Fiscal incentives for energy poverty in Italy: Bridging the gap or missing the mark?

Abstract

This study evaluates the effectiveness of Italian fiscal incentives for energy retrofitting, with a particular focus on their role in addressing energy poverty. It examines the distribution of these incentives across households, assessing their impact on energy-vulnerable groups using well-established energy-poverty indicators. Drawing on data from the 2022 Household Budget Survey by the Italian National Institute of Statistics (ISTAT), the analysis employs Propensity Score Matching (PSM) to determine the extent to which tax credits for energy-efficient renovations benefit energy-poor households—an aspect of policy effectiveness largely overlooked in the literature. The findings reveal that higher-income households disproportionately benefit from these incentives, highlighting inefficiencies in targeting mechanisms. Despite promoting energy efficiency improvements, fiscal subsidies remain largely inaccessible to low-income, energy-poor households. The study underscores the need for policy refinements, such as income-based eligibility criteria and enhanced outreach efforts, to ensure more equitable access to energy-saving incentives. Furthermore, it acknowledges data limitations, particularly the absence of longitudinal tracking, and calls for more granular data collection to assess long-term impacts effectively. These insights contribute to the broader discourse on optimizing fiscal policies to mitigate energy poverty and support sustainable energy transitions.