[Article originally published in El Periódico de la Energía]
Since 2019, those of us in the climate, energy, or environmental sectors (or at least, interested in them) have frequently heard about the National Integrated Energy and Climate Plan, or NECP. First published by the Government of Spain in 2020, covering the period 2021-2030, this document aimed to reflect the country’s commitments regarding energy and climate, marking the first major exercise in comprehensive strategic planning in these areas.
Three years later, to meet the requirements of the Governance Regulation, the process to update this text was initiated. This process was shaped by the increased climate ambition at the European level, as included in the European Climate Law and the “Fit for 55” and “RePower EU” packages. As a first milestone of this process, on June 28, 2023, Spain submitted the updated NECP draft to the Commission, which, after evaluating it, published its recommendations in December to be incorporated into the final text. According to the aforementioned regulation, this final text should have been submitted to the Commission by June 30.
To date, there is no confirmation that the final 2023-2030 NECP text has been submitted to the Commission or made public. However, based on the updated draft text, the Commission’s recommendations, and the content of the Strategic Environmental Study of the updated draft, there are significant gaps regarding measures aimed at industrial decarbonization – a sector responsible for 18.4% of the country’s greenhouse gas (GHG) emissions.
Aid Through the PERTE
The updated NECP draft reflects the Strategic Project for the Recovery and Economic Transformation (PERTE) for Industrial Decarbonization as a fundamental tool for industrial decarbonization. It foresees three lines of action: a grant line for the decarbonization of the manufacturing industry, another for manufacturing companies participating in the IPCEI on the renewable hydrogen industrial chain, and the study and evaluation of a possible support fund for carbon contracts for difference and the potential implementation of a pilot project.
However, basing the decarbonization of an entire sector solely on public aid is wholly insufficient to achieve the necessary transformation required to meet GHG reduction targets in line with the Paris Agreement.
Therefore, it is necessary to analyze the role of each of the subsectors that make up the country’s industrial framework, their needs regarding energy use and production processes, and to establish a roadmap within the updated NECP for their transformation. This should include intermediate emission reduction targets and specific measures and policies to achieve them.
Decarbonizing the Steel Industry
It is also essential to emphasize that, within the industrial sector, the steel industry plays a particularly significant role. However, there are still no guarantees to ensure that the transformation of this sector will occur swiftly enough to avoid surpassing a 1.5ºC increase by mid-century. To achieve this, the roadmap for this sector should serve as a basis to:
- Reduce demand and improve energy efficiency in steel production in Spain.
- End the activity of Blast Furnaces A and B at the ArcelorMittal steel plant in Gijón by 2025 and 2030, respectively, replacing them with alternative production methods based on renewable energy sources: DRI plants with green hydrogen and hybrid electric arc furnaces. The plant owner could, in this case, apply for state aid for this purpose.
- In no case should the installation be converted to use fossil gas, except on a transitional basis and under strict conditions: (1) that state aid is prohibited, and (2) that the owner, after prior consultation with the public and all stakeholders, drafts and publishes a transformation plan for its production process. This should include annual, progressive targets for green hydrogen usage and GHG emission reduction, ensuring the cessation of fossil gas use no later than 2040.
- Ensure that the electricity used for steel production is 100% renewable no later than 2035.
The journey toward the comprehensive transformation of the industrial sector is no easy task and is bound to face significant challenges. The first step to achieving this is to have early, adequate, and participatory planning.
The NECPs are key instruments guiding the energy transition of EU member states, including the transformation of the industrial sector toward a climate-neutral and sustainable model. The next ten years will be crucial for this transformation, making it essential to address and resolve the existing gaps through the final text of the 2023-2030 NECP.
Carlota Ruiz Bautista
Carlota Ruiz Bautista is a lawyer specialized in environmental and energy law. She has extensive experience in the development and implementation of projects in the areas of energy transition, climate change, fisheries, agriculture, climate governance and air quality; where she has worked with public administrations, companies, interest groups and civil society organizations.
