The engagement of the Italian energy sector in the transition to the green economy

Università degli Studi di Torino

Corso di Laurea: Management dell’informazione e della

comunicazione aziendale

The engagement of the Italian energy

sector in the transition to the green

economy

Tesi di Laurea

Relatrice

De Bernardi Paola Candidata

Pinto Arianna

Matricola 1014621

Anno Accademico 2023/2024

A chi coglie, sfida e

abbraccia il cambiamento. Il sole esiste per tutti.

2

INDEX

Abstract (Italian)..................................................................................................... 4

Abstract.................................................................................................................. 5

1. Introduction to circular economy........................................................................6

1.1. Principles and stages of Circular Economy...................................................8

1.2. The European framework for sustainable development.............................11

1.3. Rating ESG and sustainability reporting.....................................................15

2. Overview of the Italian energy sector...............................................................18

2.1. Oil & Gas sector and Hydrogen's creation of new opportunities.................22

2.2. Renewable sources for electricity...............................................................26

Case study: Iren’s

3. empirical and theoretical analysis of CSR politics...............32

Iren’s

3.1. sustainability report and KPIs analysis (2023)..................................34

Iren’s

3.2. structure and commitment in northern Italy.....................................38

“Circular Wood”

3.3. The plant in Vercelli: an example of circular economy and

environmental protection.................................................................................. 42

Conclusions.......................................................................................................... 46

Bibliography......................................................................................................... 48 3

Abstract (Italian)

L’elaborato si propone di delineare e approfondire i temi di sostenibilità aziendale e di

transizione verso la green economy, con particolare riguardo al settore energetico italiano. Le

motivazioni che mi hanno spinta ad illustrare tale tema hanno duplice natura. In primis,

l’interesse nei confronti delle multiutility, realtà aziendali alla ricerca di una congrua sinergia

tra l’utilizzo delle materie prime, il capitale disponibile, il rispetto dell’ambiente e i bisogni

pubblici. In secondo luogo, una crescente curiosità personale verso discipline quali il

controllo di gestione, la responsabilità sociale delle imprese e l’attività di Investor Relations,

affrontate durante il corso di laurea. L’obiettivo di questa tesi di laurea è quello di fornire

un’analisi empirico-teorica accurata dei dati raccolti con il fine di proporre nuove chiavi di

lettura del concetto di economia circolare, sempre più diffuso nella società contemporanea. Le

informazioni sono state ricavate da materiale accademico-letterario tra cui libri di testo del

corso di laurea, bibliografia online, paper e/o giornali internazionali e siti internet. Per quanto

riguarda il caso di studio, sono stati analizzati vari documenti di natura finanziaria e non,

reperiti dal sito web aziendale. Inoltre, è stata condotta un’intervista in loco presso l’impianto

“Circular Wood” di Iren Ambiente (in provincia di Vercelli). La tesi si articola in tre capitoli:

nel primo capitolo viene fornita un’introduzione dell’economia circolare e dei criteri ESG. Il

secondo capitolo si propone di approfondire l’impegno delle aziende italiane nella transizione

energetica, attraverso l’utilizzo delle risorse rinnovabili e progetti green innovativi. Infine, nel

terzo capitolo viene presentato il caso di studio incentrato sull’azienda Iren S.p.A. Grazie a

questo lavoro di ricerca è stato possibile analizzare lo stato di avanzamento del settore

energetico italiano verso un’economia più sostenibile. I relativi risultati saranno esposti nelle

conclusioni finali di questa tesi. 4

Abstract

This paper aims to outline and deepen the themes of corporate sustainability and transition to

the green economy, with particular regard to the Italian energy sector. The reasons which

induced me to illustrate this subject are twofold. Firstly, the interest in multiutilities,

companies looking for a fair combination between the use of raw materials, available equity,

respect for the environment and public needs. Secondly, a growing personal curiosity towards

disciplines such as performance auditing, corporate social responsibility and Investor

Relations activity, which were explored during the degree program. The purpose of this thesis

is to provide an accurate empirical-theoretical analysis of the data collected with the aim of

proposing new interpretations of circular economy which is an increasingly widespread

concept in contemporary society. The information has been collected from academic-literary

material including course textbooks, online bibliography, papers and/or international

newspapers and websites. Regarding the case study, financial and non-financial documents

found on the company website have been analysed. In addition, an onsite interview was

conducted at the plant “Circular Wood” of Iren Ambiente (in the province of Vercelli). This

thesis is divided into three chapters: the first chapter introduces circular economy and the

ESG criteria. The second chapter aims to deepen the commitment of Italian companies in the

energy transition, using renewable resources and developing innovative green projects.

