Market Overview
Portugal occupies one-sixth of the Iberian Peninsula at Europe’s southwestern perimeter. The mainland and its archipelagos host a rich biodiversity, and the country’s marine environment is of particular importance. The implementation of European Union (EU) environmental law and policy, along with significant EU funding assistance, have contributed to preserving and improving the environment in Portugal. Nevertheless, environmental implementation and enforcement represent a challenge. Europe has ambitious laws and policies to protect air and water, promote the circular economy, raise recycling rates, and safeguard nature. Implementing related laws and policies is key to achieving Portuguese environmental objectives. The European Commission launched the Environmental Implementation Review (EIR), a tool to help countries address systemic obstacles to environmental integration by identifying the causes behind poor implementation.
On May 2021, the Portuguese government approved the Portuguese Climate and Energy National Plan (Plano Nacional de Energia e Clima or PNEC) for the decade 2020-2030. This plan sets an agenda to reach the goal of the decarbonization of the Portuguese economy by reaching a 30% reduction of greenhouse gases emissions by 2030. The PNEC is a ten-year integrated plan mandated by the EU for each of its member states to meet the EU’s overall greenhouse gases emissions targets. PNEC addresses all five dimensions of the EU Energy Union: decarbonization, energy efficiency, energy security, internal energy markets, and research, innovation, and competitiveness. To reach that target by 2030, the Portuguese government adopted several national goals, such as:
- Raising renewable power generation from 31% to 47%
- Reaching 20% of electric vehicles
- Reducing the consumption of primary energy
In 2015, the Portuguese government adopted the Green Growth Commitment (GGC). This strategy grew out of the Coalition for Green Growth, which launched in 2014. The GGC encompasses 16 sectors, with over 100 initiatives and 14 targets for 2020 and 2030.
In 2016, during the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), Portugal adopted a carbon neutrality by 2050 goal, and developed its Roadmap for Carbon Neutrality 2050 (Roteiro para a Neutralidade Carbónica – RCN 2050), which sets out Portugal’s vision, trajectories, and guidelines for the policies and measures to be implemented within this timeframe. Achieving carbon neutrality by 2050 means gradually abandoning the previous linear economic model based on fossil fuels, focusing on an economy that is sustained by renewable resources and uses resources efficiently, and implementing updated circular economy models that enhance the territory and promote territorial cohesion. For example, Portugal will explore its untapped potential for hydroelectricity production, starting by establishing rigorous criteria to select sites to install large new hydroelectric projects.
To complete the decarbonization strategy, the waste and wastewater sector is expected to undergo substantial changes by 2030. In effect, to comply with the goals set out in the Landfills Directive, only a maximum of 10% of urban waste produced will be deposited in landfills by 2035. There a paradigm shift is needed to increase recycling and reuse waste, focusing on a more circular economy that generates less waste.
The reduction of waste production is a priority, as is reinforcing separated collection of urban waste, with emphasis on the biological treatment of bio-waste and the intensive use of solutions to reuse and recycle materials. It is essential to ensure the rational use of existing water resources and satisfy the needs of all consumers, including environmental consumers.
Waste Management
Portugal has both national and regional waste authorities. At the national level, the Portuguese Environment Agency (APA): ensures and monitors the execution of the national waste strategy; manages licensing; monitors waste management activities; issues technical standards; carries out the operational and administrative control of waste transfers in the national territory; collects and processes information on waste; and ensures the validation of the information required for the application of the economic and financial regime for waste management - Waste Management Fee (TGR). Regional coordination and development committees supplement with their own localized authorities in waste management.
Waste management on mainland Portugal is currently based on the following solutions:
- Separate collection of packaging waste, paper, and other recoverable waste streams (door-to-door, ecopoints, ecocenters) for sorting recycling.
- Separate collection of biodegradable municipal waste for organic recovery through composting and/or anaerobic digestion processes.
- Undifferentiated collection of municipal waste for shipment to mechanical and biological treatment facilities for later recycling or other recovery processes.
- Undifferentiated collection of urban waste for energy recovery (waste incineration).
