An analysis of the public reports submitted by Italy to the European Commission between 2014 and 2024 highlights issues with the use of revenues generated from EU Emissions Trading System (EU ETS) auctions. 

Reviewing the revenues from the ETS auctions reveals significant shortcomings in expenditure planning and fund traceability.

Only nine percent of the revenues generated by the system have been allocated to measures addressing climate change. 

Where are the ETS funds and how are they being used? 

An analysis of the public reports submitted by Italy to the EU Commission between 2014 and 2024 reveals that: 

• Between 2012 and 2024, EU ETS auctions generated revenues of 15.6 billion euros.
• According to an analysis of the reports alone, Italy appears to have spent only 9% of these 15.6 billion euros on climate change-related expenditures; well below the current ex-legem spending forecast of 50% of the revenues.
• Only 42% of the revenues generated during the 2012-13 biennium have actually been spent to date, twelve years later. 
• The reports do not provide a clear overview of how the 3.6 billion euros in auction revenues, allocated for emergency measures to reduce household energy costs between 2021 and 2022, were utilised.

In light of the upcoming implementation of EU ETS 2 and the amendments to EU ETS 1, which require 100% of auction revenues to be spent on climate change and on compensating for the disproportionate effects on social groups and small businesses, the analysis highlights several potential areas for improvement.

These include:better planning and management of auction revenue expenditure; improved information and transparency in the actual allocation and spending of auction revenues; integration of ETS 2 revenues into the fiscal and parafiscal structures of tariffs.