VZCZCXYZ0007
PP RUEHWEB

DE RUEHRO #0461/01 1050901
ZNY CCCCC ZZH
P 140901Z APR 08
FM AMEMBASSY ROME
TO RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 0139

C O N F I D E N T I A L ROME 000461 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPARTMENT FOR EEB DAS HENGEL 
DEPARTMENT PASS TO DEPARTMENT OF ENERGY 
DEPARTMENT OF ENERGY FOR P/I JAMES HART 
 
E.O. 12958: DECL: 04/14/2023 
TAGS: ECON ENRG EPRT IT
SUBJECT: SCENESETTER FOR ACTING DEPUTY SECRETARY OF ENERGY 
KUPFER'S TRAVEL TO ROME, ITALY, APRIL 21-23, 2008 
 
REF: A. ROME 451 
     ¶B. 07 ROME 2438 
 
Classified By: EcMin Thomas Delare for reasons 1.4 (b) and (d) 
 
Political Backdrop 
------------------ 
 
¶1.  (C/NF) Your trip to Rome for the International Energy 
Forum (IEF) will occur immediately after Italy's April 13-14 
parliamentary elections.  While you are here, Italian 
parliamentarians will be in the beginning of the government 
formation process.  Romano Prodi's center-left coalition 
government collapsed in January after two years of unstable 
government.  Prodi will remain caretaker Prime Minister until 
mid-May when a new government can be sworn in.  As caretaker 
PM, Prodi and his ministers (including Economic Development 
Minister Bersani, responsible for energy issues) can continue 
to carry out day-to-day business but cannot change government 
policy.  Polls indicate that conservative former PM Silvio 
Berlusconi's People of Liberty coalition (PdL) leads Walter 
Veltroni's Democratic Party (PD) by an average of five to 
eight percentage points.  Though Berlusconi's lead may have 
narrowed in recent weeks, virtually all pollsters and 
political analysts predict Berlusconi will win the national 
electoral vote.  However, complicated rules for distributing 
Senate seats mean the outcome in the Senate is uncertain.  In 
the event that the two parties split the parliaments, a 
"unity" government or other options are possible.  An 
emerging foreign policy consensus and a future government 
without the far left mean any of the likely electoral 
outcomes should bring improved U.S. foreign policy 
cooperation with Italy and an improved tone in our bilateral 
relationship. 
 
Italian Energy and Energy Security Policy 
----------------------------------------- 
 
¶2.  (U) Since 2005, the GOI has sought to increase the use of 
natural gas to meet Italy's winter heating needs.  This 
policy was driven by the desire to minimize exposure to high 
oil prices and to lower Italian carbon dioxide emissions in 
order to comply with Italy's Kyoto Protocol obligations. 
According to Eni, the Italian oil and gas parastatal 30% 
owned by the Italian government, Italy was the world's 
seventh-largest consumer of natural gas in 2005.  In 2005, 
Italy consumed 84.27 bcm of natural gas.  Of this, 23.33 bcm 
(27%) came from Russia.  The use of natural gas for power 
generation has also increased.  In 2005, of 303,699 GWh of 
electricity generated by Italian power plants, 149,262 GWh 
(49%) was generated using natural gas.  Italy's remaining 
electricity was generated using coal (49,419 GWh, 16% of 
total), oil (47,124 GWh, 16%), and hydro (42,927 GWh, 14%), 
with the remaining 5% coming from waste, biomass, geothermal, 
wind, and other sources. 
 
¶3.  (U) Italian energy security policy has two goals: (i) 
increasing Italian access to existing natural gas sources by 
constructing new natural gas pipelines, and (ii) encouraging 
the formation of a common EU energy policy. 
 
¶4.  (U) After natural gas shortages in January 2006, caused 
by Gazprom's decision to cut off gas exports via pipelines 
transiting Ukraine, the GOI has supported construction of 
pipelines linking Italy to natural gas fields in Russia, 
Algeria, and the Caspian Basin.  Ministry of Foreign Affairs 
officials have said the GOI will support "any project that 
will bring natural gas to Italy."  Most recently, GOI efforts 
helped ensure EU approval of the Turkey-Greece-Italy (TGI) 
pipeline, which will connect Italian gas consumers to natural 
gas fields in Azerbaijan.  Similarly, the GOI supports the 
South Stream pipeline, proposed by Gazprom and Eni, which 
will connect Russia directly to Bulgaria and European markets 
via a pipeline running under the Black Sea.  Ref A reports on 
the Eni-Gazprom relationship and its implications for Italian 
energy security.  While the GOI has offered rhetorical 
support for the construction of LNG re-gasification 
facilities, it has not intervened forcefully to help gas 
companies, including ExxonMobil and British Gas, overcome 
opposition at the regional and city/town levels. 
 
¶5.  (U) The GOI supports formulation of an EU energy policy 
as a means to encourage energy diversification and improve 
the competitiveness of the EU's internal energy market. 
Italy sees a unified EU position on energy as a balance to 
the "negotiating weight" of Gazprom and other energy 
suppliers.  Gazprom supplies more than a quarter of the EU's 
 
natural gas supplies.  Discussions of an EU energy policy 
have begun in Brussels, but have not made much progress. 
Among the issues that the incoming Italian government will 
have to grapple with is the role of nuclear power.  A 1988 
referendum had the practical effect of banning nuclear power 
generation in Italy.  Opponents of nuclear energy argue that 
the question of nuclear waste disposal must be addressed 
before nuclear energy production in Italy resumes. 
 
Possible Meeting With Economic Development Minister Bersani 
--------------------------------------------- -------------- 
 
¶6.  (U) Minister of Economic Development Bersani is the GOI 
minister responsible for energy issues.  Because Bersani is 
the IEF host and a G8 Energy Minister, you may meet with him 
on the margins of the IEF.  If a meeting takes place, bear in 
mind that because Bersani came into office under the Prodi 
government, he may be a caretaker minister at the time of the 
IEF. 
 
¶7.  (U) Energy Secretary Bodman met with Bersani during 
Bodman's November 2007 trip to Rome for the World Energy 
Congress (WEC).  During their meeting, Bersani signed the 
Global Nuclear Energy Partnership (GNEP) Statement of 
Principles.  Bersani and Bodman also signed an agreement on 
bilateral cooperation in energy research and development. 
(Ref B)  If you have a bilateral meeting with Bersani, you 
should ask what he thinks the energy priorities of the 
incoming government will be.  Bersani may also have some 
interesting thoughts on the likelihood of the return of 
nuclear power generation to Italy and on what Italy and the 
EU can do to improve the energy security of Eastern European 
EU member states. 
 
¶8.  (U) You should also be aware that Ambassador Spogli has 
made energy security one of the top priorities of this 
Embassy.  We are working now to intensify our dialogue with 
the Italian government on a broad range of energy issues, 
including energy diversification, EU market reform, and 
increased use of renewable energy sources.  It would be very 
helpful to us if you could focus your public comments to the 
press on the urgent need for Italy and the EU to diversify 
their energy supply and take other steps to enhance their 
energy security. 
SPOGLI