Italy falls behind on energy transition as transport and buildings lag

Italy’s 2025 emissions rose by about 9 million tons of CO2 equivalent, putting the country further off track for 2030 EU climate targets, according to ECCO’s annual PNIEC progress report. The think tank says transport, buildings and industrial decarbonization are the weakest points, while public spending and policy coordination remain too fragmented to close the gap.

Why it matters: - Italy must still cut about 95 million tons of CO2 equivalent from 2025 levels to meet its 2030 EU obligations. - The shortfall affects transport, buildings, agriculture, waste and small industry, which are covered by the Effort Sharing Regulation. - If Italy keeps missing its targets, projected compliance costs could reach between €3.8 billion and €5.7 billion for emission-rights purchases.

What happened: - ECCO, the Italian climate think tank, released its annual Progress Report on the National Integrated Energy and Climate Plan, or PNIEC. - The report says Italy’s greenhouse-gas emissions rose by about 9 million tons of CO2 equivalent in 2025 versus 2024. - ECCO says the pace of the transition is slowing even as 2030 approaches. - The report was published from Rome.

The details: - ISPRA projections show Italy had already accumulated an excess of about 30 million tons of CO2 equivalent between 2021 and 2025. - That gap is expected to rise to 39 million tons by 2030. - Public resources for the transition are being spread thin because of weak governance and no clear financing strategy. - The PNRR closed with 45% of transition funds actually spent. - Of the €18.2 billion collected from ETS auctions between 2012 and 2024, only 9% went to climate measures. - In transport, the sector still accounts for more than 30% of Italy’s emissions. - The PNIEC targets 4.3 million electric cars by 2030, but only 445,000 were on the road in August 2026. - Electric-car incentives pushed EV registrations to 9% between late 2025 and 2026, below the 22% European average. - After incentives ended in June, the market returned to prior levels. - Available support remains limited and split across multiple technologies. - In buildings, the share of thermal renewables has been flat for five years. - Italy has not yet transposed the EU’s Case Green directive. - The Conto Termico ran through its annual budget in one month. - The National Energy Efficiency Fund used only €18 million of €284 million available. - Gas demand remains 11.2 billion cubic meters below 2019 levels. - Gas consumption rose 2.1% in 2025, driven by thermoelectric generation, which increased 7.2%. - The report says Italy still lacks a real exit strategy from gas. - The Sardinia gasification plan is now expected to finish no earlier than 2033. - Italy installed about 7 gigawatts of renewables in 2025, below the 10 gigawatts a year needed for the 2030 target. - Curtailment losses of renewable power rose to about 802 gigawatt-hours in 2025, more than double 2024. - Electricity prices are still shaped largely by gas, and taxes and levies weigh more heavily on power bills than on gas bills. - Italy’s decision to postpone coal phaseout to 2038 sends an unclear signal to investors. - Final energy electrification remains stuck at 23%. - In 2024, electricity covered 49% of services demand and 40% of industrial demand, but only 21% of household-sector demand and 2% of transport demand. - Italy has one of Europe’s highest electricity-to-gas price ratios. - Industrial decarbonization incentives are fragmented and short term. - The report cites ex-Ilva as a symbol of the problem. - Italy remains well behind 2030 targets for renewable hydrogen, biomethane and carbon capture, even with new support tools.

Between the lines: - The report suggests Italy’s climate problem is no longer just about missing targets; it is also about weak policy design. - Low electrification, high power prices and inconsistent incentives are slowing demand shifts that would reduce emissions faster. - The gap between installed clean energy and actual usable output also points to grid and permitting bottlenecks. - ECCO’s critique implies that new money alone will not fix the transition without better coordination and a clearer tax and spending strategy.

What's next: - ECCO says the 2026 budget can still change direction by using Brussels-approved flexibility to accelerate electrification. - The think tank wants taxes and levies rebalanced so electricity is cheaper relative to gas. - ECCO also wants the Social Climate Fund financed early, before its 2027 start date, to help households most exposed to energy costs. - The report points to a need for a unified industrial strategy that covers both investment spending and operating costs.

The bottom line: - Italy is not just lagging on climate targets. The report says the country is also underinvesting, under-coordinating and under-using the policy tools it already has.