Energy Efficiency Policies and Measures in Italy

Energy Efficiency Policies and Measures in Italy ODYSSEE- MURE 2010 Monitoring of EU and national energy efficiency targets ENEA Rome, November 2012

Contacts: Giulia Iorio Pier Giorgio Catoni ENEA Lungotevere Thaon di Revel, 76, Rome Tel.: +390630483674 / Fax: 0630483657 E-Mail: giulia.iorio@enea.it piergiorgio.catoni@enea.it www.enea.it The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.

Contents Page 1 Executive Summary...1 2 Key messages...3 3 The Background to Energy Efficiency...6 3.1 Overall economic context...6 3.2 Energy consumption trends: by fuel and by sector...7 3.3 The policy background to energy efficiency...8 4 Overall Assessment of Energy Efficiency Trends...11 4.1 Overall trends in energy intensity...11 4.2 Industry...12 4.3 Households...14 4.4 Services...16 4.5 Transport...18 4.6 Assessment of energy efficiency/savings through ODEX: total and by sector...21 4.7 CO 2 -emissions trends: total and by sector; role of fuels substitutions and of energy efficiency...25 5 Energy efficiency measures...27 5.1 Recent Energy Efficiency Measures...27 5.2 Patterns and Dynamics of Energy Efficiency Measures...30 5.3 Innovative Energy Efficiency Measures...33 5.4 Energy efficiency measure evaluations...35

5.4.1 Semi-quantitative Impact Estimates of Energy Efficiency Measures... 35 5.4.2 Lessons from Quantitative Energy Efficiency Measure Evaluations... 40 6 National Developments under the EU Energy Efficiency Directive and the 20% Energy Efficiency Target of the EU... 42 Annex 1: Energy Efficiency Measure Summary by Country Annex 2: Country Profile

Index of Figures Page Figure 3.1: Macro-economic developments...6 Figure 3.2: Final energy consumption by energy source...7 Figure 3.3: Final energy consumption by sector...8 Figure 4.1: Energy intensities...11 Figure 4.2: Energy consumption of industry by fuel...12 Figure 4.3: Energy consumption of manufacturing sector...13 Figure 4.4: Energy consumption of industry by branches...13 Figure 4.5: Energy intensity by industrial branches...14 Figure 4.6: Energy consumption of households...15 Figure 4.7: Energy consumption of households by sources...15 Figure 4.8: Energy consumption of households by end-use...16 Figure 4.9: Energy consumption of services by energy source...17 Figure 4.10: Final consumption, energy intensity and electricity of services...17 Figure 4.11: Energy consumption of services per employee...18 Figure 4.12: Energy consumption of transport sector by mode...19 Figure 4.13: Energy consumption of road transport...19 Figure 4.14: Energy consumption trends of road transport...20 Figure 4.15: Energy consumption of passenger transport by mode...21 Figure 4.16: Energy efficiency index...22 Figure 4.17: Energy savings by sector...22 Figure 4.18: Energy efficiency in industry sector...23 Figure 4.19: Energy efficiency in transport sector...23 Figure 4.20: Energy efficiency in households...24

Figure 4.21: CO 2 emissions by sector... 25 Figure 4.22: CO 2 emissions variations in steel production... 26 Figure 4.23: CO 2 emissions variations in households... 26

Index of Tables Page Table 3.1 Yearly growth rate of GDP, industry value added, tertiary value added and private consumption...6 Table 4.1: Variations in primary and final energy intensities in Italy...12 Table 4.2: Variations in energy consumption of transport by mode...18 Table 4.3: Variations in energy consumption of goods transport by mode...20 Table 4.4: Unit consumption variations by road transport mode...24 Table 5.1: Annual energy savings expected in 2010 and 2016 and achieved in 2010...27

1 Executive Summary In the period 1990-2010 both primary and final consumption increased in Italy: +12.3% and +17.8%, respectively. After a steady growth, since 2006 primary and final consumption decreased; only in 2010 there was an increase. The corresponding energy intensities fell: primary energy intensity by 6.1% and final energy intensity by 1.0%. The trends were quite stable until 2006, in the last years there were a decrease for both intensities. The driving sector is tertiary, +116.0% of energy consumption, followed by transport sector, +26.2%, in 1990-2010. The industrial sector had a cut in energy consumption, -13.2%. All sectors had a reduction in energy consumption in the last years, only in the 2010 a recovery in energy consumption is shown. Electricity consumption displayed the high increase, +38.3% in 1990-2010, followed by gas, +33.7%. Oil products and the coal decreased in 1990-2010, -8.2% and -39.7%, respectively. The renewable energy sources had a highest growth rate: +539.6% in 1990-2010, +9.7%/y, with a quota of 4.3% of energy consumption in 2010. In the last years, 2005-2010, all energy sources decreased except for the renewable energy sources (+161.5%). The energy efficiency, measured by ODEX index, improved by 15.1% in the period 1990-2010. The households sector contributed the most to this result with an improvement of 34.0%, followed by industry with +13.8%, while transport sector showed a slow progress of 2.6%. The improvements for industry and transport were especially observed in the last years. Households keeps on increasing the energy efficiency, even if more slowly in the last years because of a larger diffusion of electrical appliances such as air-conditioner. Transport sector showed the bigger and faster increases in 2000-2010, +2.1%, caused by the efficiency improvement in cars transport due to new cars. The energy efficiency in the industrial sector is speeding up in the last years: +10.7% in 2000-2010 and +6.8% since 2005. This acceleration is due to those sectors that in the last years showed an increase in energy efficiency after huge losses in the years 90s and in the first years of 2000; chemicals and steel continue to be the most efficient sectors. The institutional actions go to the improvement of energy efficiency, the reduction of greenhouse gas emissions and the promotion of the renewable energy sources. In 2010 Italy submitted the National Renewable Energy Action Plan, in implementation of 2009/28/EC Directive, that defines the targets for 2020 and the measures. The D.Legs. 28/2011 defined the tools, mechanisms and incentives (green certificates and 1

other incentives) necessary for achieving the targets up to 2020. The Plan sets the targets of 17% of renewable energy sources in gross final consumption and 10% of renewable energy sources in final consumption of transport sector. The Decree 15 th March 2012 of the Ministry of Economic Development sets for each Italian Region the targets of gross final consumption, electricity and heat from renewable sources up to 2020. In 2011 the second National Energy Efficiency Action Plan was submitted. It reports the targets achieved in 2010, 3.6% of energy savings against an expected energy savings of 3%, and updates the measures to improve the energy efficiency: minimum required standards for new buildings and restructured buildings in the residential and tertiary sectors, incentives for high efficiency motors and inverters, for mechanical vapour compression and for high-efficiency cogeneration for industry sector, incentives to replace the fleet with fuel-efficient and low-emission vehicles.

2 Key messages Energy and environment are the focus of the new National Energy Strategy. The strategy has been broken down into seven priorities each with its specific support measures, in action or to be defined: energy efficiency, ideal instrument for pursuing all objectives and it s expected to exceed the European targets; competitive gas market, integrated with European markets and with prices aligned them, and with the possibility of becoming the main southern European hub sustainable development of renewable energy, overcome the European targets 20-20-20, while at the same time keeping energy bills under control developing the electricity market fully integrated with the European market and infrastructure restructuring the refining sector and the fuel distribution network sustainable hydrocarbons production in Italy modernising the system of governance of the sector, with the aim of making decision-making processes more effective and more efficient. These priorities come from the main objectives of the national strategy: reduce significantly the energy cost gap for consumers and businesses by bringing prices and costs in line with European levels. achieve and exceed the European targets established by 20-20-20 package. continue to improve the security of supply, especially in the gas sector, and reduce dependency on imports. encourage sustainable economic growth by developing the energy sector. Energy efficiency is one of the top priorities of the new energy strategy because it contributes to the achievement of all targets: the main policy measure is a wide-ranging programme that makes it possible to surpass Europe s 2020 targets and achieve a position of industrial leadership. 3

The programme aims to save additional 20 Mtoe of primary energy and 15 Mtoe of final energy; avoid about 55 million tonnes of CO 2 emissions annually; save about 8 billion euro each year in fossil fuel imports. On the basis of the potential efficiency, existing and new instruments will be used to achieve the targets: stronger minimum and legal standards, especially for the construction industry and the transport sector; extension of the timescale for tax deductions, mainly for the civil renovations; introduction of direct incentives for government and civil service initiatives because they cannot use the tax deduction mechanism; white certificates. Renewable energy sources are a core element in achieving the goals of the energy strategy. The basic decisions are to: exceed the European 20-20-20 targets; achieve economically sustainable development in the sector; give preference to technologies with greater spin-offs for the sector and for the Italian economy; gradually integrate electricity from renewables with the electricity market and grid. In terms of quantitative targets, the intention for renewables is to achieve a 20% of gross final consumption (compared with the European objective of 17%), about 24 Mtoe of final energy. This will enable a reduction up to 50 million tons of CO 2 emissions. More specifically: In the electricity sector, the target is to develop renewable energy sources so that they account for 36-38% of final consumption, which equals to 11 Mtoe. This would make production from renewables the leading component in the electricity generating mix in Italy, at par with or exceeding gas. To achieve the targets by 2020, around 12.5 billion euro are being made available per year, over a 20-year period.

