This is a best prospect industry sector for this country. Includes a market overview and trade data.
The consequences of climate change in Spain are devastating in many parts of the country, with floods and droughts that affect farms and cities, storms that destroy crops, and more numerous, stronger, and longer heatwaves even in spring that affect population health and the stability of the important agribusiness sector, among other. Average annual temperatures increased in the Iberian Peninsula in the past five decades, extending the length of summer and the number of heatwave days.
Spain’s national climate initiatives established detailed actions to enhance climate resilience. The integrated National Energy and Climate Plan and the Long-Term Strategy for a Modern, Competitive and Climate-Neutral Economy by 2050 also underscore climate resilience and suggest concrete actions. These plans are closely linked under Spain’s Strategic Energy and Climate Framework. The Climate Change and Energy Transition Law entered into force in May 2021 with the long-term objective of climate neutrality and decarbonization of the economy by 2050 with a 100% renewable electricity system. It sets goals by 2030 of reducing greenhouse gas emissions by at least 23% with respect to 1990, achieve 42% renewables in final energy consumption and 74% renewable electricity generation, and improving energy efficiency by reducing primary energy consumption by at least 39.5%. By 2040, new passenger cars and light commercial vehicles must be emissions free. Municipalities with more than 50,000 inhabitants and island territories will have to implement a sustainable urban mobility plan by 2023 and introduce mitigation measures. These goals will be reviewed upward periodically starting in 2023.
The National Climate Change Adaptation Plan 2021-2030 is based on lessons learned from previous efforts to adapt to climate change and on the latest knowledge about climate change and international commitments. CO2 emissions plummeted to historical levels in Spain in 2020 because of the COVID-19 pandemic. As soon as activity recovered in 2021, greenhouse gas (GHG) emissions increased by 5.9 percent and 14 percent in the first five months of 2022. With respect to the base year (1990), emissions in 2021 increased by 0.3 percent, although they decreased by 34 percent compared to 2005. The effects of the crisis unleashed by the coronavirus resulted in a large drop of energy demand in 2020 (12.5 percent less than the previous year) and part of 2021, which resulted in a significant decrease of emissions. However, in the last quarter of 2021, with a notable economic recovery, emissions grew again due mainly to the rise in fossil fuel consumption and road transportation, which translated into a sector emissions growth of 13.9 percent. It also contributed to higher emission rates in the last twelve months and a 13 percent increase of coal burning for power generation, almost 5 percent more of natural gas use, and the growth in oil consumption by 9.2 percent.
Thus, the Spanish government is supporting local companies incorporating sustainability into their business strategies and transforming challenges into new business opportunities to become key players in sustainable development and achieving the 2030 Agenda. The Spanish government has outlined a new regulatory framework for reducing carbon emissions and promoting the development of renewable energy. On May 22, 2021, Spain’s Act 7/2021 on Climate Change and Energy Transition Plan came into force. It established energy targets for 2030 and 2050 for the reduction of GHG emissions. Renewable energy and energy efficiency targets have been incorporated into the new act. These targets may be subject to upward adjustment by the Council of Ministers from 2023 onwards. There are several plans and strategies that will be instrumental to reach the objectives established by the Climate Change and Energy Transition Plan, including:
- Spanish Economy Decarbonization Strategy by 2050 establishes the path for reducing emissions and increasing the number of carbon sinks, every five years.
- The National Adaptation to Climate Change Plan, which is the planning instrument to promote coordinated action against the effects of climate change (strategic objectives, impact indicators and risk reports).
- The Housing Rehabilitation and Urban Renewal Plan, with the objective of improving existing building stock, regardless of ownership, following the indicators set out in the long-term strategy for energy rehabilitation in the building sector in Spain.
Funding is of essence in this ecological transformation. The General State Budget for 2022 is the main tool for channeling the European funds that will help achieve this recovery from the pandemic, through the Recovery, Transformation, and Resilience Plan (PRTR), from which the first disbursement of almost USD 12 billion has already been received in 2021. Spain has been the first country to receive payment from EU community authorities after fulfilling the 52 milestones linked to that first disbursement of funds. The 2022 accounts contemplate the (PRTR) in terms of ecological transition, which will have an investment of more than 28 billion destined to promote a green economy. Out of the total of 70 billion that the PRTR will mobilize in the 2021-2023 period, 40.29 percent of the investments must contribute to the objectives of mitigation and adaptation to climate change, as well as the goal of full decarbonization of the economy by 2050. Likewise, 100 percent of the investments must respect the so-called “green filter,” so that all the reforms and actions subject to the Plan do not cause any significant damage to the environment.
