Italian gas consumption has been
dropping over the last 20 years.
While in 2005 it stood at 86.3bcm annually
by 2022 it had fallen to 68.7 bcm
and by current estimates it will settle
at only slightly over 50bcm by the end of this year.
Despite this, Italian utilities are proposing
to spend billions on new gas infrastructure.
Italian gas TSO Snam, for example,
has earmarked EUR 11.5bn to expand
its gas systems and bolster its
South North Adriatic line capacity
Some believe the reasoning behind
this push is to future-proof
these networks for hydrogen use,
as it's far easier to raise
financing for gas infrastructure
than it is for hydrogen-related projects.
But is this roundabout way
of raising hydrogen financing
actually putting taxpayers’ money at risk?
We have to be very, very concerned about
avoiding stranded assets
because stranded assets eventually
are paid by all taxpayers or energy users.
They don't contribute to the
competitiveness of an economic system.
Last week, Italy's government
unveiled its new hydrogen strategy
which aims to fuel up to 18%
of its energy intensive industries
and up to 30% of the country's
transport demand by 2050.
Italian utilities believe existing pipelines
can be easily converted for hydrogen
but analysts say the technical reality
may be more complex.
We have seen in the past a bit too much optimistic views
about the possibility of repurposing gas grids.
If we look at the European-supported
hydrogen corridor from Sicily to Central Europe,
actually it is entirely based on
repurposing of gas assets.
Another potential stumbling block,
of course, is hydrogen storage.
One point that is quite critical
is that apparently in the world,
we almost don't have any geologic capacity
for storing hydrogen. So, if storing
hydrogen proves to be a critical thing,
we might also be very limited
in the potential for long distance transport
of hydrogen and that's quite problematic.
Using gas infrastructure as a backdoor route
into hydrogen financing
might seem clever on paper,
but if these conversion plans
don't work out as promised,
it'll be the taxpayer that has to
foot the bill for these stranded assets,
and Italy will have undermined
its economic competitiveness.
