Il cut electricity and gas bills “cannot be extended indefinitely”. The warning was launched by Fabrizio Balassone, head of the economic structure service of the Bank of Italy, intervened on the bill decree before the Environment and Productive Activities commissions of the Chamber.
Balassone admits that "in this phase of emergency, in which uncertainty about the economic prospects is particularly high, interventions to mitigate the increase in costs are indispensable".
Why cutting bills is not the solution
However, in the medium term, cutting bills at the expense of the State is not the right solution to the problem of high energy prices, for at least two reasons: "On the one hand - explains the manager of Bank of Italy - it would not solve the underlying problem of energy dependence from abroad; on the other, it would absorb a very large amount of public resources, subtracting it from alternative uses or determining further increases in public debt".
What are the alternatives to cutting bills
Rather, according to Balassone, "in order both to accelerate the diversification of the country's energy supply sources and to respect the environmental objectives agreed at European level, the interventions to mitigate the price increase will have to be accompanied by a increased use of other manufacturers and consumption containment policies, also based on mechanisms aimed at encouraging informed choices on the part of families".
“We need a large investment program”
In particular, “in the short term, direct interventions will be needed expand import capacity from countries other than Russia through pipelines and regasification terminals and e.g increase the extraction of natural gas from national deposits – Balassone said again – On longer horizons, but starting now, it will have to be implemented an extensive investment programme for the increase in the production of energy from renewable sources and the infrastructures necessary for the progressive electrification of energy uses”. All this "will be accompanied by a rapid and decisive action to simplify the necessary authorizations".
European GDP and Russia-Ukraine war: risk -2% in one year in non-extreme scenarios
As for the consequences of the war between Russia and Ukraine, according to ECB experts, in non-extreme scenarios, “the fallout from the conflict could compress output in the euro area by up to 2 percentage points within the next year – continued Balassone – The consequences, currently under evaluation, may also be relevant for our country”.
First of all on the energy front, where the high-price situation has "worsened after Russia's aggression against Ukraine: if these increases were accompanied by a drastic reduction in imports from Russia, there would be significant negative effects on the economy in Europe and in Italy with a further increase in inflation”, Balassone underlined again.
Read the text of Balassone's hearing in the Chamber.
