• Sustainability in tourism: make or break

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    One of the consequences of the COVID-19 health crisis has been the increased awareness of the population and, by extension, that of politicians regarding the need to include sustainability criteria in economic policies in order to promote a more sustainable and resilient reactivation of the economy. The tourism industry is no stranger to these trends; firstly, because its business can be adversely affected by the consequences of climate change and, secondly, because there is ample scope for the industry to become more sustainable. This article attempts to determine what we understand by sustainability in the tourism sector, how it can be measured, the current situation of Spain’s tourism industry and where it is heading.

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    What do we mean when we talk about sustainability in tourism?

    Spain’s tourism industry has developed exceptionally in recent years, becoming one of the country’s main sources of business, income and employment. However, this strong development had also led to the emergence of some negative actions and social unease regarding the role played by tourism at certain destinations and moments until, in 2020, the coronavirus crisis paralysed the sector’s activity and highlighted its social and economic relevance for many areas in Spain. At present, the policies implemented by the European authorities and the Spanish government itself clearly indicate a way out of the crisis based on criteria of sustainability and resilience which, in the case of the tourism sector, consists of two aspects. On the one hand, tourism is particularly sensitive to the impact of climate change, such as rising sea levels, extreme weather events, environmental degradation and biodiversity loss. On the other hand, as tourism is an activity that involves high levels of atmospheric pollution and puts great pressure on natural resources, there is ample room for improvement to make the sector more sustainable.

    The World Tourism Organization defines

    the principles of sustainability in terms of the environmental, economic and socio-cultural aspects of tourism development

    In this respect, the World Tourism Organization (UNWTO) defines the principles of sustainability in terms of three areas: environmental, economic and socio-cultural. The first area aims to make optimal use of natural and environmental resources, as well as to preserve biological diversity. The economic aspect corresponds to tourism’s impact on the economy of the locality receiving tourists, in such a way as to promote long-term viable activities, with stable employment opportunities and well-distributed socio-economic benefits. Finally, the socio-cultural aspect seeks to conserve and strengthen the cultural and architectural assets and traditional values of the tourist destination in question.

    How can we measure the sector’s progress towards sustainability?

    In order to gauge the degree of sustainability in the sector and the steps that should be taken in the future, we have created a relevant indicator for each of the three aspects defined by the UNWTO regarding tourism’s sustainability. It should be noted that our analysis has been carried out using data prior to 2020, as the effect of the pandemic on these indicators would distort the analysis contained in this article.

    Most of the tourism industry’s greenhouse gas emissions

    concentrated in the transportation sector

    In environmental terms, we have taken the trend in greenhouse gas (GHG) emissions into the atmosphere by the sectors that make up Spain’s tourism industry.6 For this analysis, we have only taken into account the trend in the three gases that are most emitted into the atmosphere: carbon dioxide (CO2), nitrogen oxides (NOx) and carbon monoxide (CO). The first conclusion that can be drawn is that most of the GHG emissions come from the transport sector (accounting for around 12% of tourism GDP), specifically the emission of nitrogen oxides resulting from combustion engines. These sectors are among the most polluting of all industries. Moreover, the pollution level has increased since 2013 for air transport, and although they have decreased for land transport they are still at an incredibly high level. With respect to accommodation and hospitality services, as well as travel agency and tour operator activities, carbon monoxide is the pollutant emitted most into the atmosphere.7 Although the pollution level are not alarming, far from moderating they actually grew by 78% in the case of accommodation and 38% in the case of agencies and tour operators between 2013 and 2019.

    • 6. This analysis considers the data provided by the National Statistics Institute by branch of activity: accommodation services, food and beverage services (branch 55-56, according to CNAE 2009); activities of travel agencies, tour operators, booking services and related activities (branch 79); land and tube transportation (branch 49), and air transport (branch 51).
    • 7. This type of GHG is produced every time a fossil fuel such as natural gas, propane gas, petrol, oil, kerosene, wood or coal is ignited. In other words, the sector produces this as a result of people using heating and cooling systems and combustion stoves.