In the heating and cooling sector, the target is to bring renewables production up to 20% of final consumption by 2020 (compared with the 20-20-20 target of 17%). This would amount to about 11 Mtoe/year. It s introduced a support mechanisms, Heating Account, to incentivize small-scale projects, with up to 900 million euro per year being made available. The planned instruments to support district heating and district cooling networks will also be activated. In the transport sector, Italy has confirmed the 2020 consumption target of 10% for biofuels, which amounts to about 2.5 Mtoe/year, and will push for the adoption of second generation biofuels. 5

3 The Background to Energy Efficiency 3.1 Overall economic context Since 2007 the economy was in recession, only in 2010 there was a change in the trend: in 2010 the GDP grew by 1.1% against drops of 5.0% in 2009 and 1.3% in 2008. In the period 1990-2010 there was a growth of 20.0% with an yearly rate of 0.9% (+26.7% and +1.4% in 1990-2007). All the economic variables showed an increasing trend until 2007 followed by a drop: industry sector presented the largest cut, -5.0%, in 2007-2010. The tertiary sector, measured by value added, has became the driving sector: +8.0% in 2000-2010 against +1.5% in 1990-2000. The private consumption of households showed the highest growth: +23.2% in 1990-2010 with an yearly rate of 1.0%. The industrial activity went back to the levels of 1990: -0.5% in 1990-2010 but the collapse occurred in the last years: +16.2% in 1990-2007 against -5.0% in 2007-2010. Figure 3.1: Macro-economic developments (1990=100) 130 GDP 125 120 Industry Value Added Tertiary Value Added Private Consumption Households 115 110 105 100 95 Table 3.1: Yearly growth rate of GDP, industry value added, tertiary value added and private consumption 1990-2000 2000-2007 2007-2010 2000-2010 1990-2010 1990-2007 GDP 1.6 1.1-1.8 0.2 0.9 1.4 Industry Value Added 1.0 0.7-5.0-1.0-0.02 0.9 Tertiary Value Added 0.2 1.4-0.7 0.8 0.5 0.7 Private Consumption 1.7 0.9-0.6 0.4 1.0 1.3

3.2 Energy consumption trends: by fuel and by sector In 2010 the final consumption was 126.1 Mtoe with an increase of 3.3% compared with 2009. Over the period 1990-2005 the final energy consumption has been growing: +23.1% with an average annual growth rate of 1.4%. Since 2005 there has been a steady drop, -9.4%; only in 2010 the final energy consumption showed an increase. The consumption structure by fuel is showed in figure 3.2, with focus for 1990, 2000 and 2010. In 2010 the consumption of all energy sources, except oil products, are increased after four years of falling off, mainly to the economic crisis. The consumption of oil products keeps on decreasing, even if oil products are the mainly energy source. The gas covers 30.5% of final energy consumption while electricity 20.0%. The consumption of coal is stable around 4.5Mtoe (the drop in 2009 was due to reduction in steel production). The renewable energy sources keep on growing: in 2010 the consumption was 5.4 Mtoe and the annual growth rate in the last three years was over 30.0%. Figure 3.2: Final energy consumption by energy source (Mtoe) 160 140 120 16.7% 100 0.8% electricity 18.4% 1.4% heat renewable 2.6% 20.0% 4.3% 80 27.1% gas 30.3% 30.5% 60 40 50.2% oil products 45.9% 39.8% 20 0 5.2% 3.9% coal 2.7% Gas and electricity are the main energy sources with a steady growth in 1990-2010, +29.7% and +38.1%, respectively. Renewable energy sources had the greatest increase reaching 4.3% of final energy consumption. Even heat is becoming an important energy source. 7

In 2010 the energy consumption in industry is increased, +4.8%, after many years of declining. Households sector showed the bigger increase, +8.3%, followed by industry and services sector, +3.1%. Transport sector had a light decrease, -0.2%. Services sector had the main increase in the period 1990-2010, +116.0%, with a constant growth: share of 16.2% in final energy consumption in 2010 against 8.7% in 1990. Transport sector showed an increasing energy consumption until 2007 followed by drop: +26.1% in 1990-2010 and, in particular, +1.7% in 2000-2010 and -5.5% in 2007-2010. Households sector had an energy consumption stable around 25 Mtoe affected by climate; only in the last years it seems to increase. In 1990-2010 industry showed a decrease of 15.9% due to the high drop in 2003-2010, especially in 2008 and 2009. The result of these trend is showed in figure 3.3. Figure 3.3: Final energy consumption by sector 100% 90% 8,7% 11,5% 16,2% 80% 23,3% 19,7% 70% 22,2% Tertiary Households 60% Transport 50% 31,1% 33,6% 34,0% Industry 40% Agricolture 30% 20% 34,3% 32,7% 25,1% 10% 0% 2,6% 2,5% 2,5% 1990 2000 2010 3.3 The policy background to energy efficiency The National targets are the improvement of energy efficiency, the development of renewable energy sources and the reduction of greenhouse gas emissions, in line with European objectives 20-20-20.

To achieve these targets a mix of measures were activated in energy efficiency and in promotion of renewable energy sources. In energy efficiency, the measures are reported in NEEAP, 2007 and the update 2011: residential sector: minimum energy performance standards for new and existing buildings which undergo to major renovation, energy certifications of the buildings, tax deduction of 55% of the amount remaining payable by the taxpayer for actions in energy savings; tertiary sector: efficient heating, conditioning, lighting and public lighting, minimum energy performance standards for new and existing buildings which undergo to major renovation; industry: high efficiency motors/inverters, high efficiency cogeneration; transport sector: limit of emissions 140 gco2/km for new vehicles. Other energy efficiency measures are: industrial innovation project on energy efficiency, in Industry 2015 ; D.L. n. 134/2012 to promote sustainable mobility through low-emission vehicles: vehicles powered by electricity and the development of infrastructure networks for charging, hybrid vehicles; obligations to energy savings for electricity and gas distributor with more than 50,000 final users. The measures to achieve the target of 17% of gross final consumption from renewables are reported in the National Renewable Energy Action Plan. The measures are mainly normative minimum quota of 50% of domestic hot water to be produced using renewable energy sources for new and existing buildings to be refurbished; green certificates; minimum quota for electrical capacity installed using renewable energy sources for new and existing buildings to be refurbished; support for the creation of district heating and district cooling networks; minimum quota for transport biofuel use; 9

and financial solar thermal and photovoltaic feed-in tariff; all-inclusive tariffs; tax credit for district heating using geothermal or biomass energy. The Decree of the Minister of the Economic Development of the 15 th March 2012 set the targets that the Regions should achieve in the reduction of final energy consumption and increase of the share of energy from renewable energy sources.

4 Overall Assessment of Energy Efficiency Trends 4.1 Overall trends in energy intensity The primary energy intensity and the final energy intensity (i.e. ration between primary or final consumption and GDP) are the indicators generally used to assess the energy efficiency of the overall economy and final consumers. In 2010, the primary energy consumption was 0.139koe/E00, +2.1% compared with 2009 and -6.4% in the period 1990-2010. The primary energy intensity had quite steady values in the range 0.145-0.150koe/E00 until to 2005; in the last years there was a high decrease, as a consequence of drop in primary energy consumption: -5.9% in 2005-2010. Figure 4.1: Energy intensities 0,16 0,15 0,14 0,13 koe/e00 0,12 primary energy intensity final energy intensity 0,11 0,10 0,09 The final energy intensity has a quite similar trend to the primary energy intensity. In 2010 it was 0.103koe/E00, an increase of 2.2%koe/E00 compared with the previous year and a decrease of 3.1% in 1990-2010. The decreasing trends of primary and final energy consumption in the period 1990-2010 are mainly due to a growth rate of GDP higher than primary and final consumption: +20.0%, +14.4% and +15.1%, respectively. In 2003-2005 the primary and final energy consumption grew at the same rate of GDP, in the last years GDP, primary and final energy consumption were decreasing. 11

Table 4.1: Variations in primary and final energy intensities in Italy (%/year) 1990-2000 2000-2002 2002-2005 2005-2010 1990-2010 Primary intensity -0.3-0.8 1.4-1.2-0.3 Final intensity -0.1-0.9 1.6-0.9-0.2 4.2 Industry In 2010 the industry consumption is increasing again: 31.6Mtoe with an increase of 4.8% compared with 2009. Since 2003 the energy consumption was decreasing and the crisis has accelerated the drop: +10.6% in 1990-2003 and -23.9% in 2003-2010, with a reduction of 15.8% in 1990-2010. In 2010 there seems to be a new trend: a growth in industry production and in energy consumption. The provisional data for 2011 confirm the trend. In the last year also the industrial production has started growing again after two years of decrease. The energy intensity showed the same trend: +3.9% in 1990-2003, -16.1% in 2003-2010, with a cut of 12.8% over the period 1990-2010. The consumption of all fossil fuels decreased in the period 1990-2010: oil products -58.2%, coal -38.6% and gas -25.4%, while electricity increased by 15.3% becoming the main energy source (figure 4.2). Figure 4.2: Energy consumption of industry by fuel 45 40 Mtoe 35 30 25 20 15 10 heat electricity renewable gas oil products coal 5 0 The weight of electricity has risen from 25.4% in 1990 to 34.8% in 2010, while share of gas has fallen from 36.9% to 32.8% and oil products from 22.1% to 11.0%. Heat is becoming an important energy sources, 9.9% in 2010.

