Energy retrofitting of firms after a natural disaster: A ‘build back better’ strategy

In 2012, an earthquake struck one of Italy’s most productive and dynamic areas, the Emilia-Romagna region. Just as policy makers are today considering green and climate-conscious investments to recover from the COVID- 19 pandemic, in 2012, the regional government granted specific energy retrofitting contributions to manufacturing and service firms affected by the seismic event. Through a panel data analysis, we evaluate the impact of such energy policy measures on firm-level labour productivity to assess the presence of non-zero multipliers. We find that energy retrofitting through regional aids positively affected firms’ labour productivity. We discuss the energy and economic policy implications of such intervention in the current framework of fiscal recovery packages.