- Landfill waste deposition of non-recoverable fractions or direct deposition.
In 2018, the EU approved a set of new waste rules. The new rules are part of the Circular Economy package presented in December 2015 and encourage reducing waste while increasing municipal and packaging waste recycling. The rules also phase out landfilling and promote the use of economic instruments, such as Extended Producer Responsibility schemes. Concerning municipal waste, the rules set:
- The following recycling targets for municipal waste: 55% by 2025, 60% by 2030, and 65% by 2035.
- Stricter regulations for calculating recycling rates.
- A reduction of municipal waste landfilled to 10% or less of the total amount of municipal waste generated by 2035.
Additionally, The EU Waste Framework Directive, further supported by Portuguese national legislation and Portugal’s Strategic Plan for Urban Waste (PERSU 2020), set directives to assess the amount of waste that has been processed for material recovery. Proper management of the produced waste is measured, for example, by monitoring the distance to the “target for preparation for re-use and recycling.” The updated 2030 PERSU is currently under public consultation and will continue the application of the national waste policy and the implementation of actions and policies.
Water Management
Portugal’s water management follows two primary principles: water access as a basic human right and the importance of protecting water as a scarce resource. In applying these principles, the consumer is charged fees to encourage thoughtful consumption and support environmental protections and water management efficiencies. The Autoridade Nacional da Água (APA), Portugal’s national water authority, defines the policies and management instruments that ensure the application of these principles. To ensure sustainable water management and protection of water resources, the APA develops a wide range of activities that includes the definition and implementation of the national water resources policy, planning and management of these resources and the associated territory, licensing of its use and respective inspection, the promotion of the efficient use of water, the implementation of monitoring programs, and the application of a water resources tax. The Regulatory Authority for Water and Waste Services regulates the supply of water for human consumption and the sanitation of urban wastewater.
In Portugal, one of the most important documents in the water supply sector is the Strategic Plan for Water Supply and Sanitation of Wastewater (PENSAAR 2020). This strategy is focused on the efficient management of resources and seeks to respond to current challenges, such as the resilience and safety of basic water and sanitation services and the provision of quality services in a professional and socially, economically, and financially sustainable manner. Since the current plan set goals through 2020, a working group is preparing a new strategic plan for the period 2021-2030 (PENSAARP 2030), which will cover water supply, water management, wastewater, and stormwater management.
The Águas de Portugal Group (AdP Group) is the leading Portuguese corporate group working in the water supply and wastewater sanitation sector. Majority-owned by the state, the group represents a business instrument for implementing public policies and attaining national objectives across the fields of the environmental sector, seeking to foster the universality, continuity, and quality of the service; the sustainability of the sector; and the protection of environmental values. The AdP Group acts across every phase in the urban water cycle, spanning the capture, treatment, transport, and distribution of water for public consumption and the collection, transport, treatment and rejection of used waters, both urban and industrial, including their recycling and reutilization. Through its companies, the AdP Group holds an extensive presence on mainland Portugal, providing services to around 80% of the Portuguese population.
Air and Noise Pollution
The APA calculates a daily air quality index, which is publicly shared through the regional coordination and development commissions on the mainland and Regional Directorates for the Environment in the autonomous regions of the Azores and Madeira. This qualitative indicator results from the calculation of the arithmetical averages of the pollutants nitrogen dioxide (NO2), ozone (O3), and PM10 particles (particles with a diameter of 10 μm or less); if available, CO and SO2 pollutants are also considered. The APA conducts inter-comparison tests and audits of the air quality monitoring and measuring stations to ensure accuracy of such measurements against APA guidelines. Portugal transposed several European legislations on the control of pollutant emissions to the air in the industrial, transport, services, and agricultural sectors into national law. The air quality index is announced along a color scale indicating “Good” to “Poor,” allowing the populace to adjust their behaviors according and protect themselves from potentially adverse health effects on poor air quality days.