    Greenhouse gas emissions by tourism sector

    Accommodation services, food and beverage services

    Last actualization: 26 January 2022 - 09:22

    Activities of travel agencies, tour operators and related activities

    Last actualization: 26 January 2022 - 09:24

    Land transport

    Last actualization: 26 January 2022 - 09:25

    Air transport

    Last actualization: 26 January 2022 - 09:26

    The indicators of economic value consider the contribution made by tourism to the economic sustainability of each destination. The variables we have used to measure this are the average number of overnight stays per month (volume of activity) and the expenditure per tourist (value of that activity). The volume and value of tourism are essential to the economic sustainability of a destination: the greater the expenditure per day, the more efficient the destination in terms of generating tourism value.

    The relationship between volume (number of overnight stays) and expenditure per tourist can be seen in the figure below.8 In the most tourism-oriented provinces (those with more than 10 million overnight stays per year), average expenditure is around 300 euros per tourist. The case of Las Palmas is particularly negative in this respect: it ranks second in terms of overnight stays but only has a modest average expenditure. Among the rest of the provinces, the average expenditure per tourist is below 175 euros. Girona, Alicante and Gipuzkoa are particularly positive in economic terms as they typically have a more modest volume of hotel stays but a very high expenditure per tourist.

    • 8. Total tourist expenditure by province has been estimated using in-person card payments by domestic and international tourists via CaixaBank POS terminals in 2019.

    Economic indicators: tourist expenditure vs. overnight stays

    Y axis: Expenditure/tourist; X axis: Overnight stays (million)

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    Source: CaixaBank Research, based on data from CaixaBank and the National Statistics Institute.

    As a basic indicator to gauge the social and cultural impact of different tourist destinations, we have measured congestion in the various provinces as this influences residents’ satisfaction and is a basic indicator of the social impact of tourism on a community. To this end, we have used the variable of the number of overnight stays in proportion to the resident population, the results of which can be seen in summary form in the map below. In general terms, no significant tourism pressure is observed in most of the country.9 However, the most noteworthy cases are the following: (i) the island regions, eminently beach and nature destinations which receive a lot of international tourism,10 (ii) certain areas close to the border with France that offer beach and mountain tourism (Huesca, Tarragona and Girona) with a small local population and that are visited by neighbouring countries, as well as (iii) certain towns in Andalusia that receive both domestic and international tourism (Malaga, Huelva and Almeria). It seems that congestion in the most tourist-oriented destinations has actually worsened in recent years, given that the population has grown, on average, much less than the number of tourists.11 

    • 9. In Spain, the ratio of the volume of overnight stays to the resident population is slightly above seven, which can be taken as a reference for the average congestion for the country as a whole. Congestion above these levels can be considered as high. In the case of the EU, it is around four, according to data provided by Eurostat.
    • 10. In fact, the Balearic Islands stand out as the European region with the highest congestion in terms of the number of annual visitors they receive, according to regional data provided by Eurostat, ahead of the autonomous province of Bolzano (Italy), the Algarve (Portugal), Tyrol and Salzburg (Austria).
    • 11. In the past 10 years, Spain’s population has grown by 2% on average while international tourist arrivals have increased by nearly 60%.

    Overnight stays as a share of the resident population

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    Source: CaixaBank Research, based on data from the National Statistics Institute.
    Towards a new, more sustainable and competitive model

    In light of the available indicators, it seems evident that there is room for improvement over the coming years. Regarding the environment, pollution levels have actually increased in recent years and the potential areas of improvement range from promoting more energy-efficient buildings and more modern air conditioning systems to more sustainable travel, among other aspects. In economic terms, there is no doubt regarding the importance of the sector for the Spanish economy as a whole, although it will be necessary to keep an eye on those destinations with high levels of congestion, where the sector’s economic contribution is modest. Finally, in socio-cultural terms there are some regions with an increasingly excessive tourism demand, which can make the resident populations uneasy due to congestion problems in small towns with limited public services, especially as they are not always prepared to absorb such a huge seasonal demand.

