Costs and benefits of the green transitionenvisaged in the Italian NRRP - An evaluation using the social cost of carbon

• Published in: Energy policy 2023-11, Vol.182, p.113744, Article 113744
• Main Authors: Alpino, Matteo, Citino, Luca, Zeni, Federica
• Format: Article
• Language: English
• Subjects: carbon; debt; discount rate; energy policy; greenhouses; National recovery and resilience plan; renewable energy sources; Social cost of carbon
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2023.113744

We perform an analysis of the green investments contained in the Italian National Recovery and Resilience Plan (NRRP) by comparing environmental benefits to the investment cost. We compute the future discounted environmental benefits in terms of expected greenhouse gases emission reductions using various estimates of the Social Cost of Carbon. Our results suggest that several projects would not have a positive net present value, unless the discount rate is relatively low and benefits accruing to developing countries receive a higher weight. The fact that investments under the NRRP are financed via long-term debt helps in bridging the gap between costs and environmental benefits. Investments in renewable energy are an exception, as their environmental benefits outweigh the cost within a short time-frame. •We study the green investments contained in the Italian NRRP.•We compare costs to benefits in terms of expected GHG abatement.•To compute the value of abatement we use six SCCs between 13 and 682 euro.•For some large projects, benefits are higher than costs only with the highest SCC.•Renewable energy is an exception, as benefits outweigh the costs with lower SCCs.