The socio-economic impacts of energy transition in Europe The socio-economic impacts of energy transition in Europe Table of contents Preface 8 Contributions from the Scientific Committee 14 The study’s ten key findings 24 Executive Summary 30 Part 1 The reference context of energy transition in Europe 46 1.1 The policy framework empowering energy transition 50 1.1.1 The international and European policy targets 50 1.1.2 The transposition into Italian, Spanish and Romanian 55 climate and energy plans 1.2 The socio-economic context favouring energy transition 68 Part 2 The role of electricity towards the transition 78 2.1 The contribution of the electric carrier for energy transition 82 2.1.1 The role of electrification in decarbonizing the economy 86 and improving air quality 2.1.2 The positive impact of electrification on noise pollution 88 2.1.3 The opportunity to improve resilience of the energy system 90 through electric carrier 2.1.4 The efficiency gains enabled by the electric carrier 92 2.1.5 The virtuous relationship between the electric carrier 94 and digitalization 2.1.6 Innovation in lifestyles and industrial processes unleashed 97 by electrification 2.1.7 The electric carrier’s support towards the Circular Economy 99 2.2 Complementary paths to energy transition 102 Part 3 An innovative assessment model for socio-economic 106 impacts of energy transition in Europe, with a focus on Italy, Spain and Romania 3.1 The methodology for the assessment of socio-economic 110 impacts of energy transition 3.2 The effect of energy transition on industrial production 131 3.3 The effect of energy transition on employment 137 3.4 The effect of energy transition on air quality 144 3.4.1 The impact assessment of energy transition on air quality 145 3.4.2 The impact assessment of energy transition on human health 150 and cost saving Part 4 Policy proposals and recommendations to make the energy 154 transition “just for all” 4.1 Unfolding benefits of energy transition along several 158 dimensions 4.2 Socio-economic challenges of energy transition emerging 162 from the assessment model 4.2.1 Avoiding the loss in industrial competitiveness 163 4.2.2 Avoiding negative distributive effects across different 168 socio-economic dimensions 4.3 Policy proposals to manage the transition, making it “just for all” 176 Bibliography 194 Table of figures about countries of interest: 202 Italy, Spain and Romania 6 Colophon This study was elaborated by The European House – Ambrosetti Juan José Alba Rios for Enel and Enel Foundation. Head of Regulation Iberia, Endesa Daniele Andreoli The research study has foreseen the participation Head of Flexibility Solutions, Enel X of an Advisory Board composed by: Chiara Dalla Chiesa Francesco Starace Head of strategic analysis and portfolio optimization, Enel X Chief Executive Officer and General Manager, Enel Daniel Duma Carlo Papa Sustainability and Institutional Affairs, Enel Romania Director, Enel Foundation Luca Meini Simone Mori Head of Circular Economy – Innovation and Sustainability, Enel Head of Europe and Euro-Mediterranean Affairs, Enel Alessio Menegazzo Valerio De Molli Head of Institutional Affairs and Sustainability, Enel Romania Managing Partner and Chief Executive Officer, Emanuela Sartori The European House – Ambrosetti Head of Market Analysis and Competitors, Enel X The study has benefitted also of a Scientific Committee The European House – Ambrosetti working group composed by: has been comprised of: Enrico Giovannini Lorenzo Tavazzi Professor of Economics and Statistics, Università di Roma Associate Partner and Head of Scenarios and Intelligence «Tor Vergata»; Spokesperson, Alleanza Italiana per lo Sviluppo Department, Project Leader Sostenibile – ASviS; former Chairman, ISTAT and Minister of Benedetta Brioschi Labour and Social Policies Consultant, Project Coordinator Michal Kurtyka Alessandro Viviani State Secretary, Ministry of Environment – Poland; President Consultant COP24 Francesco Galletti Adair Turner Analyst Chairman, Energy Transitions Commission; former Chair, United Kingdom Climate Change Committee Arianna Landi Analyst Nicolò Serpella Special thanks to: Analyst Fatih Birol Ines Lundra Executive Director, International Energy Agency Assistant Laszlo Varro Chief Economist, International Energy Agency We would like to thank the following for their valuable Szilvia Doczi contributions and suggestions: Energy Policy Expert, International Energy Agency Joaquín González-Blas Sánchez Energy Manager, Alcoa, Spain The following have contributed to the research on behalf of Enel Dumitru Chirita and Enel Foundation: Chairman, ANRE – Romanian Energy Regulatory Authority Daniele Agostini Benjamin Denis Head of Energy and Low Carbon Policies, Enel Advisor, European Trade Union