    The sector’s agenda for sustainability involves implementing initiatives that pre-date COVID-19 and now make it possible to take advantage of funds from Europe.12 Specifically, the Spanish tourism industry is covered by the government’s Recovery, Transformation and Resilience Plan via the policy of «Modernisation and digitisation of the industrial fabric and SMEs, recovery of tourism and promotion of an entrepreneurial nation Spain», in which component 14 outlines a Modernisation and Competitiveness Plan for the Tourism Sector. Within the latter, the area that will receive the most investment is the Strategy for Sustainable Tourism at Destinations, which has an estimated budget of 1.9 billion euros for the next three years.13

    • 12. At the beginning of 2019, the Spanish government and Secretary of State for Tourism had already begun work on Spain’s Sustainable Tourism Strategy 2030, which took into account the need to include sustainability criteria for the sector and began to introduce the objectives and criteria that, through the NGEU funds, have now been established in the new Strategy for Sustainable Tourism at Destinations.
    • 13. The government held the first extraordinary call for Sustainability Plans in November 2021. 615 million euros were disbursed to the autonomous regions, taking into account economic variables (percentage of tourism GDP with respect to regional GDP and the reduction in the number of tourism workers between December 2019 and December 2020), regional variables (the size of the autonomous region as a percentage of the total area of Spain and population density) and tourism variables (number of international tourists received in 2019 and spending by these tourists).
    The ultimate goal is none other than to try

    to improve the competitiveness of Spain’s tourism industry by means of a new model with greater added value

    The objective of these initiatives is not only to ensure that Spanish destinations are capable of integrating environmental, socio-economic and regional sustainability criteria into the tourism products and services they supply but also to develop resilience strategies in the face of current challenges (climate change, excessive demand for tourism, health and safety-related crises) and to achieve greater cohesion among the different regions. In other words, to improve the distribution of the burdens on the country and establish an integrated approach to help slow down its depopulation. The ultimate goal is none other than to try to improve the competitiveness of Spain’s tourism industry by means of a new model that is more sustainable, of higher quality and, therefore, of greater added value.

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  • How the agrifood sector is becoming more sustainable

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    Climate change and the struggle to prevent it pose enormous challenges for agrifood production in Spain. In turn, improving the sustainability and resilience of the sector will be key to achieving the environmental targets set out in the European Green Deal. Agri-environmental indicators show that, despite some progress in recent years, the sector needs to tackle significant aspects, such as reducing the use of chemical pesticides, fertilisers and antimicrobials in agriculture, as well as improving animal health and welfare, increasing efficiency in the use of energy and water resources, promoting food consumption that is more sustainable and healthier and reducing food loss and waste, fostering a circular economy. The new CAP, with eco-schemes as its key measure, and the Next Generation EU funds will support the sector’s green and digital transition.

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    The threat of climate change and transition to a sustainable food system

    Spain’s agriculture has traditionally benefited from a privileged geographical location and climate but it is particularly vulnerable to climate change. Increased soil erosion, floods, droughts and wildfires, along with an increase in pests and diseases, are just some of the direct effects. In turn, primary sector activity also contributes to climate change: crop specialisation and intensification, the use of chemical inputs and the industrialisation of livestock production all have negative impacts on water, soil, air, biodiversity and habitat conservation.

    Agriculture contributes to climate change and, in turn, suffers directly from its consequences

    It must therefore move towards a new model that protects the natural resources on which it depends.

    EU countries are increasingly aware that they need not only to mitigate climate change but also adapt to it. Consequently, given growing concerns for the environment, the agrifood sector must move forward in its transition from a system that emits greenhouse gases (GHG), demands a large amount of natural resources and also pollutes them, to a new model, increasingly widespread, that provides healthy, nutritious food sustainably, protecting the natural resources on which agricultural activity itself depends.

    In addition to improving the sustainability of agrifood production and downstream distribution, another important lever for change is to promote healthier and more environmentally sustainable consumption patterns. For example, a diet with a larger proportion of vegetables, organic foods, seasonal and local produce. Similarly, the reduction of food loss and waste and promotion of the circular economy are also key factors in moving towards a sustainable food system, as stated in the European Commission’s «Farm to Fork» strategy.

