Italy Delays Coal Phase-Out to 2038 as EU Climate Unity Fractures

On March 27, Italy's parliament voted to extend the life of the country's remaining coal-fired power plants by thirteen years — from a planned shutdown at the end of 2025 to 2038. The decision, passed by the lower house and awaiting Senate approval, amounts to one of the most dramatic reversals of climate policy anywhere in the European Union. It also throws into sharp relief a growing divide: countries that invested heavily in renewables are weathering the 2026 energy shock far better than those that did not.

The contrast is not subtle. While Rome voted to keep coal on standby, Madrid was posting the cheapest electricity prices on the continent. The same crisis is producing opposite policy responses — and the gap is likely to widen.

The Energy Shock Behind the Reversal

The proximate cause of Italy's retreat is the energy crisis triggered by the conflict in Iran and the near-total closure of the Strait of Hormuz. According to Bruegel, roughly 20 million barrels of oil and petroleum products transit the strait daily — approximately one-fifth of global consumption — along with 20% of global liquefied natural gas trade, including all exports from Qatar and the UAE. Since strikes began on February 28, shipping through the strait has, in Bruegel's words, "slowed to a near standstill."

The impact on European markets was immediate. Oil prices jumped roughly 8% on the morning of March 2, and European gas prices rose approximately 20% that same day, according to Bruegel. Gas prices then continued climbing, rising 55% from pre-conflict levels in the days that followed.

Europe entered this crisis with substantially less cushion than in recent years. Bruegel's data shows the EU held just 46 billion cubic metres (bcm) of gas in storage at the end of February 2026 — down from 60 bcm a year earlier and 77 bcm in February 2024. That declining buffer made the Hormuz disruption considerably more threatening than it might otherwise have been.

For Italy specifically, the exposure is acute. According to Earth.org, approximately 21% of the country's total oil and gas imports flow through the Strait of Hormuz — making Rome more dependent on that chokepoint than most of its EU peers.

What Italy Actually Voted For

The amendment to Italy's energy bills decree, introduced by Prime Minister Giorgia Meloni's coalition government, does not mandate the immediate reopening of coal plants. Instead, it extends the legal authorization for four remaining coal-fired facilities to operate through 2038, keeping them available as standby capacity.

The two largest plants — Enel's Brindisi Sud (Federico II) and Torrevaldaliga Nord in Civitavecchia — had already been mothballed as of January 1, 2026, when their environmental authorizations expired under Italy's 2024 National Energy and Climate Plan (PNIEC). According to Enerdata, Italy's total coal capacity stands at approximately 4.65 GW, and the government has specified that reactivation would be triggered by gas prices consistently exceeding €70 per megawatt-hour.

Energy Minister Gilberto Pichetto Fratin told reporters the plants "could be reactivated if gas and oil supply issues escalate." His cabinet colleague, Minister Tommaso Foti, was blunter: "All energy sources, at least in the immediate future, must be used to their fullest potential."

The decree still requires Senate approval and conversion to law by the end of April 2026, per Enerdata, but it is expected to pass comfortably given the governing coalition's majority.

The Paradox of Coal as Insurance

Critics argue that keeping coal plants on life support is both economically irrational and environmentally reckless — and the data supports a degree of skepticism about the government's logic.

Coal's contribution to Italy's electricity generation has been in structural decline for years. According to Enerdata, coal-fired generation fell a further 13.5% in 2025, continuing a long-term trend. Renewables, by contrast, supplied 41% of Italy's electricity consumption that same year. Coal's share of the generation mix has dwindled to the margins.

This raises an obvious question: if coal contributes so little to Italy's power supply, what security does extending its authorization actually provide? The plants are not currently generating electricity. They have not been competitive for years. And even if reactivated, they would take weeks to ramp up — hardly a fast-response asset in a genuine supply emergency.

The maintenance costs of keeping mothballed coal plants in a state of readiness are nontrivial, and those funds could be directed toward battery storage, grid upgrades, or accelerated renewable deployment — investments that would reduce Italy's structural vulnerability rather than simply maintaining the option to burn coal again someday.

Mariagrazia Midulla of WWF Italia told Earth.org that coal is "a real killer of climate and public health," arguing that the energy price emergency is being used as a pretext for a policy choice that has little to do with actual supply security.

Angelo Bonelli, leader of the Europa Verde green party, accused the government of outright "climate neglect".

The counterargument from the government's allies is straightforward. Italy's League party called the delay "right and responsible" amid what it described as a "serious international energy crunch". The political calculus is clear: energy prices are a pocketbook issue, and no governing coalition wants to be seen decommissioning any power source during a supply crisis — even one that barely runs.

Spain's Renewable Dividend

The starkest rebuttal to Italy's approach comes from across the Mediterranean. Spain entered the Hormuz crisis in a fundamentally different position — not because of geography or luck, but because of investment decisions made years earlier.

Since 2019, Spain has doubled its wind and solar capacity, adding over 40 GW — more than any other EU country except Germany, whose power market is roughly twice Spain's size. The result has been transformative. According to Euronews, that renewable buildout has reduced the influence of expensive fossil generators on Spain's electricity prices by 75% since 2019.