The industrial branches showed a growing energy consumption in the period 1990-2003. Since 2003 the consumption is decreasing (figure 4.3). The decreases are mainly due to improvements in energy efficiency and economic crisis. Figure 4.3: Energy consumption of manufacturing sector (1990=100) 190 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 textile non met. minerals machinery paper food primary metals chemicals manufacturing The main branches are primary metals, non metallic minerals and chemicals, machinery is increasing its weight. (figure 4.4). Figure 4.4: Energy consumption of industry by branches 100% 90% 80% 70% 60% 11,0% 5,7% 5,3% 5,9% 6,5% 5,7% 6,7% 6,5% 6,5% 7,6% 7,2% 7,9% 8,3% 8,0% 6,5% 6,8% 7,3% 7,2% 7,8% 8,3% 9,2% 5,7% 5,9% 6,2% 6,5% 6,6% 6,9% 6,9% 7,0% 6,4% 6,4% 6,7% 6,8% 6,7% 7,0% 6,8% 7,0% 7,3% 6,9% 8,1% 7,6% 4,9% 18,2% 8,7% 18,0% 17,4% 18,5% 17,6% 18,1% 17,7% 17,3% 16,5% 16,0% 15,0% 13,3% 13,4% 13,9% 13,6% 13,4% 13,1% 14,6% 12,7% 14,5% 13,2% 10,7% 11,0% 10,5% 10,9% 10,9% 11,5% 12,1% 12,5% 12,3% 12,5% 13,1% 13,2% 12,8% 13,1% 13,0% 13,3% 13,4% 13,7% 13,8% 13,9% 50% 40% 25,9% 26,3% 24,6% 24,6% 24,3% 24,4% 22,6% 23,3% 22,6% 21,3% 22,7% 22,9% 21,5% 21,3% 21,7% 22,4% 23,3% 22,3% 22,0% 19,2% 23,2% 30% 20% 19,8% 20,0% 20,8% 19,6% 19,1% 18,9% 19,0% 18,8% 19,2% 20,1% 20,1% 19,5% 19,7% 20,7% 21,9% 22,3% 20,9% 21,2% 22,6% 20,6% 18,8% 10% 0% 5,6% 6,8% 7,6% 7,1% 7,3% 7,6% 7,8% 7,7% 8,1% 8,9% 8,5% 9,0% 9,4% 9,1% 8,9% 8,5% 8,3% 8,2% 8,8% 9,9% 8,8% 5,3% 5,9% 6,4% 6,5% 6,8% 6,7% 6,6% 6,5% 6,7% 6,5% 6,6% 6,7% 6,8% 6,6% 6,3% 5,9% 5,7% 4,9% 4,4% 4,6% 4,2% textile food non met. minerals primary metals machinery chemicals paper other industries 13

In 2010 only primary metals, +26.4%, and machinery, +5.8%, had an increase in energy consumption. The other industrial branches kept on reducing the energy consumption: -4.6% for chemicals, -7.5 for textile, -0.9% for paper. The energy intensive branches had reduced their share from 68.8% in 1990 to 62.8% in 2010. The energy intensities showed the same trend of the energy consumptions (figure 4.5). In 2003-2010 all the branches had a decrease in energy intensity: -25.1% for chemicals, -39.2% for textile and -30.6 for food. Only primary metals showed an increase, +5.7%, due mainly to greater cut in valued added than energy consumption. Figure 4.5: Energy intensity by industrial branches (1990=100) 170 textile food non metallic minerals primary metals 160 machinery chemicals 150 paper manifacturing 140 130 120 110 100 90 80 70 60 50 4.3 Households In 2010 the energy consumption of households was 27.9Mtoe, +8.3% compared with 2009. All the energy sources increased with the exception of oil products (figure 4.6). Households consumption grew by 4.2% in the period 1990-2005, followed by a decrease of 5.5% in 2005-2007. Since 2007 the consumption increased at a high rate, +5.6% per year, mainly due to gas consumption.

Figure 4.6: Energy consumption of households 30 25 Mtoe 20 15 10 wood heat electricity gas oil coal 5 0 Gas and electricity are the main energy sources with 54.7% and 21.4%, respectively, of households consumption and had a steady growth over the period 1990-2010: 1.5%/y for gas and 1.4%/y for electricity. Oil products had a high drop in the period 1990-2010, -63.5%, and their share had fallen from 35.4% to 11.8%. Figure 4.7: Energy consumption of households by sources 100% 2,4% 2,6% 3,2% 3,0% 4,0% 3,6% 3,5% 4,0% 4,1% 4,3% 4,7% 4,7% 4,6% 4,5% 4,7% 4,7% 6,4% 5,8% 5,6% 8,1% 11,7% 90% 17,8% 16,9% 18,1% 18,4% 20,6% 19,0% 18,8% 19,9% 19,9% 20,1% 21,3% 20,6% 22,2% 22,2% 22,4% 21,7% 80% 0,0% 0,0% 0,0% 0,0% 23,1% 24,3% 23,8% 23,0% 21,4% 70% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,6% 0,6% 0,6% 0,6% 0,2% 0,2% 0,4% 60% 50% 40% 44,1% 47,4% 47,7% 50,1% 51,1% 52,0% 53,3% 51,9% 51,7% 51,2% 50,5% 50,4% 50,3% 53,8% 52,2% 53,7% 51,4% 52,9% 54,7% 54,3% 54,7% 30% 20% 10% 0% 35,4% 32,8% 30,6% 28,1% 23,9% 25,0% 24,1% 23,7% 24,1% 24,2% 23,2% 24,0% 22,7% 19,5% 20,1% 19,3% 18,4% 16,4% 15,6% 14,4% 11,8% 0,3% 0,3% 0,4% 0,4% 0,4% 0,4% 0,4% 0,5% 0,2% 0,2% 0,2% 0,3% 0,1% 0,1% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% coal oil gas heat electricity wood 15

Wood kept on increasing, even if the consumption is small: in 2010 it was 3.3Mtoe, 11.%, and non-commercial wood (i.e. the wood not involved in commercial transactions) is not included. In the last years, a small share of consumption came from heat (district heating). In 2010 all end-uses had a increase compared with 2009. Space heating took up 66.9% of energy consumption, followed by electrical appliance and lighting, 16.5%. (figure 4.8). Over the period 1990-2010 the consumption for space heating grew by 6.3% with a higher rate in the last years. Electrical appliances had a highest increase, +36.5%, with a slowdown in the last years. Water heating and cooking had a steady decrease. Air cooling had the most rapid growth but its consumption is small. Figure 4.8: Energy consumption of households by end-use 80% 70% 60% 50% space heating water heating cooking air cooling elect. appl. and lighting 40% 30% 68,9% 66,0% 66,9% 20% 10% 0% 16,2% 16,5% 11,1% 13,3% 10,9% 9,4% 6,7% 0,1% 6,6% 0,4% 5,9% 1,3% 1990 2000 2010 4.4 Services In 2010 the energy consumption of services sector was 20.5Mtoe. In the last years the growth is slowing down compared with the 90 years and the early 2000s. The main energy sources are gas and electricity that take up around 95% of energy consumption (figure 4.9). Gas and electricity had a steady annual growth rate over the period 1990-2010: +5.3% and +3.9%, respectively. The consumption of oil products had a great drop, -49.3%, and the quota had fallen from 17.8% to 4.2%.

