For months now, public debate about Italy’s post-pandemic economic recovery has focused on an upcoming deadline: On April 30, the country must submit a “recovery and resilience plan” to the European Commission to access funds from its Next Generation EU program. Italy will need to take the environment into account: The program is a key element in the European Union’s planned climate transition to become the first climate-neutral bloc by 2050. Under the Next Generation EU program, which is intended to help countries out of the economic crisis caused by the COVID-19 pandemic, 37 percent of each country’s investments—including measures like developing renewables, improving buildings’ energy efficiency, and spurring sustainable transport—will have to be related to climate.
By tying recovery funds to its climate goals, Brussels is betting on a fundamental transformation of EU’s member states’ economies and societies. But in Italy, the impending deadline has set off a kind of “fear of missing out” that has drowned out discussion on the actual content of the plan. Critics say it’s being drafted with little transparency or civil society participation. They argue that what little is known indicates an outsized focus on technology without companion policies supporting community-based economic investment. Given the importance of small and medium-sized enterprises to Italy’s economy and the growing role of local, sustainable ventures in production and consumption globally, sidelining them is a missed opportunity for Italy’s government to chart a leading course on green growth.
In Italy, three drafts of the plan were published between December 2020 and January 2021, but those plans lacked technical details. Filling those out was one of the main points of contention when, earlier this year, Italy’s governing coalition collapsed, following a rebellion by former Prime Minister Matteo Renzi and his small Italia Viva party. Former European Central Bank President Mario Draghi is now at the helm as Italy deals with a third wave of coronavirus cases and deaths. Amid a slower-than-expected vaccine rollout across the EU, Italy recently passed 100,000 known deaths, second in Europe only to the United Kingdom.
“In this last phase, civil society and citizens’ group have not been consulted,” said Vittorio Cogliati Dezza, a member of the coordinating committee of the Inequalities and Diversity Forum, whose members include nine leading civil society groups and researchers. “And prior to that, consultations went only as far as listening. There were no working groups to allow civil society to bring in its expertise.” In turn, “what’s missing is more attention on social welfare and reducing inequalities. Renewable energy projects are measured only according to the gigawatts they deliver to the market, in square meters of solar panels or kilometers of cycle paths, without any attention to their social impact.”
Italy won’t be starting from zero when it comes to adapting its economy to the climate transition. Italy is already a circular economy leader in Europe, in large part due to its technological advances. Although waste management has been hugely problematic in some large cities in Italy, including Rome, Italy also hosts some of the most innovative recycling technology in the world, including the first plant to recycle diapers and the only one in the world producing the organic compound butanediol from sugars to make compostable bioplastics.
Although industrial innovation is important to building a circular economy, community is too. The idea of moving away from an economic model based on extracting, making, and disposing toward one based on recycling, reusing, and repairing has—by definition—a strong human dimension. In the midst of an economic crisis, community innovation can be leveraged to create jobs as well as reduce greenhouse gas emissions. The focus, when addressing the latter, is often on renewable energy, but an estimated 45 percent of emissions come from the production and consumption of products and food, which means the circularity of the economy should play a key role.
“A circular economy would be one in which there are more opportunities for localized, shorter supply chains,” said Tim Gore, the head of the low carbon and circular economy programme at the Institute for European Environmental Policy, a sustainability think tank. “It’s about reestablishing connections in our communities with the products that we own. Having real people we go meet to repair a product for example, more proximity to where a product has come from.”
One example of a hyperlocal approach in Italy can be found in Ripe San Ginesio, a town of just 800 people that aims to be a model of sustainability while reviving the local economy through tourism. Three years ago, Marta Baldassarri and Valentina Vitali started creating custom-made clothes from their homes in Macerata in central Italy, using natural and recycled fabrics and dyes. Their trademark nature-inspired designs and ethical imprint won them a small start-up grant from their local municipality to set up a workshop in Ripe San Ginesio.
Baldassarri and Vitali, who are in their 30s, aim for sustainability throughout their entire supply chain, in both land use and work practices. They are aiming to make an impact in a sector where such change is badly needed: the European Parliament estimates the production and waste of textile products are responsible for 10 percent of global greenhouse gas emissions—more than international flights and maritime shipping combined.
Baldassarri and Vitali have experimented with making dyes out of natural ingredients they source locally. “We are collaborating with a pub, which is providing us with onion peels to make yellow, and we want to start collaborating with sushi restaurants to source avocado for a pink print,” Baldassarri said. Their small, newly established workshop has been struggling with pandemic-related closures, but they are confident their idea will work. They are less confident in any help coming directly from European funds, which Baldassarri said they couldn’t afford to access in the past because doing so required an upfront investment they couldn’t make.
At the government level, the EU expects Italy to implement needed policy changes to help any recovery plan tied to the EU’s funds. Legambiente, one of Italy’s main environmental organizations, has identified five broad reforms needed to efficiently carry out the projects that should be completed by 2026, according to EU rules. These reforms include simplifying authorization procedures for green economic projects, including recycling and renewable energy plants, and involving citizens in decision-making processes when projects affect their territory. In terms of the circular economy approach, Legambiente has proposed that each province independently recycle compost and other materials. Community training in circular economy practices and supply chain innovation should also be encouraged.
“The Italian economy is made up mostly of [small- and medium-sized enterprises]. Taking into account their innovation and ability to restart will be key,” said Stefano Ciafani, Legambiente’s president. Small and medium-sized enterprises have been hit by the crisis, and it is often smaller businesses that rely on informal workers and processes. This has made it more difficult for the government to reach some sectors of society with subsidies, contributing to widening income gaps. Ciafani views the upcoming recovery plan as an opportunity to reach out to all sectors of the Italian economy, particularly those that have struggled the most during the pandemic. “We cannot have just Eni, Enel, and the other big players of the Italian economy writing this plan. It should be rebalanced,” Ciafani said.
“The opportunity here is to use these funds in a way that is genuinely transformational,” Gore said. “But that opportunity could easily be squandered if it is left to the usual suspects to draw up plans essentially behind closed doors and have their approval rushed through without proper scrutiny. The risk is that we’ll just see more of the same current dominant sectors that will benefit from these funds in the way that the stimulus measures after the 2008 financial crisis essentially benefited the status quo and didn’t do enough to drive forward a transformation of the European economy.”
Italy will soon have another chance, in addition to the EU’s recovery plan, to meet this challenge. Circular Economy Network, a coalition of businesses and trade associations, points out in its latest report that Italy has been efficient at utilizing scarce resources, but it lags behind when it comes to investment and innovation patents. Italy also lacks a national strategy and action plan. Tasked with drawing such a plan is the newly created Ministry for Ecological Transition, led by Roberto Cingolani, a physicist and academic who is one of eight “technical” ministers in Draghi’s mixed cabinet. This ministry replaces the Ministry for the Environment, adding new responsibility for the energy sector.
“The recovery fund is one of the instruments we have to raise our capacity, remain a leader, and possibly become a beacon at a global level,” Cingolani said in a speech at a recent conference on the circular economy, where he spoke at length of Italy’s ability to recycle materials, including metals, from heavy industry. “These technologies are crucial for the future of the generations to come, and we need to do our best to value them,” he said. When contacted, the ministry could not provide further details on the recovery plan or the circular economy strategy, both of which are “in the process of being defined.”
In both the recovery plan and a possible national strategy, Italy’s government has the opportunity to involve small- and medium-sized enterprises as well as local efforts—it remains to be seen whether policymakers will take it.
