Italgas

Carbon Tracker has produced a set of three separate related reports on Snam, Italgas and Enagas, the European gas network listed companies, to assess the future of gas networks in a world increasingly dominated by renewables and electrification. All three stocks and bonds are widely held in European asset manager portfolios, including those specialised in utilities/infrastructure.

The energy transition is rendering future cash flows from gas transport and distribution increasingly uncertain. The transition will be very different depending on activity (i.e., transport vs. distribution), and geography & regulation (Italy, Spain or the UK). In view of such uncertainties, decarbonisation at Snam, Italgas and Enagas will be increasingly key to equity and debt investor returns.

Our objective is to provide institutional investors and other financial institutions with the information and insights to better understand the issues and to be able to more effectively engage with investee companies, regulators and economic policymakers—highlighting and advocating the implementation of the decarbonisation actions needed. Examples of required action are 1) further reduction of gas leaks, 2) shortening of gas network economic asset lives, and 3) advocating improvement of the national regulatory frameworks in order to incentivise faster decarbonisation.

In turn, the three reports also represent a tool for asset owners to comprehend the challenges and necessary changes that the energy transition imposes on gas networks. Given that countries often consider gas networks as “strategic assets”, national policymakers and regulators are clearly key stakeholders, and we hope they, too, may benefit from reading the reports.

Chris Moore, our Senior Corporate Research Analyst responsible for European Power & Utilities, analyses for each of the three companies several topics, including:

• How far gas network operators are Paris aligned.
• How realistic is decarbonisation with hydrogen.
• Whether asset lives are appropriate with lower gas demand and net zero.
• Whether regulators are sufficiently focused on decarbonisation.
• Above all, the future of gas networks in a world increasingly dominated by renewables & electrification.