Figure 4.9: Energy consumption of services by energy source 25 20 wood Mtoe 15 10 heat electricity gas oil 5 coal 0 Energy intensity, both total and electricity, had a steady growth over the period: a rapid growth in 1990-2005, 4.5%/y for energy intensity and 3.6%/y for electricity intensity, followed by a drop for energy intensity, -4.4%/y, in 2005-2007 because of the economic crisis, and an increase of 2.2%/y for electricity intensity. Since 2007 both intensities keep on growing. Figure 4.10: Final consumption, energy intensity and electricity of services (1990=100) 230 220 210 200 190 180 170 160 150 140 130 120 110 100 90 energy intensity electricity intensity final consumption 17

A high and fast increase was also showed in the consumption per employee (figure 4.11). Figure 4.11: Energy consumption of services per employee (1990=100) 280 cons/emp in services 260 240 220 200 elect/emp in services elect/emp in hotels, restaurants elect/emp in health, social sector elect/emp in administrations elect/emp in trade 180 160 140 120 100 80 4.5 Transport In 2010, the energy consumption of transport sector was 38.4Mtoe, -1.4% compared with 2009. Since 2007 the consumption has started to decrease because of the economic crisis, while over the period 1990-2007 increased steadily (+30.5% in 1990-2007). Table 4.2: Variations in energy consumption of transport by mode (%/year) 1990-2000 2000-2007 2007-2010 1990-2010 Road transport 1.8 0.9-2.8 0.8 Rail transport -0.7-1.1-3.4-1.3 Air transport 6.2 2.9-4.3 3.4 Water transport 20.3 0.7-5.4 9.1 Total 2.1 0.9-2.9 0.8 In 2010 oil products covered 93.7% of consumption of transport sector but their share had fallen from 98.0% in 1990, the consumption of gas from 0.6% in 1990 to 1.6% in 2010. The rapid growth of biofuels, from 0.6% in 2004 to 3.4% in 2010, is caused by the obligation to use a minimum amount of biofuels in the consumption of gasoline and diesel, set by Decree.

The road transport is the main mode, both for passenger and goods. The road transport absorbed 94.1% of energy consumption of transport sector in 2010, followed by water transport, 2.9%, and air transport with 1.9% (figure 4.12). Water and air transport modes showed the highest growth in 1990-2010. In the last years the air transport had a decrease in the consumption combined with a growth in passenger traffic. Figure 4.12: Energy consumption of transport sector by mode 45 40 35 30 Mtoe 25 20 15 10 water transport air transport rail transport road transport 5 0 Cars are the main transport vehicles in road transport: since 2000 the consumption is decreasing because of new cars more efficient, shift from gasoline cars to other type of cars and the economic crisis of 2007. As the result the share of cars was decreased from 62.2% in 2000 to 55.0% (figure 4.13). Figure 4.13: Energy consumption of road transport 100% 90% 80% 70% 7,9% 8,3% 9,5% 11,0% 9,9% 10,9% 10,5% 10,9% 11,5% 10,8% 6,9% 6,8% 6,8% 7,0% 6,2% 5,2% 6,7% 6,9% 5,7% 4,9% 4,4% 34,6% 33,5% 31,5% 29,1% 30,2% 28,7% 29,1% 29,1% 28,7% 30,1% 30,9% 32,0% 32,8% 33,5% 35,5% 37,4% 38,0% 37,9% 38,9% 39,5% 40,6% 60% 50% 40% 30% 57,5% 58,1% 59,0% 59,9% 59,9% 60,4% 60,4% 60,1% 59,8% 59,1% 62,2% 61,2% 60,4% 59,5% 58,3% 57,4% 55,3% 55,2% 55,4% 55,6% 55,0% 20% 10% 0% Cars Trucks and light vehicles other 19

After two years of decrease, the consumption by tracks and light vehicles began to grow again (figure 4.14). Figure 4.14: Energy consumption trends of road transport (1990=100) 150 140 Road consumption Cars Trucks and light vehicles 130 120 110 100 90 The road transport is the main mode for goods transport: it carries out 71.0% of the traffic and it s decreasing (table 4.3). Table 4.3: Variations in energy consumption of goods transport by mode (%/year) 1990-2000 2000-2007 2007-2010 1990-2010 Road transport 0.4-0.4-0.7-0.1 Rail transport 1.4 1.3-12.1-0.8 Water transport -0.6 6.5 0.6 2.0 Total 0.3 0.9-1.5 0.2 The first mode for passenger transport is road transport, over 90%, and in particular the private transport by car, around 80% (figure 4.15). In the last years all modes are decreasing, except air transport and road transport by public mode.

Figure 4.15: Energy consumption of passenger transport by mode 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% car public modes rail domestic air 4.6 Assessment of energy efficiency/savings through ODEX: total and by sector In the 2010 the energy efficiency index for the whole economy amounted to 87.1, measured as three-year moving average and base year 1990, which means a 12.9% efficiency improvement from 1990 (figure 4.16). The sectors contributed in different way: households had efficiency improvement every year, more rapidly until first years of 2000, transport sector had improvements only in the last years. Manufacturing had efficiency improvement in the first 90s, followed by a worsening in the period 1997-2004. Since 2004 energy efficiency is increasing again. 21

Figure 4.16: Energy efficiency index (1990=100) 105 100 95 90 85 80 75 70 Manufacturing Transport Households ODEX 65 The improvement in energy efficiency led to an energy savings equal to 16.7 Mtoe in 2010 (figure 4.17). Figure 4.17: Energy savings by sector 2 0-2 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-4 -6 Mtoe -8-10 -12-14 -16 Households Transport Manufacturing -18 In the period 1990-2010 the energy efficiency of manufacturing sector is improved by 13.4%. Chemicals and steel had the greatest improvements: 42.3% and 28.2%, respectively. Energy efficiency in paper and cement are increased by 12.4% and 11.8%, respectively, but in the last years the improvement are less rapid. After years of loss in energy efficiency, textile and food had improvements: in 2000-2010 textile was im-

proved by 32.3% and food by 24.9%. Machinery had the worst loss in energy efficiency until the last years (figure 4.18). Figure 4.18: Energy efficiency in industry sector (1990=100) 160 150 140 130 120 110 100 90 80 70 60 50 chemicals steel non ferrous non metallic cement paper food machinery textile manifacturing The energy efficiency index of transport sector in 2010 was 98.9. The efficiency of transport sector depends mainly on the energy efficiency of transport road because of cars and tracks take up over 90% of energy consumption: in the period 1990-2010 the cars improved energy efficiency and tracks worsened (figure 4.19). The rail and air transport had a great improvement in efficiency but their role in the transport sector is small. Figure 4.19: Energy efficiency in transport sector (1990=100) 150 140 130 120 110 100 90 80 70 60 50 cars trucks and light vehicles rail transport air transport transport 23

The energy efficiency of road transport is showed also by unit consumption variation of tracks and cars (table 4.4). Table 4.4: Unit consumption variations by road transport mode (%/year) 1990-2000 2000-2010 1990-2010 cars -0.7-1.1-0.9 trucks and light vehicles 0.2 3.1 1.6 The households sector showed the best result in improvement of energy efficiency: in 2010 the index was 71.4% with an annual improvement rate of 1.7% in 1990-2010. (figure 4.20). Figure 4.20: Energy efficiency in households (1990=100) 105 100 95 90 85 80 75 70 households space heating electrical appliances 65

4.7 CO 2 -emissions trends: total and by sector; role of fuels substitutions and of energy efficiency The CO 2 emissions trends are showed in figure 4.21. Since 2005 CO 2 emissions are decreasing: -9.4% of final consumers in 2005-2010 against +12.5 in 1990-2005. The cut in emissions was realized in almost all sectors as the result of the actions to achieve the European targets at 2020 and the economic crisis of the last years. Services is the only sector that had an steady increase of CO 2 emissions. Figure 4.21: CO 2 emissions by sector (1990=100) 200 180 160 140 120 100 80 60 final consumers industry (incl. autop.) transport households services agriculture The CO 2 emissions of transport sector were increased over the period 1990-2010 by 15.1%. In the 2005-2010 the CO 2 emissions were reduced by 6.7%. The emissions of transport sectors come mainly from road transport: in the period 1990-2010 the CO 2 emissions per car is decreasing against an increase in road goods transport. All the CO 2 emissions from passenger transport modes are decreasing. In the last years the drop in the CO 2 emissions also depends on economic crisis. Industry sector had a cut of -29.9% in CO 2 emissions in 1990-2010 obtained mainly in the last years: -23.7% in 2005-2010. Chemicals and steel made the biggest contribution to emissions decrease. The emissions variations in steel production in 1990-2010 are showed in figure 4.22. 25

