ECCO: Italy taxes electricity far more than gas, slowing electrification

A new ECCO study says Italy’s tax and fee system heavily penalizes electricity versus gas, diesel and gasoline, undermining electrification and the country’s energy transition. The think tank says a reform is needed to align energy taxes with climate and competitiveness goals. Why it matters: - Italy’s current energy tax structure makes electrification less attractive for households, businesses and transport. - ECCO says that slows investment, weakens competitiveness and delays the energy transition. - The study argues that a fairer split between electricity and fossil fuels could help lower bills and mobilize private capital for cleaner technologies. - Keeping the current gap leaves Italy exposed to imported fossil fuels, with 95% of gas and 89% of oil consumption imported. What happened: - ECCO, the Italian climate think tank, presented a new study in Brussels during European Sustainable Energy Week. - The study finds that Italian households pay taxes and levies on electricity up to four times higher than on gas. - In industry, the gap exceeds 20 times. - In transport, electric charging modes face taxes and levies up to twice those applied to diesel and gasoline. The details: - In 2024, average electricity costs for Italian consumers were about 31 euro cents per kilowatt-hour. - Of that electricity bill, 49% was the raw energy cost, 16% network services, and 35% fiscal components, levies and ETS-related costs. - Average gas costs were about 10 euro cents per kilowatt-hour. - For gas, 50% was raw energy cost, 22% network services and 28% fiscal charges and levies. - ECCO estimates that a small or medium-sized business pays 11 euro cents per kilowatt-hour in taxes and levies for electricity, versus 0.6 cents for gas. - The main driver of the gap is general system charges, which were created to fund sector policies and renewable energy support. - Those charges still fall mostly on electricity consumption. - Gas, diesel and gasoline do not bear comparable costs because decarbonization in heating and mobility is expected to come through electrification. - ECCO says a tax and levy reform is needed to bring fiscal policy in line with energy, security and competitiveness goals. - The study says taxes and levies should reach at least the same level per kilowatt-hour across electricity, gas, diesel and gasoline. - ECCO says that kind of redesign could also raise the revenue needed to fund transition policies now supported by system charges, the ETS mechanism and poorly coordinated public spending. - Matteo Leonardi, ECCO’s co-founder and executive director, said Italy’s tax system penalizes the most efficient technologies and prevents electrification from delivering full economic benefits. - Leonardi also said the current burden on energy carriers is inconsistent with consumer benefits. Between the lines: - ECCO is making a fiscal argument as much as an energy one. - The think tank is saying Italy cannot rely on market forces alone to close the gap between fossil fuels and electricity. - The message is that policy design, not just technology, is now a bottleneck for electrification. - The study also links energy taxation to macroeconomic risk, especially dependence on imported fossil fuels. What’s next: - ECCO wants a reform that rebalances taxes and levies across energy sources. - The think tank argues the redesign should preserve funding for transition policies while lowering the bias against electricity. - ECCO says a modernized system would strengthen competitiveness and let households capture more of the savings from electrification. - More information is available in ECCO’s announcement and on ECCO’s LinkedIn page . The bottom line: - ECCO says Italy’s energy transition is being held back by a tax system that still favors fossil fuels over electricity.