Amid the race towards a greener future, Italy finds itself grappling with the delicate task of allocating funds for its hydrogen sector within the context of the European Union’s Recovery and Resilience Facility (Pnrr).
The nation’s approach to hydrogen infrastructure development, underscored by concerns over funding remodulation, underscores the intricate challenge of balancing ambition with fiscal prudence.
As the European Commission scrutinizes Italy’s proposal to allocate Pnrr funds to the hydrogen sector, experts and insiders raise alarm over potential delays and uncertainties. In comparison to other interventions aimed at territorial enhancement and energy efficiency, the remodulation of hydrogen sector funds has provoked concerns that its significance might be overshadowed.
Davide Chiaroni, Deputy Director of Energy & Strategy at the School of Management of the Milan Polytechnic, emphasizes Italy’s lag in developing a coherent hydrogen strategy. With Italy’s planned electrolysis capacity of 1.97 GW paling in comparison to Europe’s 93.55 GW, the nation’s urgency to establish a clear hydrogen vision is evident.
The reduction of funds allocated to the hydrogen sector within Pnrr, without the assurance of replacement resources, casts a shadow of uncertainty over industry stakeholders. Notably, the funding cut impacts plans for larger hydrogen plants, including the decarbonization of the Taranto iron and steel complex. This flagship project was poised to set the course for future endeavors, making the funding cut a setback for Italy’s nascent hydrogen ecosystem.
Italy’s Pnrr was initially designed to initiate numerous projects with the intention of assessing outcomes and determining strategic focus. The removal of a significant project, such as the Taranto initiative, sends ripples across the entire hydrogen supply chain. According to Chiaroni, the reverberations extend to both direct and indirect stakeholders, eroding the potential for a scalable effect that could have influenced smaller projects down the line.
Italy’s government has indicated the possibility of sourcing additional resources from the Repower EU fund, a non-repayable grant totaling 2.76 billion euros. However, part of the funding may take the form of a loan, introducing complexities for longer-term hydrogen infrastructure projects. Repayment terms could potentially misalign with construction timelines, exacerbating the challenge of timely implementation.
With the remodulation of Pnrr funds prompting concerns from various quarters, including Municipalities and Regions, Italy navigates a complex landscape where competing priorities vie for resources. The risk of an underdeveloped hydrogen supply chain, compounded by a lack of institutional clout, underscores the urgency for strategic alignment and clear financial commitments.