Figure 4.22: CO 2 emissions variations in steel production 1,0 0,0 Mt CO 2-1,0-2,0-3,0-4,0-5,0-6,0 total variations quantity effect (more production) CO2 savings effect of unit consumption variation Impact of substitution The CO 2 emissions in households increased by 1.3% in 1990-2010. The trend is affected by the climatic effects and a larger diffusion of electrical appliances, especially from 2000. The emissions variations 1990-2010 are showed in figure 4.23. Figure 4.23: CO 2 emissions variations in households 20,0 15,0 10,0 Mt CO 2 5,0 0,0-5,0-10,0-15,0 total variations climatic effect quantity effect (more dwellings) CO2 savings effect of unit consumption variation Impact of substitution

5 Energy efficiency measures 5.1 Recent Energy Efficiency Measures In 2011 Italy presented the Second National Energy Efficiency Action Plan. The Plan illustrates the achievement of partial results provided by the first plan and updates the energy efficiency measures in order to achieve the target of 9.6% energy savings by the end of 2016. In 2010 the energy savings achieved by energy efficiency measures of NEEAP 2007 were 47,711 GWh/y, 3.6% of target of 2016 (table 5.1). Table 5.1: Annual energy savings expected in 2010 and 2016 (NEEAP2007) and achieved in 2010 (NEEAP2011) Energy savings achieved in 2010 GWh/y Energy savings expected in 2010 GWh/y Energy savings expected in 2016 GWh/y Households 31,472 16,998 56,830 Services sector 5,042 8,130 24,700 Industry 8,270 7,040 21,537 Transport sector 2,972 3,490 23,260 Total 47,711 35,658 126,327 Residential Sector The energy efficiency measures involve in buildings, electrical appliances and lighting. The measures are defined in Decree Law 115/2008, the Ministerial Decree 26 June 2009 and Decree Law 28/2011: minimum requirements for new and for the existing buildings which undergo to major renovation, promotion of the use of machinery and equipment high efficiency; promotion of the use of renewable energy sources. It sets the guidelines for the energy certifications of the buildings. New buildings must have energy performance index lower than a threshold for both winter and summer air-conditioning, external shielding systems, at least 50% of primary energy consumption for water heating from renewable energy sources, photovoltaic plants in order to produce electricity, if there is a district heating net in the space of 1,000 meters it s necessary to facilitate the connection to the net. Also restructured buildings of more than 1,000 square meters must comply with these regulations. The tax deduction of 55% of the amount remaining payable by the taxpayer for interventions in energy efficiency for existing buildings keeps on having excellent results: in 27

2009 there were 236,700 interventions with an primary energy savings estimated of 1,487 GWh/y and CO 2 avoided of 317,000 t/y, in 2010 405,600 interventions with an primary energy savings estimated of 2,032 GWh/y and CO 2 avoided of 430,000 t/y. New types of incentives are being considered for interventions on opaque building surfaces that allow greater energy savings. The measures of 55% of tax deductions were planned until 30 th June 2013 but they will be made permanent and more effective and efficient in terms of cost-benefit (National Energy Strategy). The D.L. 16 th of February 2011 and the 18 th November 2010 has implemented the Energy Related Products Directive. Transport Sector The main measures are to replace the fleet with fuel-efficient and low-emission vehicles. The D.L. n. 134/2012 promotes sustainable mobility through measures to encourage the development of infrastructure networks for charging vehicles powered by electricity, especially in order to increase the spread of public and private fleets of low-emission vehicles, and purchase of electric or hybrid vehicles. The Decree provided incentives directly used for the purchase of low-emission vehicles for scabbing old vehicles for the years 2013-2015 (a fund is established in the estimates of expenditure of Ministry of Economic Development). Industrial Sector The main energy efficiency measures were incentives for new electrical motors at high efficiency and inverters, lighting control systems and high efficiency cogeneration. Other incentives will be related to heat recovery in production processes. Inside the Industry 2015 programme to increase the competitiveness of the industry, the industrial innovation project on energy efficiency is settled. This programme s aim is energy savings in industrial production and final uses and utilization of renewable energy sources by selected projects co-financing from the government. In December 2008, 26 selected Sustainable Mobility projects received a total of 180 million euro, generating a total investment of 450 million euro. In January 2009, the Industrial Energy Efficiency stream selected 30 projects mobilizing an investment of 500 million euro in research and development targeting both efficiency and the use of renewable energy technologies. Approximately 65% of the investment funding targeted bioenergy,

energy production from waste and solar photovoltaics. The remaining 35% of investments targeted high-efficiency buildings materials, improved energy efficiency in enduse systems and sub-systems, as well as wind energy. Tertiary Sector The energy efficiency measures for the tertiary sector are the same for residential sector about buildings, electrical appliances and lighting. The tertiary can also use the incentives for the cogeneration and the white certificates system. Cross-cutting measures The energy efficiency measures involve in energy efficiency, energy savings and promotion of the renewable energy sources. Main measures are while certificates and incentives (55%, green certificates for production of electricity from renewable energy sources and thermal energy from renewable energy sources). A new white certificates mechanism is going to be approved, new guidelines will be defined in 2013 and will come into force in 2014. The mechanism introduces new energy savings targets for the years 2013-2016; introduces 18 new cards for the evaluation of energy savings, 4 for transport sector; extends participation to companies in the industrial, transport, tertiary and public sectors with energy manager; introduces the "great projects" for interventions that generate energy savings for 35,000 toe/y. The Decree on heating renewables, Heating Account, provides incentives for the heat from renewable energy sources and energy efficiency in public administration (thermal insulation of the opaque building surfaces, heating with condensing boiler). The private subjects can have access only to incentives for the heating renewables, public administration can have access to incentives for heating renewables and energy efficiency because it s excluded from the tax deduction of 55%. The annual fund for incentives will be 700 million euro for the private subjects and 200 million euro for public administration. The government estimates an energy savings of 15.8 Mtoe in 2020. These incentives are in line with the National Renewable Energy Action Plan, that sets the target of increasing the share of energy from renewable energy sources in gross final consumption from 4.9% in 2005 to 17.0% in 2020. Decree of the Minister of the Economic Development of the15th March 2012 sets the targets that the Regions 29

should achieve in the reduction of final energy consumption and increase of the share of energy from renewable energy sources. 5.2 Patterns and Dynamics of Energy Efficiency Measures Residential Sector For the residential sector in a first step, 2002-2007, the policy measures were informative and financial in order to awaken families to energy savings and efficiency; normative mainly about buildings: solar panels for heating and hot water, energy certification and energy performance minimum requirements, thermal plants and cooling installations. These measures are ongoing. From 2007 the measures are mainly normative and receive EU Directives: NEEAP to reach the target of 20% of energy efficiency in 2020, standards for efficient lighting and electrical appliances, eco-design Directive for energy-using products.

Transport Sector In the transport sector the main measures were infrastructure types. From the last years of 90s there were a mix of measures: financial types (incentives for the shift to LPG or natural gas vehicles and to the high efficiency and low-emission cars), fiscal types (implementation of EU Directive on use of biofuels), co-operative measures and infrastructure types. Industrial Sector The measures are only financial and fiscal types: incentives for use of efficient electric motors and inverters, for efficient lighting system and for promotion of cogeneration (implementation of EU Directive). The weight of white and green certificates carry on growing. 31

Tertiary Sector In the last years the measures are mainly legislative and related to NEEAP and EU Directives: for buildings: project, installation, working and maintenance of thermal plants in buildings, certification schemes for new and existing buildings; for energy efficiency: standards for efficient lighting and electrical appliances, implementation of Eco-Design Directive.

