policies implemented by governments globally. different channels might have opposite effects and dominate at different points in time. renewables and the effects of the green transition on overall energy prices the effect of the green transition on overall energy prices will also crucially depend on the availability and price of renewable energy. the costs associated with renewables have been decreasing. they are now lower than those of fossil fuels. in 2020, new utility scale photovoltaic and onshore wind power plants were cheaper than new fossil fuel plants. in 2021, onshore wind costs fell by 15 per cent compared with 2020, while offshore wind and solar photovoltaic costs fell by 13 per cent. as of 2022, the marginal cost of new solar energy production was estimated to be a quarter of the marginal cost of existing gas plants in europe. [ 18 ] and in the current energy crisis, wholesale electricity prices have been lower when eu power generation relied more on renewable energy than on gas. not only, therefore, is a reallocation of production and consumption from fossil fuel energy to renewable energy necessary to reach the net - zero emission target. but the lower cost of renewable energy can also put downward pressure on overall energy prices. in fact, the eu has decided to cushion the impact of the electricity price spike on households and businesses by imposing a temporary revenue cap on producers with lower marginal costs [ 20 ], which mainly comprise renewable and nuclear energy producers. expanding renewable energy production would increase the european economy ’ s resilience to fossil fuel price spikes and supply disruptions. while renewable energies also have some drawbacks, such as the intermittence of their supply and the commodity inputs required during the plant construction phase [ 21 ], they do not use any more commodities during the lifetime of an installation. what should we expect amid all the uncertainty? to assess the effects of the green transition on energy prices in the future, international bodies such as the ngfs and the international energy agency ( iea ) have turned to scenario analysis. i will refer to two contrasting scenarios. the first is an orderly scenario which assumes ambitious climate policies are introduced immediately. this scenario limits global warming to 1. 5 °c through stringent climate policies and innovation, reaching global net - zero emissions by 2050 in line with the paris agreement. [ 23 ] it nevertheless requires ambitious policy action and technological change across all sectors of the economy. [ 24 ] the ngfs does not provide detailed and granular information on the overall cost of energy production (

they are back near pre - crisis levels. by contrast, spending on construction has lagged behind for longer. between 2008 and 2014 it contracted uninterruptedly, weighing heavily on the overall investment - to - gdp ratio, which to date has hardly risen at all. yet even this sector has shown some signs of a revival starting last year. the signs are clearer in the residential sector, which has long benefited from tax incentives for the renovation of existing buildings, while the non - residential construction sector is still struggling to pick up and public investment has been on a trend decline since 2010. why has investment returned to growth, at least in machinery and equipment? the bank of italy ’ s econometric model can give us some quantitative answers. according to our estimates, 1 almost half of the growth recorded is attributable to the improvement in the credit market : the strongly expansionary monetary policy stance has recently led to a reduction in the cost of capital and fostered more relaxed supply conditions. yet the gradual improvement in demand and increased confidence on the part of firms have also contributed by one third ; if the favourable economic situation continues, then this factor ’ s contribution should increase. lastly, government policies to encourage spending on capital goods have also made a significant contribution, which we estimate at around one fifth of the total. as is well known, various tax incentive schemes for see the box ‘ the trend in investment and the cyclical recovery ’ in the bank of italy ’ s annual report for 2015, 2016. investment have been set up and implemented in recent years, especially in favour of advanced technology. the results of the bank of italy ’ s annual business survey ( to which, as always, the bank ’ s regional research network has made a vital contribution ) show that in 2016 tax benefits for investment provided considerable support, and will do so to an even greater extent in 2017. we estimate that these benefits are going to boost investment by 3. 5 percentage points overall in the period 2016 - 18. the fact that they are of limited duration is also important : part of their short - term effect is that firms bring forward their spending plans. our surveys show that in 2016 investment was higher for small and medium - sized manufacturers, which had been particularly hard hit by the recession. they also indicate that investment will expand further this year : the share of manufacturing firms that plan to increase investment in 2017 was much higher than the share of those planning to reduce it. the slowdown recorded in the early