    The Farm to Fork strategy

    The Farm to Fork strategy
    Source: European Commission.
    From the European Green Deal to the CAP Strategic Plans

    The EU is deploying a wide range of tools to provide stakeholders with mechanisms and incentives to support this transition to a sustainable food system and, in turn, to help achieve the targets set out in the European Green Deal. One important addition in the reformed Common Agricultural Policy (CAP), which will enter into force in January 2023, is the drafting of National Strategic Plans to establish priorities in terms of aid and incentives for the various production subsectors.6The star measure is eco-schemes, which are voluntary and reward sustainable practices. Spain’s Ministry of Agriculture has proposed two eco-schemes, with a budget of 1,107.49 million euros, which group sustainable practices into two areas: agroecology and low carbon agriculture. The first group includes activities such as pasture management using sustainable mowing, crop rotation and the maintenance of non-productive areas and other biodiversity aspects. The second group includes extensive grazing, conservation agriculture and the maintenance of living or dead vegetation cover.

    • 6. Spain’s Ministry of Agriculture, Fisheries and Food must submit its Strategic Plan to the European Commission by 30 December 2021.
    The new CAP, with eco-schemes as its key measure,

    together with Next Generation EU funds, will support the sector’s green and digital transition.

    In addition to the CAP, the European NGEU funds will also help to finance the green and digital transition of the primary sector. In particular, item 3 of Spain’s Recovery, Transformation and Resilience Plan, aimed at the environmental and digital transformation of the agrifood and fisheries system, provides for an investment of 1,502.8 million euros. The plan is based on four fundamental pillars: (i) improving efficiency in irrigation, (ii) promoting sustainability and competitiveness in agriculture and livestock farming, (iii) a digitalisation strategy for the agrifood sector and the rural environment, and (iv) modernising the fisheries sector, by promoting sustainability, research, innovation and digitalisation.

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    Environmental indicators in the primary sector

    The European Commission has analysed the situation of individual Member States in relation to their contribution to each of the Green Deal ambitions. The table below lists these targets and the reference values of these indicators for the main countries.7

    To make Europe the first climate-neutral continent by 2050, the first milestone has been set for 2030: reduce greenhouse gas (GHG) emissions by at least 55% compared with the 1990 level. While GHG emissions from EU agriculture have fallen by a significant 20% since 1990, no progress has been made since 2005. And in Spain the situation has been reversed: emissions have increased since 1990 (6.5%) with just a modest reduction since 2005 (–3.7%).

    • 7. «Commission recommendations to Member States as regards their strategic plans for the CAP», European Commission, December 2020.
    In relative terms, GHG emissions by Spain’s agricultural sector

    are lower than the EU average, which has set itself the target of at least 55% below 1990 levels by 2030.

    Despite this trend, it is important to note that, in relative terms, the sector is responsible for 12.0% of the economy’s total GHG emissions compared with an EU average of 12.7%. Furthermore, if we take into account the fact that the primary sector contributes 2.9% of GDP compared with 1.6% in the EU, the result is that GHG emissions by Spain’s agrifood sector per unit of GVA are significantly lower than the European average (1.2 kg/euro compared with 1.7 kg/euro in the EU).8 Similarly, emissions from agriculture per unit of agricultural land (tonnes of CO2 equivalent per hectare) are lower in Spain (1.6 compared with 2.5 in the EU).

    The second EU milestone is contained in the Farm to Fork strategy, which sets a target of 50% reduction in the use and risk of chemical pesticides by 2030. In recent years, Spain has significantly reduced the use of this type of chemical and the challenge is to continue moving in this direction. The target for antimicrobial resistance is a 50% reduction of the overall antimicrobial sales for farm and aquaculture animals by 2030, compared with the EU baseline in 2018. In this respect, Spain lags behind the EU average.

