To foster the climate transition and at the same time defend households from energy inflation, the state should focus on "income relief for the hardest hit” and on the “transition aid”, without investing too much in “counteracting price increases”. She said it Luigi Federico Signorini, general manager of the Bank of Italy and president of IVASS, speaking on Saturday at the conference "Sustainable transformation: environment, economy and society - The challenges ahead, possible actions", organized in Venice by the Centesimus Annus Pro Pontiff Foundation.
Fossil fuel prices must go up
Given the wave of inflation on energy assets which began in 2021 and exacerbated this year by the war, “we certainly have to support those in difficulty”, underlined Signorini. But, if we want to protect the climate transition, we must also "let the signal represented by the relative prices”, which are “a key tool for the efficient allocation of resources”.
Indeed, according to the Chief Executive Officer of Bank of Italy, “a transition strategy would hardly work without it carbon pricing: that is, without incorporating in the price of fossil fuels the damage they cause to the common good, i.e., in economics jargon, the negative externalities associated with their use”.
The goal is to make "the least convenient fossil sources of alternative ones, thus benefiting the development of low-emission technologies”. It is therefore necessary to remind public opinion that, "in order to achieve the objectives of the climate transition, the prices of fossil fuels had to rise anyway: and grow a lot”.
We need more incentives for renewables
Not only that: for Signorini, this action “must be accompanied with every possible benefit, including of a regulatory nature, for alternative sources. This is both to speed up the transition and to make it affordable for everyone. Looking ahead, it would be good to help families who are or are at risk of being in energy poverty by not offering permanent subsidies for the use of fossil fuels, but giving them the concrete possibility of reducing energy waste and switch to renewable sources. Not an umbrella, that is, to shelter indefinitely from the increases in carbon-based fuel prices, but a sturdy pair of boots to make the leap towards decarbonisation as soon as possible".
Read the full text of Signorini's intervention.
