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Saturday December 3rd, 2022 1:29PM

Energy crisis key to Italy's election — but not conservation

By The Associated Press

MILAN (AP) — Giambarini Group’s plants in northern Italy must keep zinc baths that rustproof steel and iron parts super-heated around the clock, seven days a week, an energy-intensive process that has grown exponentially more costly as natural gas prices spike.

Methane to create molten zinc that forms a protective coating over high-rise support beams and wrought-iron fences used to take up just 3% of operating costs, but now it's as much as 30%. The family-run company has passed some of the extra cost to customers, but business is uncertain as rising prices for raw materials freezes the construction industry that Giambarini supplies.

“We don’t know the future. We don’t know if it will get worse or better, since clients don’t know if they will have work,’’ said CEO Alberto Giambarini, the third generation in his family to run the business. He has orders for the coming 10 days, instead of through Christmas, like in the past. “We are living day to day.”

The energy crisis facing Italian industry and households — like those across Europe — is a top voter concern going into Sunday's parliamentary elections as fears grow that astronomically high bills will shutter some businesses, at least temporarily, and force household rationing by winter. Prices started going up a year ago and have only been exacerbated as Russia has cut back natural gas used to generate electricity, heat and cool homes, and run factories as Europe supports war-torn Ukraine.

Already in July and August, industrial energy use dropped by double digits mostly because of scaled-back production — which experts say could affect economic growth and employment in the coming months.

At the same time, three-quarters of Italian households expect even more pain this fall with higher bills, according to the SWG polling institute. Already, 80% report important sacrifices to pay energy costs, such as delaying vacations, major purchases and eating out.

Never in an Italian election campaign has energy been such a central talking point. Candidates have sparred over whether debt-laden Italy, which has already spent more than 60 billion euros to help families, businesses and local governments, should incur yet more debt to finance new relief. They're also facing off on whether Italy should consider investing in new nuclear technologies.

But no party is discussing mandatory conservation measures, like many of Italy’s European neighbors.

“It is remarkable to see how much all these people are commenting on energy. Before the current situation, no one would mention the issue. But at the same time, they are neglecting if not ignoring completely the climate side of this,’’ said Matteo Di Castelnuovo, an energy economist at Milan’s Bocconi University. “No one is going to talk about rationing or reducing consumption.”

Most major parties, including Giorgia Meloni’s far-right Brothers of Italy and Enrico Letta’s center-left Democratic Party, are largely following strategies pursued by the outgoing government of Premier Mario Draghi. They both advocate a European Union cap on natural gas prices, despite a failure to gain EU consensus in months of discussion, along with varying formulas to help families and offer tax breaks to businesses.

Pollsters and energy experts say these similarities have made it difficult for voters to be moved by energy policy.

Broadly, the campaign has focused on continued natural gas investments.

For the Democratic Party, plants that regasify liquid natural gas are positioned as a bridge to other technologies as it sets a target to add 85 gigawatts of renewable energy by 2030 in a country that for years has averaged just 1 gigawatt a year. The center-right coalition that Meloni’s party is leading wants to expand pipeline deliveries to Italy, which fits a longer-term strategy of making Italy a gas hub for Europe but does not address the EU goal of emission reductions by 2030.

The right-wing coalition and small centrist parties also advocate a return to nuclear power, which Italians have rejected in two referendums decades apart. In addition to societal resistance, the technology would take at least two decades to implement, too late to help Italy’s commitment with the Group of 7 wealthy economies to fully decarbonize by 2035, said Matteo Leonardi, executive director of the environmental think tank ECCO.

The political debate is largely focusing on lowering gas prices but not diversifying or discouraging households from consuming resources that would better support industry, Leonardi said.

“The response to this crisis, as they are saying in the rest of Europe, are renewables and efficiency," Leonardi said. “You cannot face a war without arms. You cannot give the message that the state will take care of it, consume what you want."

Italy’s famed textile industry, which gives French and Italian fashion houses their luxury edge, also is suffering. The small and medium operators that form the backbone of the system risk closure without a swift, systemic response from both Europe and Italy, said Sergio Tamborini, head of the SMI Italian Fashion System association.

“The bills that arrived in June and July were explosive,’’ Tamborini said.

Italy’s textile industry — along with leather and accessories accounting for revenue of 100 billion euros a year — is a luxury niche that Tamborini worries will be weakened by cheaper markets if costs aren't reduced.

Dying and printing textiles is especially energy intensive, Tamborini said, and for some, “it is a problem of survival.”

“We should have had help already in September. We cannot wait for the next government to be active, because it could be Christmas or even after,” he said, given the fractured nature of Italian politics.

Meanwhile, Giambarini said his business has no immediate plans for short-term layoffs of 250 workers, but the outgoing government has been discussing new layoff programs to give businesses a way to avoid crippling energy costs.

Shutting down even temporarily would be devastating, taking months to relaunch, said Giambarini, adding he was still deciding which party to back.

“We are waiting for the election and hope we will get a government that will indicate a better road out of this period of crisis,’’ Giambarini said.

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