Italy Subsidies

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Italy—14.6 billion Euros in 2016

Italy directly and indirectly subsidized fossil fuels for 14.8 billion Euros in 2016, and 13.2 billion Euros in 2015. Subsidies are given to both production and consumption, which include exemption from paying excises, discounts and discounted financing. The top sector receiving subsidies is transportation.

For the first time, the Italian government proposed an environmental component to evaluate and revise excise taxes as part of the 2012 tax reform. This was a major turning point in the country’s environmental policy because such a tool has enormous potential not only in reducing greenhouse gases (GHG) emissions as well as accelerating the shift to a greener energy supply. With article 15 of the 2012 tax reform, the Italian government proposed a revision of accise –or excise- on energy products on the basis of environmental criteria. The idea was to introduce new rates, proportional to generated emissions, which curb the use of dirtier energy sources while incentivizing the use of renewables. This is a very important policy area for Italy because energy production and consumption account for about 60% of all GHG emissions

In March 2014, the law was finally approved and mandated the fiscal revision of excise. A roundtable of experts started in 2015 and in late 2016 the Italian Minister for the Environment, Land and Sea published a report with a detailed description and evaluation of the current environmental impact of each subsidy/excise rate. At last, this catalogue provides some clarity into a very complex and confusing domain. This report is essential because it establishes a baseline of what is currently working and what is not: previously the environmental impact of such subsidies and excises was unknown. Unfortunately, the law has not been implemented yet and fossil fuel subsidies live on.

As part of the European Union and the G20 framework, the Italian government committed to the total phase out of inefficient fossil fuel subsidies by 2025. In fact, the EU repeatedly solicited Italy to report on and reduce fossil fuel subsidies by 2020. A harsher request from the EU might convince the Italian government to act.

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