The practical effect: in 2019, Spain had some of the highest electricity prices in Europe. By early 2026, it had some of the cheapest. When gas prices surged after the Hormuz closure, Spain's consumers were far more insulated than Italy's.

The fiscal impact is equally striking. Between 2020 and 2024, Spain cut its power sector import bill more than any other EU country, with new solar and wind farms avoiding 26 billion cubic metres of gas imports costing €13.5 billion, according to Euronews.

Spain's coal story mirrors the renewable transformation in reverse. According to Euronews, coal accounted for 25% of Spain's power generation a decade ago. By August 2025, the country used zero coal-fired power. That is not a rounding error — it is a complete structural exit from coal, achieved through market forces and policy incentives rather than legislative mandate.

Energy finance expert Gerard Reid captured the underlying logic: renewable equipment is purchased "once every 25 years", unlike oil and gas, which require continuous purchases subject to price shocks. Spain made a one-time capital investment; Italy is still renting its energy security from volatile commodity markets.

The Broader EU Divide

Italy is not alone in its hesitation. According to Enerdata, Germany has also expressed readiness to keep its coal plants as backup assets longer than originally planned. Elsewhere in the bloc, Bulgaria has announced a coal phase-out timeline stretching to 2038 or 2040, while Poland and the Czech Republic are widely regarded as among the most resistant to accelerated decarbonization.

On the other side, the countries with the largest renewable fleets are reaping measurable benefits. Outside the EU, the United Kingdom set a wind generation record on March 26, with peak output reaching 23,880 megawatts — enough to power 23 million homes, according to Euronews. Greece, which committed to ending all coal assets by 2026, is pressing ahead despite the crisis.

Across the continent, solar power has emerged as a significant offset. SolarPower Europe's analysis found that solar energy has been saving the EU more than €110 million per day since the beginning of March, totaling nearly €4 billion in avoided fossil fuel imports during the month. If gas prices remain elevated, the industry group projects savings could reach €67.5 billion over the full year.

These figures underscore a structural truth that the crisis has made impossible to ignore: renewable capacity, once built, acts as a permanent hedge against fossil fuel volatility. Countries that invested early are now spending less and worrying less. Countries that delayed are scrambling — and, in Italy's case, reaching backward.

The pattern also raises uncomfortable questions about path dependency. Countries that failed to invest in renewables during the relatively calm period of 2019-2025 now face the worst of both worlds: high energy prices and an inadequate domestic generation base to offset them. The crisis does not create the incentive to invest — capital markets tighten during energy shocks, supply chains for solar panels and wind turbines are strained, and permitting processes do not accelerate because gas prices are high. The time to build was before the crisis. For countries like Italy, that window may have partially closed.

What This Means for EU Climate Targets

The European Union's climate architecture is entering a critical period. The European Commission is preparing post-2030 rules, the revised Renewable Energy Directive (RED III) has set a binding target of 42.5% renewables by 2030, and member states are in the process of updating their National Energy and Climate Plans.

Italy's decision to extend coal operations through 2038 does not technically violate EU law — coal phase-out timelines are set by member states, not Brussels. But it sends a troubling signal about the political durability of climate commitments when they collide with short-term energy anxiety.

The risk is not that Italy's coal plants will suddenly become major emitters again. Their contribution to the national grid is marginal, and the reactivation threshold of €70/MWh gas prices means they may never actually fire up. The risk is precedent. If the EU's fourth-largest economy can push its coal exit back by thirteen years in a single parliamentary vote, what prevents others from doing the same?

The Italy-Spain comparison offers a clarifying lens. Both are Mediterranean economies with abundant solar resources. Both face the same global energy shock. But their responses have diverged sharply — one investing its way out of fossil dependence, the other hedging its bets with the dirtiest fuel available.

For European policymakers, the lesson is becoming harder to avoid. Energy security and climate ambition are not in tension — they are, increasingly, the same thing. The countries treating renewables as strategic infrastructure are more resilient in a crisis. The countries treating fossil fuels as insurance are discovering that the premiums keep rising.

Key Takeaways

• Italy voted to extend coal plant authorization from 2025 to 2038, a 13-year delay driven by the Iran-related energy crisis. The four remaining plants would serve as standby capacity, reactivated only if gas prices exceed €70/MWh, according to Enerdata.

• Spain's renewable buildout is paying crisis-time dividends. Having added over 40 GW of wind and solar since 2019, Spain entered 2026 with Europe's cheapest electricity and 75% less exposure to fossil fuel price swings than in 2019.

• The EU faces a widening internal gap between renewable leaders (Spain, Greece) and fossil holdouts (Italy, Bulgaria, Poland), with the Iran energy crisis accelerating the divergence.

• Solar power alone saved the EU nearly €4 billion in March 2026, according to SolarPower Europe, with potential full-year savings of €67.5 billion — making the economic case for renewables increasingly difficult to dispute.

• The crisis has reframed the energy transition debate. Renewables are no longer just a climate measure — they are emerging as the most reliable hedge against geopolitical supply disruptions.