Finally, the third chapter presents the case study focused on the company Iren S.p.A. Thanks

to this research, it was possible to analyse the progress of the Italian energy sector towards a

more sustainable economy. Relevant results will be detailed in the final conclusions of this

argument. 5

1. Introduction to circular economy

The concept of circular economy emerged in the seventies of the last century, when the

European Commission published the article “The potential for substituting manpower for

energy” defining the idea of an economy in loops and its impact on job creation, resource

savings and waste prevention. With the course of time the idea of an ‘open’ economy was

born. In contrast to a closed economy, the open one draws on unlimited input resources and

output sinks . Thus, why circular? According to Ellen

[ CITATION Wik24 \l 1040 ]

1

MacArthur Foundation , since its inception, economy has been ‘linear’, moving in a straight

line from resource extraction to waste disposal. Nowadays, this principle is slowly being

replaced by the notions of reusing, repairing, refurbishing, repurposing and recycling products

or materials[CITATION Ell \l 1040 ]. This means that in a circular economy nothing is waste,

people and companies try not to squander goods, packages or raw materials. It is about using

worthwhile supplies wisely, considering waste as a resource instead of a cost and finding

innovative ways to enhance the environment and the economy. The benefits that this new

economic model brings to society will be explained in the drafting of this thesis. In support of

these concrete actions there are several international associations, such as the Ellen

MacArthur Foundation, a charity founded in 2009 and «committed to sustaining changes

towards an economic system which delivers better outcomes for people and the

2

environment» . It should not be forgotten that the European Union and its Member States play

a fundamental role in the transition to the green economy. One of the most important

documents at European level is the 2030 Agenda that points out the guidelines and defines

concrete goals to be achieved during this decade. However, a question that arises is whether

the circular economy model implies also disadvantages for companies and families.

3

According to the Earth Day Organisation , The two main disadvantages are the absence of an

efficient circular supply chain designed to recycle and reuse various resources, as well as the

lack of critical infrastructures. As claimed by the Swiss publisher ‘Frontiers’, the largest

obstacle to the circular economy is the need for increased government funding, which should

1 The name of the Foundation comes from the female solo sailor Ellen MacArthur, who in 2005 won the award

for sailing the fastest around the globe. In 2010, she set up the Foundation in her name to accelerate the

transition to a circular economy. Nowadays, it is one of the most important foundations related to circular

economy.

2The aim of Ellen MacArthur Foundation [ CITATION Ell \l 1040 ]

3Every year on April 22, Earth Day is observed as a way to show support for environmental protection and

conservation. 6

assist businesses that must deal with upfront expenses and limited choices. These cons are a

result of a root problem: circular economy lacks a clear theoretical foundation. Therefore,

some nations are having difficulties in transforming their corporate models to fit circular

economy [ CITATION Kon23 \l 1040 ]. This is the reason why in recent years international

organizations are striving to deepen the knowledge related to this theme, creating a real new

subject of study, increasingly explored in the academic field. 7

1.1. Principles and stages of Circular Economy

To better understand the

concept of circular

economy, its principles and

foundations are listed below.

We can take into

consideration what is

displayed on Ellen

Macarthur Foundation’s

website. Circular

Economy (CE)’s goals are

basically three: to

eliminate waste and

pollution; to circulate

products and materials; and to

4

regenerate nature .

Today’s world economy is

based on a linear system: take-

Figure 1, 10 R-Strategies - 1.1. Principles and stages of

Circular Economy. Source: www.circularise.com

make-waste. It means that we

take raw materials from the Earth; we make products from them and eventually we throw

them away as waste, most of which ends up in landfills or incinerators. It is known that this

linear system cannot work in the long term because the resources on our planet are finite.

According to Ellen MacArthur Foundation, the key to achieving the first two objectives is the

design of the package. It is known that many plastic packages or disposable products cannot

be reused, recycled or composted. So, manufacturers should ensure that the materials could re-

enter the economy at the end of their use with the aim of changing the linear take-make-waste

system into a circular system, but how? For instance, by continuing to use materials as products or,

5

in case they can no longer be used, as raw materials or components [CITATION Ell20 \l 1040 ] .

This way, nothing turns into waste and the intrinsic value of products and materials is retained. In

4 CE principles. Ellen MacArthur Foundation. Source: www.ellenmacarthurfoundation.org

5 Source: Video on Ellen MacArthur Foundation website; www.youtube.com/watch?v=NBEvJwTxs4w

(February 2020) 8

more practical terms, many companies are simply selling products without packaging, others are

adopting reusable packages while others are embracing two modern techniques named as technical

cycle and biological cycle. In the first one, products are reused, repaired, remanufactured and

recycled. In the second one, biodegradable materials are returned to the earth through processes

6

like composting and anaerobic digestion . Concretely, the third goal outlined by the American

foundation “regenerate nature” is certainly the most difficult to achieve. Industries should shift the

focus from raw materials extraction to nature regeneration and should no longer simply focus on

not damaging the environment, rather on how they can actively improve it [CITATION Ell24 \l

1040 ]. By keeping products and materials in use, less land will be required for sourcing virgin raw

material and stuff procurement will be increasingly focussed on renewable resources. To achieve

visible results and tangible changes, manufactures and companies should be financially supported

by the government due to the incoming costs to implement new processes within the production

chain. Furthermore, they need time to complete this transition to a circular economy and more

