What are the prospects for coal in Italy?

Italy is a leading economy, ranked 11th in the world. The industrial sector drives the economy; it employs more than 30% of the working population and accounts for 25% of GDP. But, it faces challenges of poor economic growth and restricted competitiveness – partly due to high electricity costs.

The government wants the industrial and manufacturing sector to maintain a central role in the Italian economy. Sustainable growth will only happen if the competitiveness of the economic system improves.

In his latest report for the IEA Clean Coal Centre, Prospects for coal and clean coal technologies in Italy,  Dr Stephen Mills identified various factors that help keep the price of Italy’s electricity high and hinder its economic competitiveness:

• the energy mix for electricity is based mainly on imported natural gas and renewables. There is no nuclear power and a modest amount of coal, so it’s significantly different to the average EU mix

• average wholesale gas prices are high and many Italian power plants are fired on imported gas, which is reflected in the price of electricity

• some generators are operating in difficult economic conditions or are facing market transition; in particular, there is over-capacity in the CCGT (combined cycle gas turbine) sector

• Italy has the highest incentives in Europe for renewables production which amount to >€10 billion/y, and make up ~20% of the average consumers’ energy bill.

Italy is one of Europe’s biggest energy importers, importing much of its oil, natural gas, coal and electricity. This is expensive and makes the country vulnerable in terms of security of supply. Energy import costs reached a new high of €65 billion in 2012. Energy import dependency is >80%, whereas the EU 28 average is 53%.

The energy sector is crucial if Italy is to resume sustainable growth. The National Energy Strategy (NES), launched by the Italian government, aims to achieve a more secure, less expensive, and environmentally sustainable energy supply. It concentrates on the greater use of natural gas and renewables for electricity generation. Both are likely to keep electricity costs high.

According to Steve Mills: “Recent years have seen the cancellation of several important proposed major clean coal-based power projects. These would have operated cleanly and efficiently and provided secure, lower cost electricity”.

Reducing reliance on imported gas by increasing the use of coal for power generation could provide significant economic benefits as well as broaden the energy mix. The current coal-fired fleet has a combined capacity of ~9.7 GW and most plants use modern technology to achieve high levels of efficiency. Average fleet efficiency is ~40% which compares well with the overall European average of 35%.

Various Clean Coal Technologies (CCTs) are in use or active development in Italy. These include:

• the commercial scale application of circulating fluidized bed combustion (CFBC) technology

• the deployment of modern emission control systems

• the co-combustion of coal and biomass/wastes

• the use of advanced supercritical steam conditions in pulverised coal combustion (PCC) power plants.

In recent years, there have been several major coal-based power projects proposed. At an investment of >€5.5 billion, these would have added around 4.4 GW of capacity to the Italian grid. However, various difficulties mean that they have been deferred or cancelled.

Italy relies on imports to meet most of its coal demand – consumption is between 20 – 27 Mt/y. Italy is the 3rd largest coal importer in the EU after Germany and the UK. The Carbosulcis mine at Sulcis (Sardinia) is the country’s last working coal mine. There are proposals for this to be revamped as a combined mining and carbon capture site, linked with a coal-fired power plant equipped with carbon capture and storage (CCS) technology.

The establishment of the CO2 Technology Centre Sulcis, located at Sotacarbo’s research centre in Sardinia is an important new development.  A programme focused on a number of CCT- and CCS-related areas is now underway. CCS is a research priority for the NES. Italian organisations continue to engage in activities focused on the three main routes for CO2 capture (pre- and post-combustion capture, and oxyfuel combustion). Significant technological advances have been achieved via a number of projects that have ranged from small-scale RD&D to technology demonstration. Italy intends to continue R&D in this field, and to monitor closely associated advances made elsewhere.

The report Prospects for coal and clean coal technologies in Italy by Dr Stephen Mills CCC/254, ISBN 978-92-9029-576-1, 107 pp, June 2015 is available for download from the IEA Clean Coal Centre Bookshop Residents of member countries and employees of sponsoring organisations can download the report at no charge after a one-off registration.