In 1979, Portugal joined the Long-Distance Transboundary Pollution Transport Convention in 1979. Portugal is also party to the Vienna Convention for the Protection of the Ozone Layer under the United Nations Environment Program (UNEP). Members of this convention commit to protecting the environment and human health from damage caused by the destruction of the ozone layer; in Portugal, this responsibility falls to the APA.
Bio-Waste
Given that 37% of common garbage is made up of bio-waste from food preparation and food waste, Portugal announced a commitment to:
- Replace undifferentiated waste collection with selective collection of bio-waste and use of installed composting and anaerobic digestion capacity
- Promote the use of compost from recovered bio-waste
- Promote the installation of equipment that allows the recovery of biogas from anaerobic digestion facilities
Portugal’s strategy includes measures to ensure the collection and treatment of bio-waste, improve the regulatory framework, and guarantee incentives for implementation. The quantitative and qualitative leaps required by the selective collection of bio-waste, valorization, and use of the products generated present substantial short-term challenges, but also offers direct and indirect positive impacts, including:
- Reduced amount of waste deposited in landfills
- Reduced landfill odors
- Improved sorted materials quality in mechanical lines
- Products with high added value (compost, organic broker, gas)
- Green jobs
- Community involvement (domestic and community composting, family farming)
- Reduced imports of raw materials for agriculture
- Improved soil quality (water retention, nutrients, carbon)
An overall reduction in bio-waste and selective collection and repurposing of bio-waste will position Portugal to meet European targets for diversion or recycling, as well as meet the country’s own ambitions set in Portugal’s Roadmap for Carbon Neutrality 2050, the National Energy and Climate Plan, and the future National Strategy Bioeconomy.
Market Opportunities
The development of environmental sustainability industries in Portugal offers potential opportunities for investors. To fulfill its decarbonization goals, the waste and wastewater sector is must undergo substantial changes by 2030. This creates specific opportunities in technologies to reduce the production of waste, separate collection of urban waste, increase the biological treatment of waste, and reuse and recycling. According to its National Investment Plan 2030, Portugal plans to invest in the following areas during the 2021-2030 period:
- Services optimization and infrastructure enhancements for water supply and water drainage systems, domestic waste, and rainwater (480 million euros)
- Increased reliability and security of systems; promotion of alternative water sources; control of undue infiltrations and inflows; adaptation of infrastructure to withstand extreme weather phenomena; and interconnection of water supply systems (724 million euros)
- Increased eco-efficiency of resources and by-products generated in the urban water cycle; environmental sustainability and innovation in the urban water cycle (109 million euros)
- Compliance with European environmental policies; reduced water pollution from of urban, livestock, or industrial activities; optimization and increased capacity of existing infrastructure (483 million euros)
- Improved energy efficiency in water systems; Energy-neutralization of power generation sites; Production and adoption of renewable energy (204 million euros)
- Innovative solutions for the selective collection and recycling of organics and biodegradables; enhanced selective multi-material collection and recycling (223 million euros)
- Revitalization of former industrial and mining areas and abandoned quarries; prevention of soil contamination in formal industrial areas, improvement of public health and the environment in formal industrial areas (130 million euros)
- Improved climate monitoring and forecasting systems; flood warning systems (130 million euros)
Trade Barriers
For information on existing trade barriers, please see the most recent National Trade Estimate Report on Foreign Trade Barriers published by the United States (U.S.) Trade Representative (USTR). Information on agricultural trade barriers can be found at the website of the Foreign Agricultural Service. To report existing or new trade barriers and get assistance in removing them, contact the U.S. Mission to the European Union or the Trade Compliance Center.
Import Tariff, Import Requirements and Documentation
Products entering the EU must be declared to customs authorities according to their classification in the Combined Nomenclature. All products entering the EU are classified under a tariff code that carries information on duty rates and other levies on imports and exports, any applicable protective measures (e.g., anti-dumping), external trade statistics, import and export formalities, and other non-tariff requirements.
U.S. exporters should consult TARIC, EU’s Integrated Tariff Database to identify the various rules applying to specific products. TARIC also helps determine whether or not a license is required for a particular product. The European Commission maintains a link to the EU Trade Helpdesk, where information can be found using Harmonized Systems codes to determine, among other information, potential requirements, tariffs, the EU market’s import rules, and taxes.