    On the other hand, Spain performs positively both in its share of agricultural land used for organic farming, an aspect we discuss in more detail in the next section, and the proportion of agricultural land occupied by highly diverse landscape features. In this case Spain, with 13.2% of its land, already exceeds the target of 10%.9

    • 8. Data from the European Commission’s Common Monitoring and Evaluation Framework (CMEF) for the CAP 2014-2020, https://agridata.ec.europa.eu/extensions/DataPortal/cmef_indicators.html
    • 9. EU Biodiversity Strategy 2030.

    European Green Deal targets and reference values

    European Green Deal targets and reference values
    Notes: GHG stands for greenhouse gases. UAA stands for utilised agricultural area. Source: CaixaBank Research, based on the European Commission’s COM (2020) 846.
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    Nitrate pollution from agriculture remains one of the greatest pressures on the aquatic environment. In this respect, the EU has set a target of reducing nutrient losses by at least 50% by 2030 while ensuring there is no deterioration in soil fertility, an aspect in which Spain needs to improve considerably. An increasing number of EU countries are also affected by water scarcity, often caused by excessive abstraction of water for agriculture and livestock. Climate change will further aggravate the problem of water availability in many regions, including Spain.

    Finally, the new CAP establishes digitalisation as a priority across the board, believing that the transition towards a sustainable food system must be supported by knowledge, innovation and digitalisation. In this respect, one key factor in developing rural areas and reversing their depopulation is the availability of a fast, reliable internet connection. While there has been a notable increase in the proportion of households in rural areas with next-generation broadband access, there is still a significant gap with respect to urban areas. The goal is to cover 100% of the population by 2025.10

    • 10. This target is included in the Agenda España Digital 2025.
    58.7% of Spanish households in rural areas

    had access to fast broadband internet in 2019. The goal is to cover 100% of the population by 2025.

    The green and digital transition of European agriculture is also creating new business opportunities which the sector must take advantage of, for example by better aligning its production with evolving consumer tastes. Sustainability will become a competitive advantage for those companies and farms that achieve a balance between economic growth, environmental care and social well-being, while those that fail to comply with environmental standards will be penalised by increasingly demanding and environmentally aware consumers who identify with the most sustainable brands and products.

    A firm commitment to boosting organic production

    The commitment to more sustainable production schemes, such as organic farming,11 is relentless. Spain, with more than 2.44 million hectares of these crops in 2020, is the first country in the EU and the third in the world after Australia and Argentina. However, in terms of its share of utilised agricultural area (UAA), it is above the EU average, as noted in the previous section, but well below leading countries such as Austria, Estonia and Sweden, which exceed 20%. Four million additional hectares would be needed to achieve the 25% target set in the Organic Action Plan.

    • 11. Organic farming is a system of agrifood production and management that combines the best environmental practices, a high level of biodiversity and preservation of natural resources and the application of high animal welfare standards, so that products are obtained from natural substances and processes (MAPA).

    Share of utilised agricultural area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Regarding organic operators,12 almost 90% out of a total of 50,047 in 2020 were primary producers while the rest were industrial operators and traders. However, the number of operators is growing much faster (more than double) further down the food chain.

    • 12. An organic operator can be an individual or company and must meet certain requirements to be able to produce, process, prepare or package food of agricultural origin in order for it to be marketed using the terms ecological, biological or organic. In Spain there is a General Register of Organic Operators (REGOE) that collates the information provided by each autonomous region.
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    By region, Andalusia leads the field both in terms of land under organic farming, with more than 45% of the total, and in terms of organic livestock farms, with almost 60%. By type of crop, cereals for grain production come top (43% of the total) and, by type of livestock, cattle (48%). Compared with other countries, the Spanish agrifood sector is the world’s leading organic producer of olive oil and wine and the second for citrus fruits and vegetables.

    However, one of the challenges facing organic production in Spain is the low domestic consumption: per capita consumption of these products in 2019 stood at 50.2 euros, a far cry from countries such as Denmark or Switzerland, which exceed 300 euros. As a result, most of Spain’s organic produce, around 60%, is exported.13 The change in habits brought about by the pandemic has boosted healthier, more sustainable and local consumption, so the trend in domestic consumption of organic produce is clearly upward.

