Italy: Decarbonisation will have very uneven sub-national impacts

By 2050 Italy intends on being net zero, but getting to that point is unlikely to be smooth. Structural challenges within Italy’s economy, combined with mixed messages from the national government, means there is a great deal of uncertainty around the duration and economic impact of this shift. Consequently, we have modelled scenarios showing possible pathways to net zero and their economic outcomes across all of Italy’s provinces. We have also considered a path where climate mitigation policies are abandoned, resulting in severe economic damage.

What you will learn:

• One thing that is clear: the impact of decarbonisation will be far from uniform across sectors. Unsurprisingly, we forecast that the burden of the climate transition will fall heavily on the more carbon-intensive subcomponents of Italy’s industrial sector.
• On a broad level, industrial activity is skewed towards the north, whereas consumer-led services and agriculture are more important to southern provinces. It would, therefore, be fair to assume that the manufacturing-intensive north will face the biggest challenges in the shift to net zero. However, this is not the case.
• Rather, we find that major disruptions are confined to pockets in both north and south Italy. Provinces in the industrial belt, east of Genova, underperform in our transition scenarios, as does the southern mining hub of Potenza. Yet, GDP in manufacturing hubs in north-eastern provinces around Milan are among the more resilient cities, owing to their reliance on subsectors that have lower carbon intensities, and thus, are able to transition more smoothly towards net zero.
• Italy’s two largest cities―Milan and Rome―fare quite differently in our scenarios. Rome’s sectoral structure, with its dependence on the less carbon-intensive public sector and limited industrial activity, means it should be able to navigate the shift to net zero more easily than Milan.