Confederation Giuseppe Montesano Vladimír Dlouhý Deputy Director, Enel Foundation President, Czech Chamber of Commerce and International Mariano Morazzo Advisor, Goldman Sachs; former Ministry of Industry and Trade, Head of Climate Change and Renewable Energy Policies, Enel Czech Republic Mirko Armiento Christophe Dridi Senior Researcher, Enel Foundation General Manager, Dacia Automobile João Duarte Radu Dudau Deputy Director, Enel Foundation Co-founder and Director, EPG – Energy Policy Group Part 1 Part 2 Part 3 Part 4 7 Paolo Falcioni Director General, APPLiA – Home Appliance Europe Gianna Fracassi Segretario Generale, Confederazione Generale Italiana del Lavoro – CGIL Fabio Inzoli Head of Department of Energy, Politecnico di Milano Constantin Isac President, UNTRR - Uniunea Naţională a Transportatorilor Rutieri din România Michael Liebreich Founder and Senior Contributor, Bloomberg New Energy Finance Artur Lorkowski Special Envoy on Climate of the Ministry of Foreign Affairs of Poland; member of the Polish Presidency Team, COP24 Ion Lungu Chairman AFEER – Association of electricity suppliers in Romania Paola Mazzucchelli Secretary General, EUREC – European Renewable Energy Research Centre Zoltan Nagy Vicepresident, Romanian Energy Regulatory Authority Franck Néel President, Oil & Gas Employers’ Federation, Romania Raffaele Petriccione Director General, DG CLIMA – European Commission Riccardo Sanna Coordinatore dell’Area Politiche di Sviluppo, Confederazione Generale Italiana del Lavoro – CGIL Antonio Sileo Research Fellow, IEFE – Bocconi University Gaetano Thorel CEO, Groupe PSA Italia Roberto Vavassori Business Director, Development and Marketing, Brembo; Chairman, CLEPA – European Association of Automotive Suppliers Fernando Ferrando Vitales President, Fundación Renovables Aurelio Ramirez Zarzosa President, Green Building Council Spain The contents of this report refer exclusively to the analysis and research carried out by The European House – Ambrosetti and represent its opinion which may not coincide with the opinions and viewpoints of the individuals interviewed. 8 Preface The new President of the European Commission, Ursula von der Leyen, said in her speech to the European Parliament: “what is good for the planet must also be good for our citizens and our regions”. The need to act quickly to combat climate change, by decarbonizing our economy, grows more urgent every day; it is a clear goal and one toward which policy-makers and businesses are focusing their efforts. However, though we all agree on the goal, we are becoming more and more aware that the starting points and Francesco Starace speed differ from country to country. This is a fact that we have in front of us CHIEF EXECUTIVE every day, and one that has to be taken into account. OFFICER AND GENERAL MANAGER, ENEL Decarbonization is a great opportunity to modernize the European economy, revitalize the industrial sector and ensure sustainable, lasting growth. Technological progress has shown us that the reduction of emissions is technically feasible and economically advantageous. It is achieved through the “energy transition”: the gradual replacement of fossil fuels with renewables, thanks to the sharp drop in costs of the technologies, along with digitalization of the networks. As power generation is becoming increasingly cleaner, the gradual penetration of electricity into the energy system will enable us not only to decarbonize the historically most polluting sectors, but also to create value in new ways, by offering new services to the consumers who, more than ever before, are becoming the central focus of the energy system. What lies before us is a real opportunity: but it is fundamental that the energy transition is understood by everyone as a benefit and not a change that will be beneficial to some and detrimental for others. To achieve this, we need farsighted policies: it is increasingly obvious that only very wide-ranging measures, that combine advantages for climate, energy, industry and society can achieve this result. Europe has already shown its leadership in designing energy and climate policies that have made it a benchmark for the rest of the world. The most recent set of policies are the Clean Energy Package, which sets for 2030 a 40% reduction of greenhouse gas emissions, with respect to the levels of 1990; a 32% share of renewables in the EU’s gross final consumption; and a 32.5% energy efficiency; and the Mobility Package, which is paramount for the promotion of sustainable mobility. Our country, Italy, is also doing its part: it has already reached its European targets for 2020, and is now working, like the other Member States, to define its Integrated National Energy and Climate Plan. Part 1 Part 2 Part 3 Part 4 9 We need to