For information relevant to Portugal and EU Member State import licenses, documentation, Union Customs Code, and custom cooperation, please consult the relevant EU Member States’ Country Commercial Guide.
Environmental and Related Regulations
The EU is particularly focused on ensuring any products marketed in the region are safe for the environment and human health. U.S. manufacturers exporting to the EU must ensure that their products meet these requirements before entering the market.
European Green Deal, Circular Economy Action Plan II, and the Chemicals Strategy for Sustainability
New legislative initiatives published by the European Commission are regularly made available for public consultation on the EU’s “Welcome to Have Your Say” website. These consultations are available to U.S. companies, nonprofit organizations, and individuals.
The European Green Deal, Circular Economy Action Plan II, and the Chemicals Strategy for Sustainability are policies and directives from the European Union Commission that regulates economic activities to protect the environment and set goals for a climate neutral society by 2050. These policies and directives affect all aspects of the European economy including agriculture, fisheries, construction, finance, and manufacturing; involve placing a larger emphasis on sharing-economy models, leasing, reusing, repairing, refurbishing, and recycling existing materials and products for as long as possible to extend their life cycle; and set actions on product design, empowering consumers, and more sustainable production processes.
Batteries
The EU adopted the EU Battery Directive (2006/66/EC) in 2006. This directive applies to all batteries and accumulators placed on the EU market, including automotive, industrial, and portable batteries. The directive restricts the sale of batteries and accumulators that contain mercury or cadmium (with an exemption for emergency and alarm systems, medical equipment, and cordless power tools) and promotes recycling of those batteries. The directive also places the responsibility on producers to finance the costs associated with the collection, treatment, and recycling of used batteries and accumulators.
Waste Electrical and Electronic Equipment
EU regulations on waste electronical and electronic equipment, though they do not require specific customs or import paperwork, may entail a financial obligation for U.S. exporters. The Waste Electrical and Electronic Equipment (WEEE) Directive requires U.S. exporters to register relevant products with a national authority or arrange for this registration to be done by a local partner. The directive also requires manufacturers to include the “crossed-out wheelie bin” symbol on the product or packaging informing consumers that the products require specialized recycling and should not discarded with standard trash.
Restriction on Hazardous Substances in Electrical and Electronic Equipment
The Restriction on Hazardous Substances in Electrical and Electronic Equipment Directive imposes restrictions on the use of certain chemicals in electrical and electronic equipment. The restriction applies to nearly all products that require power unless there are specific exclusions or exemptions. U.S. exporters must certify that their products meet the requirements of this legislation by affixing “CE Marks” to their products. U.S. exporters must retain product files to support the “CE Marks” for controls.
Market Entry
Using an Agent or Distributor
When doing business in Portugal, U.S. companies should keep the following points in mind:
- Local Representative: Having a local representative with good contacts is very important in establishing business contacts. Portugal is a small country, so knowing people in the industry is very important.
- Exclusive Distributor: One distributor that is appointed on an exclusive basis is ideal.
- The Iberian Peninsula: Portugal and Spain do not constitute a homogeneous marketing area. A Spanish distributor should not be asked to cover Portugal unless the Spanish company is willing to set up a separate Portuguese entity to handle this area.
- Impact of the EU: Many projects are EU-funded, so an EU partner is desirable (and often fundamental) when bidding.
- Slow Down: Conducting business takes longer in Portugal than it does in the U.S. or in northern Europe, as personal relationships are integral to business. Customers want to get to know sellers before fully trusting them.
- Business is Honorable: There are relatively few trade complaints. The business community is close-knit and many distributors are family-owned companies, which means trade disputes are rare and are often resolved out of court. Be prepared to wait if the courts are required. Despite some recent reforms and improvements, the Portuguese legal system remains slow and is the single biggest cause of unresolved U.S. company trade complaints.
- English Language is Common: Portugal has a long tradition of international trade. The U.S. is well-respected in the market, and companies can usually accommodate doing business in English.
