer months relatively well. But we are now seeing the effects of a second wave, similar to that in other European countries, and we cannot let our guard down.
Italians are doing their best to deal with this deadly crisis, wearing masks everywhere and, for the most part, respecting restrictions. We cannot let our sacrifices go to waste by returning to our pre-pandemic normality.
Italy now has an opportunity to build a stronger, greener, and more resilient post-pandemic economy, buoyed by higher employment and improved public health. By emphasising the health and well-being of its people, the country can continue to set a global example as it prepares to assume the G20 presidency and co-host the United Nations’ COP26 climate summit in Glasgow in 2021.
Whether Italy achieves this goal will depend on how it uses the €209 billion ($248 billion) stimulus from the European Union’s new COVID-19 recovery fund. A new report by more than 30 Italian economists and analysts, coordinated by energy consultancy REF-E, estimates that if Italy spends 80% of the EU funds on reducing carbon dioxide emissions – and not on expanding its gas infrastructure – its GDP could be one-third higher by 2030 than it would have been without the money. Moreover, the working-age employment rate would increase from 57% today to 68% by 2030, benefiting young people in particular.
Alternatively, Italy’s recovery money could become stuck in the gargantuan and fragmented decision-making processes that have hamstrung the economy’s low-carbon transformation for years. Should that happen, the country will face another decade or more of lackluster GDP growth, and worsening risks related to climate change and exposure to viruses.
The choice should be a no-brainer. The Italian economy could shrink by 9% this year, with investment falling to just 16% of GDP – from 18.4% in 2019 – hitting jobs and incomes, increasing inequality, and prompting people to save rather than spend. At the same time, Italy’s greenhouse-gas emissions are expected to decline by 7.5% in 2020, setting a baseline from which we could continue cutting pollution rather than bouncing back to pre-pandemic levels.
Italians want to pursue a greener, healthier future – even more so than people in the United States, the United Kingdom, the Netherlands, France, and Poland, according to a recent survey commissioned by the More in Common initiative. Seventy-seven percent of Italians surveyed expressed support for a European “Green Deal” involving “large-scale government investments to make our economy more environmentally friendly,” while 81% agreed that the decrease in CO2 emissions during the COVID-19 lockdown “shows that we can reduce our impact on the environment if we really want to.” But nearly two-thirds of Italians said the government is not doing enough to fight climate change.
Achieving a sustainable future will therefore require fundamental changes in Italy’s economic policies and implementation, underpinned by a broad consensus that fast and deep decarbonisation goes hand in hand with growth, health, stability, and resilience. Our inability to approve and develop green projects until now reflects the lack of a coherent political vision and strategy. But as our battle against COVID-19 has shown, Italians can successfully unite to fight a common threat.
Building a more resilient green economy requires the right investments, with priority given to low-risk carbon-free projects that guarantee long-term employment, health, and equity. Renewables, energy-efficiency schemes, electric-vehicle charging stations, and clean modes of transport will advance these goals; new gas pipelines will not.
Green hydrogen, made from renewable energy, could be a game changer for hard-to-abate sectors such as steel and long-distance freight transport. Europe’s largest steel complex, in the southern Italian city of Taranto, is currently struggling to stay afloat, but could secure a long and sustainable future by becoming the poster child for zero-carbon steel.
Such investments make clear economic sense. Italy spends €19 billion per year on fossil-fuel subsidies and spent a net average of €44 billion annually on fossil-fuel imports over the past decade. In 2018, more than half of all loans from Italian banks – 14% of their total assets – were tied up in carbon-intensive sectors, according to the Bank of Italy. With the low-carbon transition already underway, and financial institutions and firms worldwide committing to decarbonise and divest from fossil fuels, these banks risk being left with stranded, devalued assets unless Italian policymakers help to accelerate the shift.
A faster green transition will also save lives. The European Environment Agency estimates that about 76,000 Italians died prematurely in 2016 as a result of air pollution, one of the highest rates in Western Europe. As of 2020, five northern Italian cities are among Europe’s top 10 for average health costs from air pollution, including premature death, medical treatment, and lost working days, according to a new study. Recent research suggests that people exposed to air pollution are more at risk of suffering the worst effects of respiratory illnesses like COVID-19. Moreover, the Mediterranean region, including Italy, will likely be more affected than other parts of Europe by global warming and the migration that it fuels.
After the economic blow delivered by COVID-19, Italy can’t afford to keep pumping public money into polluting industries. Instead, we must redirect that capital to create high-quality jobs in sustainable sectors – especially for young people and women, the groups hit hardest economically by the crisis. By channeling its long-standing innovative and engineering prowess, Italy can secure la bella vita verde. (Project Syndicate)
•Enrico Giovannini, a former Italian Minister of Labour (2013-14) and head of the Italian National Institute of Statistics, is dpokesperson for the Italian Alliance for Sustainable Development (ASviS).