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Spain is Joining the Net Zero Club

Spain has joined the growing group of countries committed to accelerating carbon reduction and achieving climate neutrality no later than 2050. The Spanish government recently drafted its Climate Change and Energy Transition Law and Spanish Energy and Environment Minister, Teresa Ribera, reiterated the EU’s commitment to green recovery: “Faced with COVID-19... the energy transition will become a strong driving force to generate economic activity and employment in the short term, in a way that fits our needs as a country in the medium and long term.”

To explore some details of the new law and early recommendations for Spanish companies, we spoke to Schneider Electric expert, Rebeca Mendoza.

 Rebeca C. Mendoza, Sustainability Consultant

Rebeca carries out research, and data analysis based on GHG reporting schemes, CDP, and Energy Efficiency Directive frameworks. She develops solutions and reports to clients that need assistance in Legislation and Policy requirements, as well as other sustainability services.

Rebeca holds a Bachelor’s degree in International Business from Tecnológico de Monterrey in Mexico, and a Master’s degree in Supply Chain Management from Széchenyi István University in Hungary.

Accelerating ambitions in times of disruption

With the recent commitments and despite the worldwide disruptions from the COVID-19 pandemic, Spain aims to achieve net zero GHG emissions and a 100% renewable electricity system. As an intermediate step, the country has reinforced its goals for 2030: to reduce greenhouse gas emissions by at least 20% compared to 1990 levels, generate at least 70% of electricity from renewable sources and provide at least 35% of the final user energy consumption from renewable sources while improving energy efficiency by decreasing the consumption of primary energies by 35%. By the end of 2019, as per information of Red Eléctrica de España, 36.8% of the electricity consumed in the territory was already generated with renewable sources while 63.2% still relied on non-renewable sources.

The objectives set out in Spain’s climate action plan are aligned with the EU’s target suggested by the European Commission, which states a decrease of emissions between 50% and 55% by 2030. Both targets use 1990 CO2 levels as a baseline.

Taking action with legislation

To deliver on these goals, the peninsula is counting on two laws that, if enforced, would lead the nation towards emission neutrality.

  1. Climate Change and Energy Transition Law
  2. Regulation of the Greenhouse Gas Emission Allowance Trading System

On Tuesday 19th June 2020, the first draft for the Climate Change and Energy Transition Law was sent to the Spanish parliament by the Spanish Ministry Board. The law seeks to provide opportunities that will stimulate the economy and renovate the industry following the COVID-19 pandemic. All efforts align with the objectives of the Green Deal, which as the European Commission defines it, is the roadmap to a sustainable economy in Europe. The Green Deal was issued in 2019 and covers issues such as supply chain, affordable and secure energy, mobilizing industry for a clean and circular economy, and zero pollution ambition for a toxic-free environment.

The package is complemented with the draft for the regulation of the Greenhouse Gas Emission Allowance Trading System, approved by the Ministry Board with enforcement taking place between 2021-2030. The law adopted the EU Directive 2018/410 enforcement, which aims to intensify emission reductions and to promote low-carbon technology investments. It is estimated that enforcement will affect almost 970 facilities and approximately 30 air carriers in Spain.

Essentials of the Climate Change and Energy Transition Law

Two instruments will assist the regulation: The Energy and Climate National Plans and The Long-Term Strategy for 2050. An expert committee board on climate change and energy transition will also be created to make recommendations and evaluations that shall be debated in the Congress of Deputies. Spain’s autonomous communities shall inform the Climate Change Commission of Politic Coordination about all their plans regarding climate change and energy from December 31st, 2021.

The law creates a unique business model that empowers users to optimize their consumption or the produced energy as producing-consumers, or ‘prosumers’. This will be enabled by two new figures; the Head of the Electric System Storage and an independent aggregator. The first is created to establish and develop key technologies for electric management and supply security in an electric system that is 100% renewable. The second will buy or sell different aggregate consumptions or produced energy from consumers, producers, or storage facilities. The model also encourages facilities to optimize their production power to provide the electric grid with operational reserve.

The law also suggests a new rewarding framework for renewable energies. It will be based in auctions where the main objects will be electric energy, the installed power, or a combination of both. The energy price will be the main offered variable. This framework will bring income stability, resulting in savings for the users of the electric grid. Revenues collected from the fiscal law for energy sustainability (Ley de medidas fiscales para la sostenibilidad energética) will be allocated to promote renewable energies by General State Budgets.

For efficient planning and execution, the key agents responsible for the energy system functioning (market operators, system operators, carriers, and traders) will design decarbonization strategies in their respective fields. The Electric System Operator, the Gas System Technician Agent, and the Hydrocarbon Logistic Company will present an evaluation report analyzing decarbonization risks and opportunities every 2 years.

If the law is approved and enforced, Spain will join other European pioneers such as Denmark, Finland and Germany in the field of climate change. The next step for this draft law is an approval by the Spanish Parliament. Once the Spanish Parliament provides an answer, the enforcement dates will be announced. No dates are provided as of yet.

Accelerate your own net zero ambitions to gain benefits of early adopters

The list of countries including net zero actions in their development roadmaps is increasing year by year. Given Spain’s legislation upgrades, many industries will be vulnerable to significant changes, which have the potential to affect businesses that are not already moving toward low-carbon operations. The difference between leading your respective industry and being negatively impacted by legislative changes relies on where you decide to catch the net zero wave. At what stage in the process of change you decide to design a strategy, and where will you take action?

Companies that are early adopters of measures to align with future legislation can significantly improve their trajectory and avoid being caught on their heels when legislation is approved and enforced. Because both of Spain’s legislations are still in the approval phase, now is the right time to start asking questions, implement sustainable technologies and processes in your business strategy, and team up with the experts to be prepared for coming change.

In a time of many uncertainties, this we know for sure: The industry leaders of this decade will offer value-added innovative solutions without compromising the environment. The urgent need to eliminate carbon emissions is already a reality, reflected in the policies and legislations certain countries and companies are already implementing. Unquestionably, in the coming years, renewable energies will be a mandatory requisite for global business and the entire supply chain will need to fall in line.

At Schneider Electric, we are ready to answer your questions and help you to be an industry leader. Is your business ready to catch the net zero wave?

To hear more about opportunities for companies in Spain following the EU Green Deal and carbon neutrality legislation, register for our upcoming virtual panel discussion on 17 September with leading Spanish Food & Bev and Retail companies.

*This panel will be presented in Spanish.

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