No. 776 - The effects of the 2021 energy crisis on medium-sized and large industrial firms: evidence from Italy

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by Matteo Alpino, Luca Citino and Annalisa FrigoJune 2023

In this paper, we aim to quantify energy-cost increases for medium-sized and large industrial firms in 2021 and identify the firms most exposed to the shock. We also estimate the infra-annual price-elasticity of demand for electricity and natural gas. The latter parameters, for which evidence based on micro data is generally scarce, are both crucial to quantify the macroeconomic impact of the energy crisis and to evaluate government support policies.

In 2021, elasticities were close to zero, except for natural gas among EU ETS firms. Energy-intensive firms increased prices more than the other firms in the sample, but the increases were generally mitigated in the presence of fixed-price energy contracts. The results in the paper are valid for 2021 and not directly applicable to 2022. Numerous contributions in the literature show that elasticity values tend to vary with the time-horizon that is under consideration.