News

2023 financial maneuver: more than EUR 21 billion to tackle the energy crisis

On 22 November, the Council of Ministers approved the draft law containing the 2023 budget and the 2023-2025 multi-year budget.

In particular, the decree plans to increase aid toward households and businesses for the first three months of 2023, by, among others, refinancing the tax credit for purchasing electricity and gas, strengthening the social bonus for utility bills and removing improper charges on bills.

Furthermore, the measure has increased the taxation on the extra profits of energy companies, in line with EU regulations, while also changing the taxable base, which will be based on the profits generated.

A price cap should also be established on revenues obtained by energy producers with infra-marginal plants, such as renewables, thus implementing EU Regulation 1854/2022.

For more information, the text of the financial maneuver is available here.

COP 27: agreement on loss and damage fund

The 27th edition of the UN Climate Change Conference closed on 20 November with a breakthrough agreement to provide "loss and damage" funding for vulnerable countries hit by climate disasters.

Despite the difficult geopolitical backdrop, COP27 resulted in countries strengthening their commitments to limit global warming to 1.5 degrees above preindustrial levels. In particular, the agreement enhanced countries' actions to cut GHG emissions and adapt to the inevitable impacts of climate change and boosted the support of finance, technology and capacity building needed by developing countries.

With many details still to be defined, the aid should be used to assist developing countries in responding to the threat of global warming. Furthermore, parties also agreed on the institutional arrangements to operationalize the Santiago Network for Loss and Damage, aimed at catalyzing technical assistance to developing countries.

Governments also agreed to establish a specific committee to make recommendations on how to operationalize the funds and establish criteria to identify the beneficiaries.

The committee's first meeting is expected to take place before the end of March 2023.

With much progress achieved at this year's COP, the public eye is already focused on COP28, which will be held in Dubai.

More information is available at the following link.

New incentives for the biomethane sector

A new ministerial decree aimed at promoting biomethane production entered into force on 27 October 2022, with EUR 1.7 billion in incentives deriving from the National Recovery and Resilience Plan (NRRP).

The incentives will comprise both a capital contribution for eligible investments and an incentive tariff applied to the net production of biomethane and they will be granted via competitive tender procedures.

The decree is aimed at incentivizing the construction of new sustainable biomethane production plants (using organic or agricultural waste) and the conversion of previous agricultural biogas production plants to biomethane plants, thus contributing to the growth of sustainable energy, essential to achieve the European decarbonization goal. A key condition that has to be met to access the incentives is that the biomethane produced has to comply with the sustainability criteria established by Directive 2018/2001/EU, with particular reference to the principle of "not causing significant harm."

For more information, the text of the decree is available at the following link.

Energy communities: new aid decree available for public consultation

On 28 November 2022, the Ministry of Environment and Energy Security published the draft decree on energy communities, which is currently available to the public for consultation and revision purposes.

The decree introduces incentives for energy communities aimed at promoting the implementation of renewable energy plants in energy communities, collective and individual self-consumption systems.

Incentives will be granted directly to the beneficiaries after the energy plant becomes operational, without the need to participate in competitive procedures, and they will be paid until a total amount of 5 GW of incentivized energy is reached.

Following a bottom-up approach, the consultation phase aims to gather observations and proposals from citizens, enterprises, institutional actors and relevant stakeholders operating in the environmental field.

For more information, consult the draft decree at the following link.

Case Law

Lazio TAR rejects appeals by energy companies against taxation on extra profit

The Lazio Regional Administrative Court (TAR) has deemed the appeals filed by energy companies against the Revenue Agency's act establishing the tax due for so-called extra profits inadmissible for absolute lack of jurisdiction.

According to the court, the Revenue Agency did not have any margin of discretion to determine the constitutive elements of the contribution, which were already defined by the law.

Since the Revenue Agency was merely entrusted with defining the technical aspects, the court has clarified the fiscal nature of the exceptional contribution, thus ruling out the possibility that the agency's acts could be considered regulatory acts or, in any case, acts with general content.

For that reason, the TAR concluded that neither the administrative nor the tributary courts could hear the case, since the tributary courts would only have jurisdiction over notices of inspections for failure to pay or partial payment, or over any refusal to refund the amount already paid.

Council of State rules on classification of "energy-intensive enterprises"

In a joint-section decision dated 4 November 2022, the Italian Court of Cassation was called upon to judge a case brought by the Regulatory Authority for Energy Networks and Environment (ARERA) against Rete Ferroviaria Italiana concerning the classification of railway companies as "energy-intensive" companies.

ARERA previously published a determination on the update of the tariff components of the electricity and gas sector, excluding railway companies from the benefits provided by Directive 2003/96/EC for "energy-intensive" companies, i.e., companies operating in an energy-intensive sector. This was because companies providing services could easily reduce their energy consumption levels and continue their activity without being considered energy-intensive.

Following these grounds, the court rejected the appeal, stating that railway companies are not able to easily compress their energy consumption, since energy constitutes "the sole driving element of trains" and expressing the principle that nonmanufacturing companies should not be automatically excluded from the benefits, as the choice should rather depend on the actual possibility to compress their energy consumption in the long run.

EU

EU Commission proposal on a price cap on gas

The European Commission has drafted a proposal for a price cap on gas, set at 275 EUR/MWh, which would only be applied in specific conditions.

The possibility of a price cap on gas has divided member states for the past few months, and the commission had to carefully balance the positions expressed by member states.

In particular, the cap will be triggered if the Title Transfer Facility ("TTF") market futures exceed the fixed price for at least two weeks, and if the gap between the TTF and global liquefied natural gas prices is greater than EUR 58 for at least 10 days.

The proposal states that when the above conditions are met, the Agency for the Cooperation of Energy Regulators ("ACER") will immediately publish a market correction notice in the Official Journal of the European Union and inform the commission, the European Securities and Markets Authority ("ESMA") and the European Central Bank ("ECB"). The following day, the price correction mechanism will enter into force and no TTF derivative orders relating to the previous month and exceeding the price cap will be accepted.

CSRD: new rules on corporate sustainability reporting approved by the European Council

On 28 November 2022, the council gave final approval to the Directive on Corporate Sustainability Disclosure.

This means that companies will soon be required to publish detailed information regarding sustainability issues, such as compliance with ESG criteria, environmental rights, social rights, human rights and governance factors.

The new sustainability disclosure rules will apply to large public interest enterprises with more than 500 employees, large enterprises with more than 250 employees and a turnover of EUR 40 million and all companies listed on regulated markets, with the exception of microenterprises. Moreover, these companies are also responsible for assessing information related to their subsidiaries. The directive will also apply to SMEs, subject to a possible exemption ("opt-out") during a transitional period, which would exempt them from the application of the directive until 2028.

The stated goal of the directive is to close the gaps in existing rules on nonfinancial information. Financial markets need particular transparency with reference to environmental, social and governance information for private capital to be directed toward the green and digital transition goals that underlie European recovery plans.

The rules will be implemented between 2024 and 2028, depending on the company that has to comply with them: large companies already subject to the Non-Financial Reporting Directive will have to publish their sustainability report by 2025; large companies that were not already subject to the Non-Financial Reporting Directive will have to publish their first sustainability report by 2026; SMEs, on the other hand, will have to publish the sustainability report by 2028.

For more information, the text of the directive can be found at this link.

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