    • 13. Sociedad Española de Agricultura Ecológica (SEAE), MAPA (2021), «Análisis de la caracterización y proyección de la producción ecológica española en 2019» and Ecovalia (2021), «Informe anual de la producción ecológica en España».
    Organic farming in Spain, on the rise

    Area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Organic operators in the primary sector (producers)

    Last actualization: 13 October 2021 - 16:39

    Organic operators in the secondary sector (manufacturers and processors)

    Last actualization: 13 October 2021 - 16:40
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The energy mix of the future

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April 10th, 2019

Energy represents a very significant component of economic activity (accounting for around 9% of global GDP according to our calculations) and its price fluctuations have an undeniable impact on the economy and the financial markets. In addition, the importance of energy goes beyond the economic sphere, as it shapes global geopolitical relations. Besides geopolitics, energy and its externalities also lie at the heart of the environmental issue. The economic historian Carlo M. Cipolla1 defined the history of the world’s population as the history of energy.

The expected change in global energy consumption over the next decade is determined by four key and interrelated factors. The first is the environmental imperative, focused on climate change. From this factor, the following two emanate: measures to achieve a lower reliance on coal in the economy in order to reduce carbon dioxide emissions (decarbonisation), and improvements in the electrical network (electrification). It should be noted that those responsible for economic policy must tread very carefully to balance environmental pollution controls with economies’ legitimate aspirations for economic growth. This is a common theme in debates on the desirability of a more active green taxation system that includes taxes on carbon emissions, something that has already been demanded by a select group of 27 Nobel Prize winners and the last four presidents of the Fed.2 This transition can only be achieved with the fourth factor, reducing energy intensity. Energy intensity is the energy consumed per unit of GDP, and reducing it relies on the current environmental policy targets being met.

Taking these four factors into account and based on forecasts by the US Energy Information Administration (EIA), it is estimated that between 2018 and 2030, global energy consumption will increase by around 15%, and its economic cost by a little more, around 18%. This higher growth in costs is mostly driven by the transition costs associated with shifting towards other energy sources that are cleaner, but also more expensive. Even so, these increases are likely to be lower than the expected growth in global GDP, which will stand at around 45%. This is thanks to the fact that global energy intensity could fall significantly, by around 20%. By country (see first chart), China, India and the rest of the Emerging East Asia bloc will account for four fifths of the expected increase in global energy consumption between 2018 and 2030 (54.0% corresponding to China, and 12.5% to India). The combined increase of Western Europe, the US and Japan, meanwhile, will represent barely 1.4% of the expected total increase.

But how will the energy mix evolve? According to our scenario, as we can glimpse in the second chart, the energy mix should evolve towards a reduction in the role of oil and coal, from 35% to 32% and from 27% to 25% of the total energy consumption, respectively. On the other hand, renewables could acquire greater importance (going from 13% of the total to 16%), as could natural gas (going from 21% to 22%) and nuclear energy (from 4.6% to 5%). However, achieving the dual objective of strong economic growth while also controlling pollution seems less certain, since emissions would not fall but rather would see an 11.0% rise. That said, such an increase would still represent an improvement on the 13.0% rise registered in 2010-2018, a period with lower global GDP growth (30.4%).

If we focus on the key factors we highlighted above, the environmental imperative is inescapable. The situation is not particularly flattering, because in 2018, 34,854 million metric tonnes of carbon dioxide were released into the atmosphere, 13% more than in 2010, when the objective is to reduce emissions. China has contributed 61% to this increase, because although it is making notable progress in controlling pollution, the very dynamics of its high economic growth and the weight of its heavy industry have played against it. Other emerging economies, especially India, have not made any progress, which will make it difficult to achieve the targets that have been set. This need to reconcile emerging economies’ legitimate desire for growth with controlling environmental pollution is what will define the global economy over the next decade.

