Assessing drivers of energy consumption and progress toward energy targets in Italy

The objectives of this study are to provide new insights on (i) the drivers of changes in final energy consumption in Italy over the period from 1995 to 2015 by employing a multi-sectoral decomposition analysis approach – Logarithmic Mean Divisia Index I (LMDI-I); and (ii) the progress of Italy toward the indicative energy efficiency and mandatory energy-saving targets set for 2020. The decomposition results show that from 1995 to 2015, an increase in final energy consumption caused by activity effects has been almost totally offset by structural changes. Energy intensity improvements occurred during the period from 2006 to 2015 when most of the energy efficiency policies in Italy were implemented. However, unlike the ex ante estimates of energy savings reported by the Italian government, the LMDI-I analysis shows that Italy is not on track to achieve the 2020 energy efficiency and energy-saving targets. Challenges and opportunities in policymaking are discussed.