Billions for a greener Italy, but will Draghi manage to spend EU money this time around?

The United Nations Climate Conference (COP26) in Glasgow is the year in which the European Union has made a clear commitment to making the continent more sustainable. During the climate summit, Innovation Origins will zoom in on Italy. This country receives around 20% of the money from the Next Generation EU fund which links recovery from the Cororona pandemic to sustainability.

No one can say that the Italian government led by Mario Draghi, the former director of the European Bank, is not moving forward. In record time, his government drew up an action plan to boost the growth of the Italian economy. Italy must become more digital, dynamic, sustainable and inclusive. In August, the European Commission approved Draghi’s plan (along with similar plans from other European countries).

The Italian plan amounts to 191.5 billion euros of the 800 billion euros to mitigate the effects of the pandemic. The lion’s share of this amount is therefore loaned to Italy. However, the money will not just be distributed.

Italy collapses

The Italian government has concocted an additional 30.6 billion euros thanks to additional government funds. Thus, for the next five years, Italy will have an additional margin of 222.1 billion euros. The money is spent in six different areas. The bulk (around 100 billion euros) includes investments in the field of digitization, innovation and ecological transition.

As such, the money is not only spent to meet the goals of the Paris (2015) or Glasgow (2021) climate summit, but also to become a more modern country. The Italian education system is collapsing, its judicial structure is fragile and its economy has only grown at an annual rate of 0.2% (before Covid) since the year 2000.

Uninsured success

The fact that Italy finally has the financial capacity to do things differently does not mean that success is assured. The first thing to do is to specify the objectives and “milestones”. These are quantitative and qualitative measures, 419 of which have been identified by the government. This step has been taken. “In fact, the government is accelerating this,” says Luciano Monti, professor of European Union politics at LUISS University in Rome.

More problematic is when it turns out at the end that the funds have been allocated but not disbursed. Maybe it’s because there were issues with the apps. Monti: “That was always the problem in the past.” According to a report by the European Court of Auditors (chapter 2 of this report) concerning last year, Italy is ranked second to last in terms of the finalization of projects which have received European funding. During the period 2014-2020, Italy received only 38% of the money pledged. This is due to the poor quality of the administrative and bureaucratic level of government.

“Over the next five years, up to four times more EU funds will be available than in other years. This is why the government has rightly given priority to structural reforms, ”says Monti. The professor himself is also a member of a government committee that checks whether the proposed plans will have a favorable effect on the situation of young people.

Tenders are minor disasters

Reforms include, for example, more flexible regulations for tendering. Italian tenders are often minor disasters, even for foreign investors. The paperwork and the time wasted are mind boggling. But the government has already issued decrees to change this. In doing so, many rules and standards have been simplified and the deadlines (request, processing, appeal, etc.) are shortened.

“Another important reform that is underway is the training of civil servants, because it is mainly they who will manage the funds. This means investing in the quality of civil servants at the local level, because the projects have an impact at the local level.

Italy also plans to measure the success of investments in a different way than in the past. Monti: “The objective of the financial injection is to trigger a strong recovery. If that does not happen, we will burden future generations with having to repay the loans. It is not for nothing that this European recovery fund is called: “NextGenerationEU”.

“This is why a new path has been chosen. This involves measuring not so much in terms of output, but in terms of results. In production-based measurement, the outcome of a service is measured, but not how it was performed. Measurement by result is more efficient.

NextGenerationEU

One of these “results” is the investment in the development of 7,500 fast charging stations for electric vehicles along highways and more than 13,000 in cities. The Italian plan under NextGenerationEU is full of other green goals, measures and investments. Professor Monti is optimistic. “The ecological transition is timely for Italy. It gives a boost to the circular economy and creates jobs for young people.

The UK and Italy have pledged to put climate change and reversing biodiversity loss at the heart of the multilateral agenda for 2021, including by chairing the G7 (July), the G20 (this weekend) end) and COP26 (from Sunday). A pre-COP26 meeting was held in Milan in early October.

Learn more about Italy’s green plans.