The second factor is decarbonisation, the focus of attention for the environmental imperative where the critical factor is coal: coal represented 26.9% of global energy consumption in 2018 but was responsible for 43.3% of global emissions. Between 2010 and 2018, there has been no reduction in the weight of this energy source. Since it is cheap, it is the primary energy source for China and India, which are the fastest-growing of all large economies (China and India contributed 40.0% of the increase in global energy consumption between 2010 and 2018). The good news is that the shift towards decarbonisation has already begun in China, where coal has gone from representing 68.1% of the total energy consumption in 2010 to 60.2% in 2018. India, in contrast, is not on the same wavelength: coal represented 48.5% of its energy consumption in 2018, above the 46.8% of 2010. What does the future hold? If the Chinese economy maintains the current trend, we will begin to see a significant reduction in the use of coal over the next decade: its weight in global energy consumption is expected to decline by 2.1 pps between now and 2030, largely thanks to improvements in China.

The third key factor, electrification, will be driven by the need to reduce pollution in large cities. Electrification is the best way to achieve this, because it allows the generation of energy from fossil fuels (the main cause of emissions) to be replaced by clean energy sources such as wind or solar. Thus, over the next few decades, a gradual process of electrification is expected, which will require significant investments and will extend to industries such as transportation, buildings and manufacturing. The importance of this phenomenon can be seen when we calculate the electricity fee,the percentage of total energy consumption that corresponds to energy loss resulting from converting primary energy sources into electricity. According to data from the EIA, this loss of energy has remained stable between 2010 and 2018 at slightly above 25%,3 but it is expected to rise to 26.9% by 2030 with the increase in electrification. In any case, electrification will be a phenomenon with far-reaching implications that will allow for a more sustainable geographical allocation of power generation.

The fourth factor is the reduction of energy intensity, which is essential in order to balance economic growth with the control of pollution. Energy intensity depends on two factors linked to technology: energy efficiency and changes in the composition of GDP. Energy efficiency means consuming less while doing the same thing (for example, reducing the consumption of a car per kilometre travelled). Changes in the composition of GDP, meanwhile, can boost activities that consume less energy. This is achieved if sectorial adjustments are made in the economy, such as reducing the weight of heavy industry in favour of information technologies.

In this regard, the future path of energy intensity at the global level will critically depend on what happens in China. China already plays a key role if we consider that, between 2010 and 2018, it has contributed 28.5% and 60.9% to the global increase in energy consumption and emissions, respectively. As we can see in the third chart, the Asian giant will continue to be a key player, given that it is expected to contribute 30.0% of the energy savings between 2018 and 2030, greater than the sum of the US and Western Europe (16.7% and 7.4%, respectively). It should be noted that China plans to achieve its energy savings primarily through a significant reduction in energy intensity of around 20% (greater than the 17.4% corresponding to 2010-2018). It intends to achieve this through a process of structural transformation as it shifts towards an economic model with a greater weight of the tertiary sector.4 On the contrary, Western Europe is expected to make a smaller contribution, as it is starting from a relatively more efficient position: in 2018, the amount of energy that Europe spent to produce each euro of its GDP was less than that spent by the US and China (31.6% and 40.9% less, respectively).

In short, the global economy is evolving towards a more sustainability energy mix, which seeks to combine buoyant economic growth with greater control over pollution. Nevertheless, all the indicators suggest that the progress we will see over the next few years will be limited, since, although global GDP is expected to grow well above energy consumption, carbon emissions will continue to rise significantly and the improvement compared to the last decade will be modest. All in all, energy will be a very hot topic over the next decade (and beyond) and the pending challenges will continue to be substantial.

Jordi Singla

1. Carlo M. Cipolla (1962). «The Economic History of World Population». Pelican Books.

2. See the 2019 article «Economist’s Statement on Carbon Dividends» at https://www.econstatement.org/.

3. Which is less than the weight of industry, at 40.4%, but higher than that of transport, trade and residential use (18.9%, 5.3% and 9.4%, respectively).

4. The EIA foresees a faster change of model and predicts a greater reduction in energy intensity (34.7%).

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