Abstract for: Italy facing the EU Emissions Trading Scheme: some scenarios by the ICE model

This paper focuses on Italy in the context of the Kyoto Protocol. According to the Annex I to the last National Allocation Plan (NAP), Italy's emissions are 95 Mt. CO2 eq. above the Kyoto target of -6.5%, i.e. 19% over the goal. This paper proposes a critical analysis of the Government plan and NAP (National Allocation Plan) based on the analysis of recent Italian energy history and a wide set of policy measures that have been stated in formal documents and not implemented. The study is performed using the ICE (Italy's Carbon Emissions) model. ICE generates energy and carbon emission paths up to 2020 and elaborates sensitivity analysis on caps, carbon prices, and other variables. In particular, the research focuses on the Italian power sector under alternative scenarios of emissions and caps. A conclusion of our analysis is that a significant purchase of carbon credits on the international ET market is necessary. Given the troubled Italian public finance situation, buying carbon credits could represent an unplanned, and maybe not feasible, heavy burden.