The only financial measure ongoing is white certificates. Cross-cutting measures In the last years the energy measures to achieve the targets of energy savings and renewable energy sources were marked-based and fiscal types. The marked-based measures are mainly the white certificates for energy savings and green certificates to promote the renewable energy sources. The fiscal measures are preferential feed-in tariffs for renewable energy sources and CHP. White and green certificates and implementation of Eco-Design Directive (nonclassified measure types) are the measures in NEEAP to achieve the targets 20-20-20 in 2020. 5.3 Innovative Energy Efficiency Measures The most innovative energy efficiency measure is the Energy Efficiency Certificates, known as white certificates system (Ministerial Decrees 20/07/04 and 21/12/07). Each electricity and gas distributor with more than 50,000 final users has to achieve a target of energy savings. The achieved energy savings are certified by white certificates. 33

There are 5 types of white certificates: type I for electricity savings type II for natural gas savings type III for other energy savings not for passenger or goods transport type IV for other energy savings in passenger or goods transport (valued in accordance with D.Legs. March 28/2011, art.30) type V for other energy savings in passenger or goods transport other than type IV. By 2012 new national targets of energy savings in primary energy will be defined for the years 2013-2016. The new targets are 4.6 Mtoe for 2013, 6.2 Mtoe for 2014, 6.6 Mtoe for 2015 and 7.6 Mtoe for 2016. The targets in energy primary are associated with the national targets of the Energy Efficiency Certificates, EEC. The EEC are calculated on the basis of the coefficient of durability that takes into account the energy savings generated over the useful life of the interventions. The targets of EEC are 3.03 MEEC for electricity and 2.48 MEEC for gas for 2013, 3.71 MEEC for electricity and 3.04 MEEC for gas for 2014, 4.26 MEEC for electricity and 3.49 MEEC for gas for 2015, 5.23 MEEC for electricity and 4.28 MEEC for gas for 2016. The innovations in the Decree are: new 18 cards for the energy savings evaluation of interventions that entitle the white certificates; companies in the industrial, transport, tertiary and public sectors with energy manager can directly request the white certificates; the great projects with an annual energy savings of 35,000 toe and a useful live over 20 years. These projects follow a particular procedure under the direct supervision of the Ministry of Economic Development and may have some additional incentives; the interventions with white certificates cannot also have the public incentives such as tax deduction of 55% and green certificates; GSE, the state-owned company which promotes and supports renewable energy sources, replaces Authority for Electricity and Gas in the management of white certificates system. The new National Energy Strategy assigns the task to cover more than a third of new energy savings to be achieved by 2020.

5.4 Energy efficiency measure evaluations 5.4.1 Semi-quantitative Impact Estimates of Energy Efficiency Measures Residential Sector Code Title Status Type Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure ITA1 EU-related: Energy Labelling of Household Appliances (Directive 92/75/EC) - Energy labelling of household Legislative/Informative 1998 Medium Yes Yes appliances - Framework Law ITA33 White Certificates Financial 2004 Medium Yes No EU-related: Energy Performance of Buildings (Directive 2002/91/EC) - Energy Performance of Build- 2006 High Yes Yes Legislative/Informative, ITA24 Legislative/Normative ings Energy Performance of Building: updated of the norms ITA31 Legislative/Normative 2006 Medium No No on thermal systems efficiency New Fiscal incentives for energy savings in the ITA30 Financial, Fiscal/Tariffs 2007 High Yes No household sector ITA28 Mandatory use of solar thermal energy in buildings Legislative/Normative 2009 Medium No No ITA29 ITA32 EU-related: Ecodesign Directive for Energy-using Products (Directive 2005/32/EC) - Standard for efficient lighting and electrical appliances EU-related: Revised Directive for Labelling of Energyrelated Products (Directive 2010/30/EU) - Eco Design Directive. Framework Law Legislative/Normative 2011 Medium Yes Yes Legislative/Informative 2011 Medium Yes Yes 35

Transport Sector Code Title Status Type ITA3 ITA13 ITA8 ITA9 ITA2 ITA4 ITA7 ITA14 ITA21 ITA15 EU-related: CO2 Standards for Light Duty Vehicles - Voluntary Agreement between FIAT and Environment Ministry Financial Packages for Old Vehicles Replacement Sustainable Mobility in Urban Areas and Mobility Management responsibilities, procedures and funds (1998-2002, 2007-2009) Development of Cycle Mobility: regulation and funds (1999-2001, 2007-2010) Incentives for the conversion of pre EURO O, EURO 0 and EURO 1 vehicles to GPL or natural gas Programmes for the Sustainable Mobility Enhancement: car sharing and eco-sundays Financial Grants for Mobility Managers Programmes Financial Contributions for the Purchase of Vehicles with a Low Environmental Impact Voluntary Agreement between the Ministry of Environment and the Union of Italian manufacturers of two and three wheeled vehicles Voluntary Agreement Ministry of Environment/FIAT/Unione Petrolifera for the promotion of Methane Goods Vehicles and Distributors, the Methane Project (2006-2007) and the Mobility Fund ( 2007-2009) Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure Completed Co-operative Measures 1997 Medium No Yes Completed Financial 1997 Low No No Infrastructure, SocialPlanning/Organisational 1998 Low No No Information/Education/Training 1998 Low No No Financial 2000 Low No No Infrastructure, SocialPlanning/Organisational 2001 Low No No 2001 Unknown No No Completed Financial 2002 Low No No Co-operative Measures 2002 Low No No Co-operative Measures 2003 Medium No No

Code Title Status Type Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure EU-related: Passenger Car Labelling on fuel economy rating (Directive 1999/94/EC) - ITA23 Consumer information on fuel economy and Legislative/Informative 2003 Low No Yes CO2 emissions EU-related: Promotion of Biofuels or other Renewable Fuels for Transport (Directive ITA19 2003/30/EC) - Implementation of EU Directive Fiscal 2005 Low No Yes on use of biofuels ITA22 Motorways of sea: the Ecobonus Infrastructure 2007 Low No No ITA20 Financial package for old vehicles scrapping Financial 2008 Medium Yes No ITA18 Improved Mobility in the Smaller Italian I- slands (MINIMI Project) [Mobilità Innovativa Nelle Isole Minori Italiane] Industrial Sector Code Title Status Type Infrastructure 2009 Low No No Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure ITA1 Feed in tariff (Pricing Scheme CIP 6/92) Financial 1997 Medium No No ITA8 Financial Package for the Establishment in Municipal Completed Gas Utilities of Low Grade Heat Production Equipment Financial 2001 Low No No ITA13 Market incentives: white certificates Legislative/Normative 2004 Medium Yes No ITA17 EU-related: EU Emission Trading Scheme New Market-based (2003/87/EC) - ETS and Kyoto Flexible Mechanisms Instruments 2004 Medium No Yes ITA12 Financing for energy efficiency and diffusion of renewables Financial 2005 Low No No ITA14 Efficient lighting system Financial, Fiscal/Tariffs 2007 High Yes No 37

Code Title Status Type ITA15 Efficient electric motors and inverters ITA16 ITA18 EU-related: Combined Heat Power (Cogeneration) (Directive 2004/8/EC) - Promotion of Combined Heat Power EU-related: Community framework for the taxation of energy products and electricity (Directive 2003/96/EC) - Energy Taxation Tertiary Sector Financial, Fiscal/Tariffs Code Title Status Type Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure 2007 Medium Yes No Financial 2007 Medium Yes Yes 2007 Low No Yes Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure Norms for Installation, Management and Maintenance of Thermal Equipment in Offices. ITA3 Completed Legislative/Normative 1991 High No No Energy Efficency of buildings: design norms of buildings shell ITA10 Legislative/Normative 1993 High No No ITA1 First Financial Package for CHP Plants and District Co-operative Measures Completed Heating Equipment Installation 1999 High No No ITA14 White Certificates Financial 2005 Medium Yes No ITA12 Energy efficiency of buildings: project, installation, working and maintenance of thermal plants Legislative/Normative 2006 Medium No No ITA13 EU-related: Energy Performance of Buildings (Directive 2002/91/EC) - Energy Performace of Build- Legislative/Informative, Legislative/Normative ings 2006 High Yes Yes EU-related: Ecodesign Directive for Energy-using ITA15 Products (Directive 2005/32/EC) - Eco-Design Directive Legislative/Informative 2007 Medium Yes Yes implementation ITA17 Measure for efficient lighting and control systems Legislative/Normative 2008 Medium No No

Cross-cutting measures Code Title Status Type ITA5 Definition of Energy Prices (CIP 6/92 Pricing Scheme) ITA4 ITA2 Green certificates: market based instruments for promoting renewable energies White certificates: market based instruments promoting energy efficiency Incentives for energy production using PV conversion ITA1 from solar energy EU-related: Community framework for the taxation of ITA9 energy products and electricity (Directive 2003/96/EC) - Unknown Energy taxation ITA10 EU-related: Recast Ecodesign Directive for Energyrelated Products (Dir 2009/125/EC) - Implementation Co-operative Measures, Marketbased Instruments Market-based Instruments Co-operative Measures, General Energy Efficiency / Climate Change / Renewable Programmes, Marketbased Instruments Fiscal Measures/Tariffs Non-classified Measure Types Non-classified Measure Types Starting Year Semiquantitative Impact NEEAP Measure EUrelated Measure 1992 Low No No 2000 Low Yes No 2004 Medium Yes No 2005 Low No No 2007 Medium No Yes 2011 Medium Yes Yes 39

The energy measures types have different impacts on the sectors: financial/fiscal measures such as the incentives for energy efficiency interventions are the energy measures with high/medium Semi-quantitative Impact Estimates on residential and industrial sectors; cooperative measures, mainly voluntary Agreement, have medium Semiquantitative Impact Estimates on transport sector; the legislative/normative measures to respect energy efficiency standards achieve high/medium Semi-quantitative Impact Estimates. 5.4.2 Lessons from Quantitative Energy Efficiency Measure Evaluations On the basis of quantitative evaluations of the measures available in MURE database the measures with the greatest impact are the measures on building: normative (energy performance of buildings) and fiscal (tax deduction of 55% and white certificates). The NEEAP2011 reported the energy savings achieved at 31st December 2010. The D.L. n.192/2005, in implementation of Energy Performances of Buildings Directive (EPBD), amended by the D.L. n.311/2006 and complemented by D.L. n.115/2008 set the minimum performance of buildings. These D.L. are implemented in combination with the Decree of the President of the Republic of 2 nd of April 2009 n.59 and the Decree of the Minister of the Economic Development of the 26 th of June 2009 relating to the National Guidelines for the energy certification. These measures involve new buildings renovation of exiting building of more than 1,000 square meters: energy performance index lower than a threshold both for winter and summer air-conditioning, external shielding systems, at least 50% of primary energy consumption for water heating from renewable energy sources, obligation of photovoltaic plants to produce electricity. The calculation tool DOCET, developed by CNR and ENEA, is used for the calculation of energy performance index of buildings, winter and summer air-conditioning, hot water. The energy savings achieved by these measures at 31 st December 2010 were 24,307 GWh/y (NEEAP2011).

