Energy poverty and the impact of energy subsidies: recent trends in Italy

Abstract

In 2008, Italy introduced a system of means-tested energy subsidies which are deducted directly from electricity and gas bills. Since 2021, the deduction has been automatic for households with an ISEE certificate on file, and additional financial resources have been allocated to help households cope with the rise in energy prices. This has significantly increased both the number of households benefiting from the measure and the amount of the bonus. This analysis aims to assess recent trends in the impact of energy subsidies on reducing the number of energy-poor households.

The ISTAT’s household microsimulation model, which is based on the IT-SILC survey matched with administrative data, allows us to estimate energy poverty at household level using the Low Income High Costs approach. In addition, the model allows us to identify which households received the subsidies and to estimate the amount of bonus received by each household.

Our findings show that energy subsidies have been effective in offsetting the impact of rising energy prices for energy-poor households. However, enhancing the targeting mechanisms could improve the effectiveness of the bonuses in reducing energy poverty.