Meloni uses high energy price as an excuse to attack the Green Deal

The Meloni government has taken sides in a battle between factions of capitalism – the fossil fuel wing and the “green” wing.

On the issue of soaring fuel prices, Italian Prime Minister Giorgia Meloni reiterated her stance in Parliament on Wednesday: a line that is contributing to the impoverishment of families and businesses. 

Sooner or later, the government hopes, the war waged by its “American friend” Donald Trump and his Israeli allies against Iran will come to an end. In the meantime, the government will continue to talk about “monitoring” price trends rather than immediately blocking the hikes. She promised there will be a crackdown on speculation, but without specifying whether and how taxation will be used against multinationals, nor naming any names of companies that have jacked up fuel prices.

Ahead of the European Council meeting on March 19 and 20, the most interesting political takeaway from Meloni's otherwise low-profile address was her attack on the pillar of the “Green Deal”: the European Emissions Trading System (ETS), which aims to slash carbon emissions across Europe.

Meloni wants to suspend and dismantle the ETS because, according to her, it artificially inflates the price of electricity. For Italy, she said, this translates to spikes of €30 per megawatt-hour – a full quarter of the cost of electricity. She argued the mechanism is having a boomerang effect that disincentivizes electrification in favor of other polluting energy sources. 

According to her logic, the structural solution to rising energy prices and the key to the revival of “competitiveness” lies in scrapping the system altogether. In reality, this is simply the idea of bringing profits back up – currently eroded by high energy costs – by capitalizing on the freedom to pollute. 

The same project was also slipped into the modest “energy bills decree” passed by the government on February 18 with €5 billion in funding to reduce energy costs to consumers. The bill has been put on ice in the Chamber of Deputies and is being used by the government to force Brussels' hand ahead of next week's summit. It is a risky gamble, as the EU could easily strike down the measure as anti-competitive “state aid.” Furthermore, the ETS cannot be altered unilaterally by a single government.

Against this whole mess, Antonio Misiani of the Democratic Party (PD) countered with the idea that double the amount allocated by the government to fight price hikes could be found simply by using the funds the state collects from the ETS mechanism itself (€4 billion), alongside taxing general system charges on bills or employing dividends from state-invested companies (€2.5 billion). Ten billion euros could serve as a solid starting point to tackle this latest emergency. In short, Meloni has the money to do something else and is actively choosing not to use it.

The right wing's crusade against the ETS is an ideological battle waged alongside fossil fuel lobbies like the industry association Confindustria. It is a response to the cost pressures weighing on energy-intensive industries – steel, manufacturing, paper and ceramics – as well as the structural burden of a gas-dependent energy mix and wholesale prices that are higher than the European average. From a political standpoint, Meloni is not in a good position with her anti-ETS plans. She has found partial backing by the “Friends of Industry” group, which includes Germany, France and Poland – however, these countries remain geared toward “reforming” the ETS, not abolishing it.

Against this backdrop, we must look at the agenda being prepared for next week's European summit. The Italian position is not the majority view. On the contrary, it is fiercely opposed by the Executive Vice President of the European Commission, Spanish socialist Teresa Ribera, who called a possible suspension of the ETS “a strategic mistake.” It is also opposed by other governments, including Sweden, Denmark, Finland, Luxembourg, the Netherlands and Spain, all of whom view the ETS not as the problem but as part of the solution.

While Meloni was speaking on Wednesday, European Commission President Ursula von der Leyen was addressing the European Parliament. The latter's position falls somewhere between her vice president Ribera and her strong supporter Meloni. The ETS will not be touched because, without it, “today we would be consuming 100 billion cubic meters of gas more,” but the system must be “modernized.” Its updating will be discussed in the second half of the year.

The Meloni government has taken sides in a battle between factions of capitalism – the fossil fuel wing and the “green” wing – that has been playing out ever since the ETS system came into force in Europe. On one side, there are those on the right – as seen with the Lega in Strasbourg on Thursday – who go so far as to claim that the root cause of soaring energy prices is not war or financialization, but “green” market policies. 

In the Italian Parliament, meanwhile, a motion presented by the Green and Left Alliance (AVS) argued that altering the ETS would penalize renewable energy and that Meloni's policy is just another favor to those in Trump's camp, which include liquefied natural gas (LNG) producers. If the Iranian crisis triggers further upheavals, Italy will be forced to import more LNG from the US due to the blockade of production in Qatar.

© Il Manifesto Global