These measures are complemented by tax deduction of 55% and white certificates: tax deduction of 55% carried out an energy savings of 5,204 GWh/y and white certificates an energy savings of 14,881 GWh/y (NEEAP2011). 41

6 National Developments under the EU Energy Efficiency Directive and the 20% Energy Efficiency Target of the EU The Italian priorities are energy efficiency and renewable energy sources: the targets of the renewables are defined in relation to the targets of NEEAP. The NEEAP2011 focuses on four main directions: energy savings in buildings: generate greater savings in the residential and tertiary sectors; white certificates: new targets for the years 2013-2016, new procedures to stimulate energy savings in industry, infrastructures and transport sector, great projects with an annual energy savings of 35,000 toe and a useful live over 20 years; technological and organizational interventions in the transport sector: The D.L. n.134/2012 promotes sustainable mobility through measures to encourage the development of infrastructure networks for charging vehicles powered by electricity, especially in order to increase the spread of public and private fleets of low-emission vehicles, and purchase of electric or hybrid vehicles. The Decree provided incentives directly used for the purchase of low-emission vehicles for scabbing old vehicles for the years 2013-2015; improvement of energy efficiency in industry and tertiary sector. In 2010 the energy savings were 47,711 GWh, 3.6% against an expected savings of 3%. The National Renewable Energy Action Plan, in implementation of 2009/28/EC Directive, sets the targets of 17% of renewable energy sources in gross final consumption and 10% of renewable energy sources in final consumption of transport sector for 2020. The D.Legs. 28/2011 defined the tools, mechanisms and incentives (green certificates and other incentives); the Ministerial Decree 15 th March 2012 set for each Italian Region the targets of gross final consumption, electricity and heat from renewable energy sources for 2020. The mechanisms to promote electricity from renewable energy sources are already in action and have produced good results: the incentives will be reduced gradually. The incentives to support the heat from renewable energy sources will be Heating Account and the white certificates.

The Heating Account allocates incentives to cover a proportion of the initial investment costs to encourage small-scale renewables installations. The expected cost of the system, once it is fully up and running, is about 900 million euro per year. This fund may also be used for improving energy efficiency but only by public administration. Up to 2020, the Heating Account alone will make it possible to reach the National Renewable Energy Action Plan targets for heating and cooling renewables. The white certificates will be the support mechanism for interventions on a larger scale: major selected investments on the basis of maximising the effectiveness and efficiency. Special attention will be devoted to the activation of initiatives encouraging the application of district-heating and district-cooling by setting up a guarantee fund for investments in district heating/cooling networks. 43

Annex 1 Energy Efficiency Measure Summary by Country

Residential sector Code Title Status Type ITA5 ITA15 ITA2 ITA3 ITA23 ITA13 ITA16 ITA19 Energy Performance of buildings: design norms for building shell and thermal equipments EU-related: Performance of Heat Generators for Space Heating/Hot Water (Directive 92/42/EEC) - Standards and Labelling for New Boilers EU-related: Energy Labelling of Household Appliances (Directive 92/75/EC) - Standards and Labelling for Washing and Drying Machines Labelling of Building Components and thermal systems EU-related: Energy Labelling of Household Appliances (Directive 92/75/EC) - Standards and Labelling of refrigerators and freezers EU-related: Energy Labelling of Household Appliances (Directive 92/75/EC) - Standards and Labelling for Dishwashers Energy Performance of Buildings: modifications of the design norms for buildings shell and thermal systems EU-related: Energy Labelling of Household Appliances (Directive 92/75/EC) - Standards and Labelling for Air Conditioners and Electric-Fired Ovens Legislative/ Normative Legislative/ Normative Legislative/ Informative Information/ Education, Legislative/ Informative Legislative/ Informative Legislative/ Informative Legislative/ Normative Legislative/ Informative Starting Year 1993 1997 1998 1998 1998 1999 2000 2003 ITA33 White Certificates Financial 2004 Legislative/ Informative, EU-related: Energy Performance of Buildings ITA24 (Directive 2002/91/EC) - Energy Performance 2006 Legislative/ of Buildings Normative ITA31 ITA30 ITA28 ITA29 ITA32 Energy Performance of Building: updated of the norms on thermal systems efficiency New Fiscal incentives for energy savings in the household sector Mandatory use of solar thermal energy in buildings EU-related: Ecodesign Directive for Energyusing Products (Directive 2005/32/EC) - Standard for efficient lighting and electrical appliances EU-related: Revised Directive for Labelling of Energy-related Products (Directive 2010/30/EU) - Eco Design Directive. Framework Law Legislative/ Normative Financial, Fiscal/Tariffs Legislative/ Normative Legislative/ Normative Legislative/ Informative 2006 2007 2009 2011 2011 45

Industry sector Code Title Status Type ITA2 ITA6 ITA8 ITA10 Unification of Appraisal Criteria and Tools for the Distribution of Financial Grants. Labelling of Building Components and Heating Equipment Limit to the Internal Temperature of Buildings Energy Efficency of buildings: design norms of buildings shell Co-operative Measures Starting Year 1991 Legislative/Informative 1991 Legislative/Normative 1993 Legislative/Normative 1993 ITA14 White Certificates Financial 2005 ITA12 Energy efficiency of buildings: project, installation, working and maintenance Legislative/Normative 2006 of thermal plants ITA13 EU-related: Energy Performance of Buildings (Directive 2002/91/EC) - Energy Performace of Buildings Legislative/Informative, Legislative/Normative 2006 EU-related: Ecodesign Directive for Energy-using Products (Directive ITA15 2005/32/EC) - Eco-Design Directive Legislative/Informative 2007 implementation EU-related: Community framework for the taxation of energy products and ITA18 electricity (Directive 2003/96/EC) - Energy Unknown 2007 Taxation Measure for efficient lighting and control ITA17 systems Legislative/Normative 2008 Transport sector Code Title Status Type Starting Year Car-Restricted Areas Planning in Major ITA10 Towns [Z.T.L. - Zone a Traffico Limitato] Infrastructure 1993 ITA17 Roadway Parking Rate in Urban Areas Infrastructure 1993 Compulsory Inspection for Motor Vehicles ITA6 Legislative/Informative 1995 Urban Traffic Plans [P.U.T. - Piani Urbani ITA1 del Traffico] and Urban Mobility Plans Infrastructure 1997 ITA8 Sustainable Mobility in Urban Areas and Mobility Management responsibilities, procedures and funds (1998-2002, 2007-2009) Infrastructure, Social- Planning/Organisation al 1998 ITA9 Development of Cycle Mobility: regulation and funds (1999-2001, 2007-2010) tion/training Information/ Educa- 1998 ITA11 The Blue Label Legislative/Normative 1998 ITA16 Agreement Protocol between Environment Ministry and Federtrasporti Infrastructure 1999 ITA2 Incentives for the conversion of pre EURO 0, EURO 0 and EURO 1 vehicles to GPL or natural gas Financial 2000

