Policies for climate change mitigation : state of the art of energy efficiency in Italy

1. Policies for climatechangemitigation: state of the art of energyefficiencyin Italy IPA Study Tour – Turkey Memo, 28 April 2016

2. Framework and objectives The EuropeanClimate-Energy Packages

3. ItalianstrategicDocuments on environment/ energy Maindocuments are: • National Energy Strategy (SEN MinisterialDecree of 8 marzo 2013) • Green policies are placed in a broaderenergyperspective and lines of action are set in the medium term (detailed scenario until 2020) • 7 priorities of action are set to improve gas and electricitymarkets, infrastructuresand prices • CO2 Reduction Plan (approved by the InterministerialCommittee for Economic Planning- CIPE on March 2013) • Indicates a complete set of measures to be used for decarbonization. • It is a document to be matched with the SEN • Next: National Plan for Climate and Energy (within the EuropeanStrategy for the ”Energy Union”) • Forecast until 2030 • Initialcontributions and projectionsatthe end of 2016

4. Trackindicated by the SEN until 2020

5. Whathappeneduntilnow? • In the last years, the biggereffort of green policies, atleast from a financialperspective, hasbeenfocused on electric production from renewableenergysources. • Twosimple data summarizefacts: at present, electricfinalconsumptionfrom RES is at around 35%, far beyond 26% thatwerecentlyaimed to reach by 2020! • In financialterms, alsofollowing the strong expansion of photovoltaicenergy, the total value of the nationalincentives for electricrenewableenergiesreached a cost of around 12.5 billionEuros per year.

6. Whataboutoutsideelectricsector? • Far lessexplosivehasbeen the growth of the twoother green instrumentsnecessary to focus on targets: thermalrenewablesources and energyefficiency. • On energyefficiency, the National Energy Strategyunderlines the “potential to exploit”: by 2020 we can reachenergysavings for around 15 MTepcompared to trend projection of energyconsumptions. We are moving in suchdirectionbutweneed to speed up.

7. Whataction? The Italiandistibution of energyconsumtionindicatesthatitisnecessary to effectively cover allsectors Source: Ministry of Economic Development/SEN

8. Strategic documents on energyefficiency Energy efficiencypotentials and policy tools are described in details in threemaindocuments, developed by the National Agency for New Technologies, Energy and Sustainable Development (ENEA): PAEE (Plan of Action for Energy Efficiency) referred to allsectors STREPIN (Strategy to Requalify National Buildings) PANZEB (National Plan of Action to IncreaseNear Zero Energy Buildings)

9. Focus on buildingsMain data: • In Italy there are 14 millionbuildings. More than 60% of themwasbuiltbefore 1976 (yearreferring to the first legislation on energyefficiency – Law n. 373/1976) • 90% consist of residentialbuildings. • 10% consistof buildings of otheruse (PA, officies, commercial, services) of which: • n. 51.000 schools with a totalsurface of 73 millionsquaremeters; • n. 3.000 buildingsowned by the Central Governmentwith a totalsurface of 14 millionsquaremeters.

10. Focus on buildings.Maintools: 1. Higherstandards and more tight legislation 2. Fiscal benefits 3. New incentives for the Public Administation (PA): 3/a.Heating and CoolingSupportScheme (Conto Termico) 3/b. Programme for RequalifingBuildingsowned by the Central Government 3/c. Kyoto Fund

11. 1. Legislative standards • New energyrequirementshavebeenestablished for buildings (Law Decree n. 63/2013 and MinisterialDecree of 26 giugno 2015) • In particular, from 1 january 2021 allnewlyconstructedbuildingsshall be identifiedas “Near Zero Energy Buildings” (NZEB): suchtarget hasbeenanticipated to 31 December 2018 for new buildingsoccupied and/or owned by Public Administations Projections: • Need to stenghtensupport and incentive measures for constructionof NZEB • Applicationof Minimum EnvironmentalCriteria (MEC) in public procurement (mandatorywith the Law 50/2016-Codice appalti) • MEC forsostenability in buildings (materials, water consumption, indoor air quality..)

12. 2. Fiscal benefits • Fiscal benefits for interventions of energyefficiencyhavebeendisciplined by the ItalianFinancial Law for 2007. Basically,a share of the theinvestments in energyefficiencyisdetracted from personal incometax for individuals or on business incometax for companies (tax credit iscurrently 65%). • Maininterventionscovered by suchtax benefits are the following: • Improvements in existing building envelopes (thermalinsulation of walls, roofs and floors, windows, installation of solar screens); • Replacementof existingsystems for winterheating with more efficientones (condensing boilers); • Installation of solar panels for hot water production. • Fiscal benefits are consideredsuccessful: on an annualbasistheypushover 3 billionEurosinvestments. • Prospects: • Need to differentiate fiscal benefits in order to promote best interventions in terms of energysavingsconsideringfull technical life-cycle of interventions.

13. 3/a. Incentivies for the PA: Heating and CoolingSupportScheme (Conto Termico) • The Heating and CoolingSupportSchemesupports, besidesrenewablesources, interventions of energyefficiency for buildingsowned by the PA. • Practically, suchsupportschemecovers the sameinterventionsinterested by the fiscal benefits for private buildings (condensing boilers, windows, thermalinsulation) . • Such incentive consists of non-repayablecontributionswhich cover a share of the investmentdepending on the kind of interventionadopted. • The totalexpenditure for inteventionsregardingenergyefficiency of buindingsowned by the PA can reach a maximum of 200 millionEuros per year. • Prospects: • The Heating and CoolingSupportShemehasbeenrecentlyrevised with the introduction of simplifiedaccess to such incentive for the PA (for instance, the possibility of "booking" the incentive and increasedcontribution up to 65%)

14. 3/b. Incentives for the PA: the Programme for RequalifingBuildingsowned by the Central Government(CG) • EU Directive n. 27/2012 on energyefficiencyestablishesthateachyear, until 2020, 3% of the surfacecovered by buildingsowned by the CG shall be restructured. The totalsurface to be requalifiedamounts to 2,5 millionsquaremeters. • Energy requalificationiscarried out following a "Programme of interventions"yearlydefinedbased on requestsbrought by interestedPAs. • In 2014-2015 havebeenpresentedprojects for interventions for an amount of around70 millionEuros. The ItalianMinistry of Environment contributes with 21,5 millionEuros (deriving from CO2 auctions of the EU-ETS System). • Prospects: • In order to start interventions, aninterministerialdecreeidentifingcriteria and modalities for the implementation of the Programmeneeds to be finalized.

15. 3/c. Incentives for the PA: Kyoto Rotating Fund for Schools • The Kyoto Fund financesenergyrequalification of schools with loansat a preferential rate of 0,25%. • Wehavealreadylaunched a first tender (June – September 2015). • 103 millionEurosrequested. • n.190 applications for interventions of energyrequalification. • n.400 applications for energy audits. • A second tender iscurrentlyrunning (open since April 2016) . • 247 millionEurosavailable.