7

theoretical information based on academic research. In this regard, ‘Circularise’ , a Dutch supply

chain transparency software provider, has given a significant contribution within the study of CE

stages. It has designed the so known ’10 R-Strategies’ [Figure 1, 10 R-Strategies - 1.1. Principles

and stages of Circular Economy. Source: www.circularise.com] which guide how circular design

and manufacturing can keep resources in use and waste out of the environment. The R-strategies,

sometimes also referred to as the R-Hierarchy or the R-Ladder, fall under a hierarchy (shown

above) going from the longest waste loop to the shortest. The shorter the loop, the more sustainable

the strategy is and the higher the strategy is on the ladder, the tighter the waste loop. This means

that the strategy requires fewer materials and is therefore more circular[CITATION Dap23 \t \l

1040 ]. Firstly, we analyse the short loops, which are focused on smarter product use and

manufacturing. Although they are considered idealistic, we can act on the value chain (when

products are first conceived, designed and developed) through strategies that tackle waste at the

crucial product design phase. The first R0 Refuse prevent the use of harmful product or material

and offer an alternative. R1 Rethink stands for reconsidering ownership, use and maintenance. The

last short loop is R2 Reduce: decrease the use of raw materials in products and services. The

following medium loops extend the lifespan of a product and its components. They all require

6 In anaerobic digestion, biodegradable material is broken down by microorganisms through a sequence of

biological processes that occur in the absence of oxygen.

7 Circularise is a platform that provides digital product passports and enables supply chain actors to share

sensitive data without risking privacy and confidentiality. 9

8

market receptivity, effective logistic and a Life Cycle Assessment (LCA) . The strategy R3 Reuse

assumes a secondary use of products by another owner for the same intended purpose, while R4

implies the repair of products for extended use. R5 and R6 correspond respectively to Refurbish

that means upgrading or modernising the components and the outside of a product with new fabric,

casing or paint and Remanufacture which involves integrating product components that are still

perfectly intact into new products with the same function. Finally, R7 stands for Repurpose, a

strategy that incorporates discarded components into a completely different product for a unique

benefit or alternative purpose. Although they are widespread strategies, R8 Recycle and R9

Recovery are placed at the bottom of the table due to the many processes and costs associated

9

with .

8 The Life Cycle Assessment (LCA) is an important tool for environmental policy. It is made up of an analysis

consisting of quantitative comparisons of flows and transformations of materials and the general environmental

impacts since the acquisition of raw materials, production and use up to waste management [CITATION

Aré24 \p 234-249 \l 1040 ]

9 [CITATION Dap23 \l 1040 ], op. cit., p.9. 1

0

1.2. The European framework for sustainable development

From the beginning of the 90s to today, the European Union (EU) has been trying to create a

common guideline for all Member States with the aim of reaching sustainability shared

targets. This sub-chapter presents a timeline of the initiatives and policies undertaken by the

European Commission (EC) to shape a Sustainable Development (SD). The Cambridge

English Dictionary defines sustainability as «the quality of being able to continue over a

10

period of time» . The most contemporary interpretations of sustainability divide the concept

into three different pillars which make up the so-called Triple Bottom Line (TBL):

environment; society; and economy. This theorical model was developed in the second half of

the 1990s by Elkington and states that a sustainable society is achieved through a right

balance between the respect for the planet, the well-being of the population and the solidity of

companies [CITATION Pol20 \l 1040 ]. The following timeline [Figure 2] shows the

main deals and agreements of last decades that will be considered in this thesis:

2000, Lisbon Agenda 2009, Lisbon Treaty 2015, Paris Agr. 2021, ECL 2023, GDIP 2030

th th th

2002, 6 EAP 2013, 7 EAP 2020, EGD 2022, 8 EAP 2050

Figure 2, Timeline - 1.2. The European framework for sustainable development. Source: own

processing

The first agreement here considered is Lisbon Agenda, an action and development plan

devised in 2000 which promised to reach by 2010 a goal deemed to be unattainable for

Europe: becoming the most competitive economy in the world. As expected, this did not

happen due to two main reasons: firstly, the EU was lagging behind the US in most technical

and scientific fields; secondly, the lack of political will in terms of collective and coordinated

th

structural measures[CITATION Wyp20 \l 1040 ]. Then, with the 6 Environment Action

11

Programme (EAP) , the EU set itself targets for 2012, among them, the development of a

strategy for the sustainable management of resources by laying down priorities and reducing

th

consumption. According to the final report of the 6 EAP, in that period the EU has been able

to stabilise resource use whilst the economy has been growing. Even though some national

10 Definition of Sustainability. Cambridge Dictionary (2024). Source:

https://dictionary.cambridge.org/dictionary/english/sustainability

11 The EAPs have defined environmental legislation in the EU since the 1970s. They have been the guide for

EU in environmental protection and key policies. In the time interval between the Lisbon Strategy (2000) and the

th th

EGD (2018) the 6 and 7 EAPs