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RUEHBS/USEU BRUSSELS 4772

UNCLAS SECTION 01 OF 02 ROME 000353 
 
SENSITIVE 
SIPDIS 
 
FOR OES/EGC B DEROSA-JOYNT AND E. FENDLEY. 
 
E.O. 12958: N/A 
TAGS: EFIN ENRG SENV IT
SUBJECT: ITALY: GREEN "INVESTMENTS" IN STIMULUS PACKAGE 
 
REF: A. SECSTATE 26022 
     ¶B. 08 ROME 1489 
 
¶1. (U)  The Italian government, in the context of its modest 
economic stimulus effort (ref B), has implemented a number of 
measures, some of which could be seen as environmentally 
friendly, and others not.   The government has not explicitly 
sought to tackle environmental challenges  as part of its 
efforts to deal with the immediate and serious economic 
problems facing Italian families and businesses. The Italian 
Chair at a recent preparatory meeting for the G8 
Environmental Ministerial expressed Environment Ministries, 
frustration at not always getting the response they would 
like from finance ministries and the private sector to their 
calls for a move toward low-carbon technology.  End Summary. 
 
¶2. (U)  Following is post reply to ref A, Department's 
request for information on green "investments" in Italy's 
economic stimulus package. 
 
¶3. (U) Per ref B, the Italian government announced in late 
2008 a number of modest stimulus and relief measures to deal 
with the deteriorating economic situation.  Its principal aim 
was, and remains, bolstering confidence in the Italian 
financial system, reinvigorating the flow of credit to 
Italian families and businesses, and providing income relief 
to the poorest Italians. In a subsequent iteration of this 
relief package, the government in January 2009 implemented 
tax and other incentives to stimulate the purchase of 
automobiles and some durable household appliances. In March, 
the government announced additional modest sector-specific 
relief measures, this time for the construction industry. 
 
¶4. (U) The government has not explicitly touted its economic 
relief package as an environmental measure, but has tied some 
of its relief provisions to environmental goals.  The 
automobile purchase incentives, for example, are more 
generous the "greener" the new car purchased, and the 
"browner" the cars consumers trade in.  The central 
government has also made money available for local 
governments that upgrade public transport vehicles and 
systems to greener ones.  Tax breaks for purchasers of 
household appliances are primarily intended to assist the 
troubled industrial sector's sales, but they require that the 
new appliances be highly-rated (A ) for energy efficiency in 
order to qualify.  Similarily, some tax breaks and regulatory 
breaks apply only if environmentally friendly features (solar 
panels, more efficient heating and windows)are used on new 
structures.  Recently-approved research and development 
incentives include energy efficiency projects totaling 500 
million euros (half from the government and half from the 
private sector). 
 
¶5. (U) On the other hand, one way the government sought to 
lighten families' expenses over the recent holiday period was 
to postpone scheduled toll-road increases.  This, 
theoretically, mitigates disincentives for automobile use. 
 
¶6. (SBU)  During the March 9 G8 Environment Ministerial 
preparatory meeting, the Chair of the climate sessions, 
Environment Ministry Director General Corrado Clini, noted 
that despite Environment Ministers, calls for moving to 
low-carbon technology such as hybrid cars,  "Euros and 
dollars are now going to support existing car models," 
because of the need to deal with the immediate impact of the 
financial crisis.  This was an example, he said, of how calls 
from environmental authorities don,t always get the 
hoped-for response from finance ministries and the private 
 
ROME 00000353  002 OF 002 
 
 
sector.  Many delegations supported turning the Ministerial 
discussion toward the economic crisis/climate change 
intersection.  Such a discussion would address the challenges 
the economic crisis presents for reaching a climate agreement 
in 2009, the inclusion in stimulus packages of green 
financing, and the potential economic impact associated with 
a move to low-carbon technology. 
 
¶7. (SBU) Comment: With the Italian government already 
laboring under a debt burden exceeding 107 percent of yearly 
GDP, it is unable to move much more aggressively on fiscal 
stimulus. By including green elements in the modest stimulus 
implemented to date, the government might blunt 
international criticism of its lagging stance on climate 
change issues. However, 
grumbling in the opposition and among the public 
that the current government is not doing 
enough on the economy will add to a tendency to see "green" 
as an unhelpful diversion from economic priorities ) 
curbing economic contraction and maintaining employment. 
Moreover, Italy's recent track record in converting 
public-sponsored technological research into commercially 
viable products and services is not very encouraging. 
DIBBLE