Impact analysis of carbon pricing strategies on the decarbonisation of the Italian electricity market

We analyse the impacts of a carbon tax regime on the Italian economy and the evolution of the Italian electricity system toward carbon neutrality by 2050. In order to frame the problem, first we address the climate change issue and its link to the production of energy (i.e. the electricity industry). We review how Italy decided to tackle this issue and how it compares with Europe's objectives. In so doing, we report the various carbon pricing instruments available to the policy makers with quotes on what previous experiences have taught us. After this overview, we introduce the different energy models frameworks adopted in support of the scope of the research. We present the results of two case studies. On the firsthand, we show how even imposing a 50\% carbon tax regime will only partially alleviate the problem and make capital owners worse off. Secondly, we discover that no less than 10 GW per year of additional photovoltaic panels should be deployed and how around \EUR 18 bln per annum need to be invested overall in greener technologies to fully decarbonise the Italian electricity system by 2050. In the conclusions, we stress on: (i) the importance of the combination between batteries and photovoltaic technology, (ii) the irrelevance that carbon pricing assumes on the long term, (iii) the higher cost of becoming independent from electricity imports and (iv) the potential cost saving curtailment holds against batteries.