Code Title Status Type ITA4 ITA7 ITA21 ITA23 ITA19 Programmes for the Sustainable Mobility Enhancement: car sharing and ecosundays Financial Grants for Mobility Managers Programmes Voluntary Agreement between the Ministry of Environment and the Union of Italian manufacturers of two and three wheeled vehicles EU-related: Passenger Car Labelling on fuel economy rating (Directive 1999/94/EC) - Consumer information on fuel economy and CO2 emissions EU-related: Promotion of Biofuels or other Renewable Fuels for Transport (Directive 2003/30/EC) - Implementation of EU Directive on use of biofuels Infrastructure, Social- Planning/ Organisational Starting Year 2001 2001 Co-operative Measures 2002 Legislative/Informative 2003 Fiscal 2005 ITA22 Motorways of sea: the Ecobonus Infrastructure 2007 Financial package for old vehicles ITA20 scrapping Financial 2008 Improved Mobility in the Smaller Italian ITA18 Islands (MINIMI Project) [Mobilità Innovativa Nelle Isole Minori Italiane] Infrastructure 2009 Tertiary sector Code Title Status Type Starting Year Labelling of Building Components and ITA6 Heating Equipment Legislative/Informative 1991 Limit to the Internal Temperature of ITA8 Buildings Legislative/Normative 1993 Energy Efficency of buildings: design ITA10 norms of buildings shell Legislative/Normative 1993 ITA14 White Certificates Financial 2005 ITA12 Energy efficiency of buildings: project, installation, working and maintenance Legislative/Normative 2006 of thermal plants ITA13 EU-related: Energy Performance of Legislative/Informative, Buildings (Directive 2002/91/EC) - Energy Performace of Buildings Legislative/Normative 2006 EU-related: Ecodesign Directive for ITA15 Energy-using Products (Directive 2005/32/EC) - Eco-Design Directive Legislative/Informative 2007 implementation EU-related: Community framework for ITA18 the taxation of energy products and electricity (Directive 2003/96/EC) - Energy Unknown 2007 Taxation ITA17 Measure for efficient lighting and control systems Legislative/Normative 2008 47

Cross-cutting Code Title Status Type ITA5 ITA4 ITA2 ITA1 ITA9 ITA10 Definition of Energy Prices (CIP 6/92 Pricing Scheme) Green certificates: market based instruments for promoting renewable energies White certificates: market based instruments promoting energy efficiency Incentives for energy production using PV conversion from solar energy EU-related: Community framework for the taxation of energy products and electricity (Directive 2003/96/EC) - Energy taxation EU-related: Recast Ecodesign Directive for Energy-related Products (Directive 2009/125/EC) - Implementation Unknown Co-operative Measures, Marketbased Instruments Market-based Instruments Co-operative Measures, General Energy Efficiency / Climate Change / Renewable Programmes, Market-based Instruments Fiscal Measures/Tariffs Non-classified Measure Types Non-classified Measure Types Starting Year 1992 2000 2004 2005 2007 2011

Annex 2 Country Profile

Energy Efficiency Profile: Italy October 2012 Energy Efficiency Trends Overview The energy efficiency improvement of final consumers was 13% over the period 1990-2010 against 23% for the EU average. The slow progress, especially in the second half of the 90s, was due to industry and transport sectors that had negative performances. After 2000 the increase in energy efficiency has been more rapid: 0.9%/year over 2000-2010 against 0.2%/year over 1995-2000. All sectors showed positive results: in the household sector the improvement in energy efficiency was more rapid in first years of 2000 while industry and transport sectors showed better results in the recent years. Industry Since 2005, the energy efficiency in the industrial sector is speeding up: the index registered an improvement of around 7% over the period 2005-2010 after a stabilization before. This acceleration is due to those sectors that in the last years showed an increase in energy efficiency after huge losses in the years 90s and in the first years of 2000: +25% for food +32% for textile, over the period 2000-2010 with a more rapid improvement in the recent years. In the last years machinery had a loss energy efficiency after improvements over 2005-2007. The best sectors were chemicals and steel with an improvement in energy efficiency of 26% and 18%, respectively since 2000. Households Household is the sector that showed the best results: energy efficiency improved by 29% over the period 1990-2010. In the last years the energy efficiency progress has been slower: 0.5%/year over 2005-2010 against 1.8%/year over 1990-2005. The improvements of the last years depend mainly on large electrical appliances (improvement of 1.2%/year over 2005-2010) while space heating had a slow progress ( 0.1%/year). These results came from the measures set for efficient use of energy in the endusers: renewables for winter and summer air-conditioning, installation of solar panels, substitution with high efficiency appliances, and obligations for new buildings. Transport The energy efficiency in the transport sector improved very slowly: 1.1% over the period 1990-2010 but is speeding up in the last years, 3.4% over 2000-2010. This poor result is due to the fact that improvements in cars efficiency (17% over 1990-2010 and 8% since 2005) have been counterbalanced by a high loss in the efficiency of trucks (-38% over 1990-2010). The other transport modes show also greater improvements in efficiency: 29% for air transport and 50% for rail transport (over 1990-2010); however, rail represents a small part of the transport sector consumption. A fund was set up to promote goods transport by new maritime routes instead of roads. Energy efficiency index (base 100=2000)* * All indicators measured as a three-year moving average. Source ODYSSEE For more information : http://www.odyssee-indicators.org/

Energy Efficiency Policy measures Institutions and programmes Italy submitted its second Energy Efficiency Action Plan 2011. It is shown that the targets for 2010 estimated in NEEAP 2007 were exceeded: 3.6% against 3% estimated, and 70% of annual energy savings in 2010 came from the residential sector. The energy efficiency measures are updated to achieve an energy savings of 9.6% in 2016. Main measures are while certificates (47 project proposals approved, 95% in industry sector, that will allow an estimated cut of 800 ktoe of energy in the next 5 years) and incentives (55% and green certificates). These incentives are in line with the Renewable Energy Action Plan, that sets the target of increasing the share of energy from renewable energy sources in gross final consumption from 4.9% in 2005 to 17.0% in 2020. Decree of the Minister of the Economic Development of the15 th March 2012 sets the targets that the Regions should achieve in the reduction of final energy consumption and increase of the share of energy from renewable energy sources. By October should be submitted the decree to stimulate the renewable sources for heating: a support mechanism for solar thermal, heat pumps, biomass and geothermal energy. Industry Inside the Industry 2015 programme to increase the competitiveness of the industry, the industrial innovation project on energy efficiency is settled. This programme s aim is energy savings in industrial production and final uses and utilization of renewable energy sources by selected projects co-financing from the government. Two of the project streams target sustainable mobility and industrial energy efficiency and use of renewable energy. In December 2008, 26 selected Sustainable Mobility projects received a total of EUR 180 million, generating a total investment of EUR 450 million. In January 2009, the Industrial Energy Efficiency stream selected 30 projects mobilizing an investment of EUR 500 million in research and development targeting both efficiency and the use of renewable energy technologies. Approximately 65% of the investment funding targeted bioenergy, energy production from waste and solar photovoltaics. The remaining 35% of investments targeted high-efficiency building materials, improved efficiency in end-use systems and sub-systems, as well as wind energy. Households, Services The principles and the methods to improve the energy efficiency in households and tertiary buildings are settled by the L. D. n.192/2005, amended by the L D. n.311/2006 and complemented by L.D.115/2008: minimum requirements for new and for the existing building which undergo to major renovation; energy certification for buildings; promote the use of machinery and equipment high-efficiency; require for new and for the existing building a coverage of 50% of energy consumption for hot water from renewable energy sources; provide an improvement of the minimum requirements of 10% for interventions in buildings the public sector; setting of regular inspections of boilers and air conditionings. The tax deduction equal to 55% of the costs for actions in energy savings in buildings (high efficiency boilers, high efficiency glasses, installation of solar panels, insulation) keeps on having excellent results: in 2010 there were 405.600 interventions with an estimate of primary energy savings of 2,000 GWh/y and CO 2 avoided of 430,000 t/y. The L. D. 16 th of February 2011 and the 18th November 2010 has implemented the Energy Related Products Directive Transport The D.L. n. 134/2012 promotes sustainable mobility through measures to encourage the development of infrastructure networks for charging vehicles powered by electricity, especially in order to increase the spread of public and private fleets of low-emission vehicles, and purchase of electric or hybrid vehicles. The Decree provided incentives directly used for the purchase of lowemission vehicles for scabbing old vehicles for the years 2013-2015 (a find is established in the estimates of expenditure of Ministry of Economic Development). Selected Energy Efficiency Measures Sectors Title of Measure Since All The market incentives: the white certificates system 2004 Households/ Industry Setting of eco-design requirements for energy-related products 2011 Households Energy Performance of Buildings 2006 Households New fiscal incentives for energy savings in the household sector 2007 Transport EU Directive on use of biofuels - Initiatives to promote the bio-fuels 2005 Transport The Motorway of the Sea: the Ecobonus 2007 Industry Promotion of Heat and Power 2005 Industry Financing for energy efficiency and diffusion of renewable 2007 Tertiary Standard for efficient lighting and electric appliances, Fund for energy efficiency 2008 Source : MURE www.mure2.com