Russia’s war with Ukraine taking energy toll on Italy
MILAN — Italian paper mills that make everything from pizza boxes to furniture packaging ground to a halt as Russia’s war in Ukraine has sent natural gas prices skyrocketing.
And it’s not just paper. Italian steel mills turned off electric furnaces last week. And fishermen, facing huge spikes in oil prices, stayed in port, mending nets instead of casting them.
Nowhere more than in Italy, the European Union’s third-largest economy, is dependence on Russian energy taking a higher toll on industry. Some 40% of electricity is generated from natural gas that largely comes from Russia, compared with roughly one-quarter in Germany, another major importer and the continent’s largest economy.
Over the past decade, Italy’s dependence on Russian natural gas has surged from 27% to 43% — a fact lamented by Premier Mario Draghi. It will take at least two years to replace, his energy transition minister says.
Even before the war,
Europe was facing a serious energy crunch that drove up costs for electricity, food, supplies and everything in between for people and businesses. Ever higher prices tied to fears that the conflict will lead to an energy cutoff are hitting the continent much harder than the U.S. because it imports so much of its oil and gas from Russia.
European leaders meeting Friday in Versailles outside Paris discussed ways of easing the pain.
Draghi pushed to diversify gas sources, develop renewables and introduce a cap on natural gas prices. He said his foreign minister, who recently visited Algeria and Qatar, was working on new gas markets.
The urgency of Italy’s energy situation is trickling down to consumers in the form of higher heating bills, and more recently, rising prices at the pump, with gasoline nearing $6 a gallon this week.
Last week, fisherman squeezed by higher gasoline prices decided not to trawl the waters off Italy, with fishing boats along the peninsula moored in port.
At current prices, it costs $1,300 a day to run boats out of Fiumicino, leaving little room for profits after plying the sea for cod, sea bass, sea bream, octopus, squid and shrimp, said Pasquale Di Bartolomeo, who runs one of 22 boats out of the port near Rome.
Restaurants, he said, will make do with frozen seafood or farm-raised fish.
Italy decreased its gas consumption from 2010 to 2014, thanks to the addition of subsidized wind and solar power, but reliance on natural gas pushed back up again in recent years as it took polluting coal power plants offline.
They have been substituted mostly by natural gas as renewables stalled, partly because of Italy’s bureaucracy that has kept many investors away, said Matteo Di Castelnuovo, an energy economist at Milan’s Bocconi University.
“Italy clearly underestimated the problem of increasing its gas consumption the last few years, and with that, its dependence on Russian gas,” he said.
The government has pledged to simplify red tape and recently approved six new wind parks that will produce more than 400 megawatts of energy.