Dispatch from Italy | January '26
***Our weekly Dispatches provide an overview of the most relevant recent and upcoming developments for the shift to climate neutrality in selected European countries, from policy and diplomacy to society and industry. For a bird's-eye view of the country's climate-friendly transition, read the respective 'Guide to'.***
Stories to watch in the weeks ahead
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Rome-Berlin talks - High-level bilateral talks between Italy and Germany are set for 23 January in Rome, focusing on economic cooperation, energy policy and industrial competitiveness. The talks follow a joint policy document signed in Rome on 10 December in which both governments’ economy ministers called for faster and bolder decisions from the EU on automotive standards, steel, and energy-intensive industries, warning against regulatory uncertainty and rising energy costs. The ministers called for a softening of elements of the EU’s 2035 combustion engine phase-out, reflecting shared concerns over the pace of the transition. Both countries frame their alignment as a competition-driven adjustment rather than a retreat from decarbonisation.
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Funding cut shakes a flagship scheme - Funding for Renewable Energy Communities (CER) – which allow citizens, municipalities and small companies to produce and share renewable electricity – was sharply reduced at the end of 2025. The government cut available funds from 2.2 billion euros to just under 800 million euros, a reduction of 64 percent. The Ministry of Environment and Energy Security described the move as a technical “realignment”, arguing that the remaining funds would be sufficient to meet today's demand. However, applications have already exceeded one billion euros and requested capacity has passed two gigawatts (GW), fuelling concerns among local authorities and developers that a large share of projects may now be excluded, undermining confidence in one of Italy’s key community-based transition tools.
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Coal exit remains unresolved - Environmental permits for the last remaining coal-fired power plants – except for two on the island of Sardinia that are scheduled to shut down between 2028 and 2029 – expired at the end of 2025. The last mainland coal plant to feed electricity into the Italian grid was the Monfalcone thermal power station, temporarily reactivated in 2022 during the energy crisis; it permanently stopped using coal at the beginning of 2025. The government reaffirmed its commitment to phasing out coal but also evaluated options to keep the plants in cold reserve to safeguard electricity supply amid geopolitical uncertainty, drawing scrutiny over potential state aid to pay operators and regulatory challenges with the European Commission. The Ministry of Environment and Energy Security said it wanted to keep the plants in strategic reserve – technically “on standby” and available for emergency power – with costs and compliance with EU rules still unresolved.
The latest from Italy – last month in recap
- Italy’s gas reserves and hub debate - Italy has maintained relatively high gas storage levels compared to some EU peers. At 75 percent by late December 2025, Italy was and remains significantly ahead of Germany’s sub-60 percent levels and the wider EU average. However, high storage levels do not prevent controversy in Italian energy policy debates. In early January, critics challenged the narrative put forward by environment and energy minister Gilberto Pichetto Fratin on Italy’s potential role as a gas hub following the US attack on Venezuela with the declared aim of accessing its oil reserves. According to an analysis published on Altreconomia, proposals to boost domestic fossil fuel production or position Italy as a transit hub for gas imports underplay structural constraints.
- Energy prices limit competitiveness - Italian electricity prices for companies remain among the highest in Europe. The price was around 28 cents per kilowatt-hour (KWh) in the first half of 2025, roughly 30 percent above the EU average and driven by high network charges and limited compensation for EU ETS costs. High electricity costs are linked to Italy’s energy mix, where gas-fired generation often sets the price, and extra taxes and fees reduce the savings from using renewables or improving efficiency. Prime minister Giorgia Meloni has acknowledged the issue, emphasising that the government is working to implement concrete solutions to address high energy costs for businesses, particularly small and medium enterprises. Despite growth in renewables – responsible for around 43 percent of electricity in 2025 – high industrial bills persist, underscoring the challenge of combining the energy transition with market competitiveness.
- Climate performance and renewable delays - Italy’s climate performance continues to lag, with the Climate Change Performance Index 2026 ranking the country lower globally than last year due to weak national policies, fossil fuel subsidies, and climate action delays. Experts from different NGOs called for faster electrification, subsidy reform, and the immediate phase-out of fossil fuels to align with the goals of the Paris Climate Agreement. At the same time, plans to expand offshore wind capacity have suffered delays in auctions and project launches. Industry groups warned that without taking swift action, Italy risks missing its 2030 renewables targets and falling behind European peers.
Rudi’s picks - Highlights from upcoming events and top reads
- Activism persists despite new protest rules – In late November, Extinction Rebellion and Greta Thunberg staged a demonstration on Venice’s Grand Canal, turning the water green with non-toxic fluorescein. The action was part of a wider campaign across ten Italian cities, and highlighted that grassroots climate activism continues in Italy despite the recent tightening of regulations for public demonstrations.
- A good read to start 2026 – Science magazine highlighted 2025’s top breakthroughs, from record growth in renewable energy to advances in AI and medicine, offering a snapshot of global scientific progress as the new year begins. The review underlines how clean energy expansion is reshaping electricity markets and climate ambitions, while technological innovation continues to accelerate across disciplines.