At the national level, the Ministry of Ecological Transitions is responsible for energy and environment. Its aim is to propose and execute the government’s policy on energy and the environment as Spain transitions to a more ecological and productive social model. Some areas related mainly to forestry environment and conservation, agricultural irrigation, marine reserves protection, among others, are under the Ministry of Agriculture, Fishing, and Food, always in conjunction with the Ministry of Ecological Transition. The autonomous regions, or regional governments, develop basic legislation in their territorial scope and approve regional environmental plans. At the local level, the main environmental powers of the municipalities relate to municipal environmental permits, urban waste, water treatment, air pollution and noise limits. Many Spanish cities and towns are successfully pioneering smart city projects with actions covering a wide range of population sizes, climatic conditions, geographic locations, city structures and activities. Apart from these three levels, there are other national and regional bodies and agencies that take part in the enforcement of environmental law within specific sectors, such as hydrographic confederations, the Spanish Climate Change Office (OECC), and the police in charge of the protection of the environment (Seprona), among others.
Demand for waste, water, soil, and air pollution mitigation and remediation, as well as green and blue equipment/technology/services continue to increase given the strong commitment and investment in Spain and the EU to stop climate change and protect the environment. Digitalization in all these subsectors will be a priority.
Water: It is necessary to invest in measures aimed at water supply, purifying water, and modernizing irrigation. Spain will allocate over USD 1.2 billion of Next Generation funds to water resources. Spain 2050, the newly unveiled national government strategy to meet the challenge of climate change, calls for profound changes in water use and management to cope with water shortages projected to affect more than half of Spain’s population by 2050. It recommends cutting water consumption by 15 percent by 2050, achieving parity of cost for reused wastewater and desalination compared to water from reservoirs, and taxing water use that carries with it high environmental costs. The current concessional regime for agricultural water could be used to achieve a major overhaul of the sector – which accounts for 80 percent of Spain’s water use – by transforming the type of crops grown and the systems of production.
The digitization of the water administration is the other essential area to which the Ministry wants to dedicate USD 298 million. Digital transformation in this sector will allow significant water savings by updating the current state of digital water management. Tracking and controlling the use of water, incorporating automation into the hydrological information systems that automate water flow and improving monitoring and control procedures of the Hydraulic Public Domain can help the country begin to incorporate new support tools such as drones or the use of big data.
Waste: In 2021, the Spanish economy generated around 138 million tons of waste (close to 490 kilos per person per year), of which 48 percent ended up in landfill. However, of these 138 million, 19.8 were recycled, generating new products or raw materials. The 19.8 million tons of recycled waste in 2021 represented 3.1 percent more than in 2020 and its sale generated revenues worth almost USD 4 billion, compared to slightly over 3 billion USD the previous year. Similarly, metal waste accounted for more than 60 percent of the total recycled volume, while the paper and cardboard segment accounted for just over 20 percent. The rest corresponded to wood, glass, and plastic. In 2021, the sector had 340 companies that managed, excluding transfer stations, some 365 urban waste treatment and disposal plants.
Water: There is an increasing need to invest in hydraulic infrastructure to face future challenges, such as sustainability, climate change, and water quality. Digitization, sanitation, and purification will allow an improvement and modernization of the water management and treatment sector to face current difficulties, such as drought, water waste in some sectors such as agriculture, misuse of water resources, etc. A specific area that needs digitization is the water treatment installations that allow the reuse of purified water suitable for irrigation. Better management of such installations will result in water savings and a reduction in discharges into the sea.
The use of automation elements and the digitization of gates and irrigation systems lead to an improvement in productivity and the use of resources, as well as the modernization of reservoirs so that they allow the storage and lamination of water of the river during the night to irrigate with the greater flow during the day. It is also important to highlight the potential of treatment plants and the products and by-products that can be obtained from them through the continuous application of RD&I to take advantage of residual water and produce electricity, gas, biofuels, fertilizers, etc. Finally, it is possible to use thermography to assess water stress and manage irrigation efficiency, controlling the deficit.
Waste: The increase of recyclable waste separation derived from the waste generated will boost the activity and income of recycling companies in the coming years, for which a growth forecast for the waste recycling sector is estimated at around 2.1 percent for the year 2022. European Legislation required that since 2020, half of the municipal waste be reused or recycled. In 2025, this figure should be 55 percent; in 2030, 60 percent; and in 2035, 65 percent, which may fuel further growth in the sector. There are good opportunities for U.S. businesses with solutions that contribute to reducing the waste generated, recovering the recoverable waste, and eliminating, in an environmentally friendly way, the non-usable waste. Thus, technology and services for substituting a linear economy based on producing, consuming, and disposing of for a circular economy in which materials containing waste are reincorporated into the production process to generate new products or raw materials have great prospects in this market.
Ministry of Ecological Transition
Spanish Climate Change Office (OECC)
U.S. Commercial Service Spain
Environmental Sector Specialist: Carmen Adrada