• 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 European Green Deal, between the desirable and the feasible

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The EU is leading the way in the reduction of greenhouse gas (GHG) emissions, but there is still a long way to go both on the Old Continent and in the rest of the world if we are to avoid an increase in temperature above 2°C. With the aim of consolidating this leadership, the European Commission (EC) has presented the Green Deal, a framework (or growth strategy in the words of the EC) that includes measures aimed at achieving a level of net zero emissions, boosting economic growth with a more sustainable use of natural resources and doing so in a way that is fair within countries, sectors and individuals. To this end, one of the first steps taken by the EU has been to incorporate regulation that forces itself to reduce GHG emissions by 50% by 2030 compared to 1990 levels (instead of the 40% set out in the Paris Agreement) and to be a climate neutral before 2050.1 Despite the goodness of these intentions, are these objectives plausible? Are the measures taken by the EU sufficient? How are these plans altered by COVID-19?

The Green Deal has been presented by the EC of Ursula Von der Leyen as the flagship of its mandate, which is reasonable in view of the concerns about the climate emergency in Europe. According to a survey by the European Investment Bank (EIB),2 82% of European citizens believe that the climate emergency is having an impact on their lives (this perception is more widespread among the Mediterranean states than those of Northern Europe). Also, 47% of Europeans see the climate emergency as one of the greatest threats their country faces. In this context, the EC has presented the Green Deal investment plan, with which it intends to «mobilise» at least 1 trillion euros over the next 10 years.3 However, it is necessary to break down this figure and understand what exactly is meant by the term «mobilise».

An initial investment proposal that raised doubts

In its initial proposal, presented in January 2020, half of this mobilisation would come from the EU’s own resources. At present, 20% of the 2014-2020 budget is considered to be green and, under the Green Deal, the EC intends to increase this to 25% for the period 2021-2027.4 To this end, among other measures, it proposes allocating 40% and 30% of the budgets of the Common Agricultural Policy and the European Maritime and Fisheries Fund, respectively, to tackling the climate emergency. In this regard, the EU’s new taxonomy will help ensure that this 25% of the budget is truly green, as it specifies the requirements for an investment or asset to be considered as such.5 In addition, the EC estimates that Member States will co-finance some of the green projects included in the EU budget with 114 billion euros. On the other hand, the EU will deploy the Just Transition Mechanism, to which it initially wanted to contribute 7.5 billion euros and through which more than 143 billion euros would be mobilised over a 10-year period to help the regions hardest hit by the transition (for example, those with a high share of employment in the fossil fuel extraction and production sector or in energy-intensive industries).6

The second largest contribution to the Green Deal investment plan consists of 279 billion euros from private investments made through the EIB’s InvestEU programme, the successor to the so-called Juncker Plan. This programme would work very much like the Juncker Plan: the EIB would provide guarantees to projects that contribute to combating the climate emergency, thereby encouraging private investment in this field.7

Finally, the EU Emissions Trading System (EU ETS) will also contribute to the trillion-euro investment with 25 billion euros collected through the auctioning of carbon credits.8 Moreover, the EC proposes creating a carbon border tax to prevent companies from relocating their production centres to regions with less stringent environmental regulations (known as carbon leakage).

Thus, of the 1 trillion euros initially announced by the EC, the real increase in EU spending on the fight against the climate emergency would only amount to a 5-pp increase of the EU budget (from 20% to 25%) being allocated for this purpose, plus 7.5 billion euros within the Just Transition Fund. The rest will come from the «mobilisation» of private and public investment, an expression that the institution uses to refer to investments, mostly private, that materialise thanks to the guarantees offered by the EU. However, most groups in the European Parliament have asked that this expression be no longer used in order to preserve the EU’s credibility.9

The Green Deal as a cornerstone of the European Commission’s Recovery Plan

At the end of May, the EC proposed a 750 billion-euro programme for its recovery plan (Next Generation EU) aimed at supporting the region’s economic recovery following the COVID-19 epidemic, taking into account the EU’s long-term challenges (primarily decarbonisation and digitalisation). This programme would be financed through the issuance of EU debt. Following the same scheme as the budget for 2021-2027, around 25% of this amount will go towards measures for adapting to and mitigating the climate emergency. Among the new measures, the contribution to the Just Transition Fund would increase from 7.5 billion euros to 40 billion euros and the EC would contribute 15.3 billion euros to the InvestEU fund in order to mobilise up to 240 billion euros (approximately 30% of which would go to green projects).

Also, a significant portion of this new sum will be invested in the renovation of buildings to make them more energy-efficient. Thus, while supporting the labour-intensive construction sector and reducing unemployment, emissions from that sector will also be reduced – an important step given how much room for improvement it has in terms of energy efficiency. It should be recalled that buildings account for 36% of total EU emissions and the EC estimates that, in order to become the first climate-neutral continent, Europe’s buildings will need to be renovated at twice the current rate (between 0.8% and 2.4% per year, depending on the Member State).

An investment that appears to fall short

Thus, taking into account the initial proposal and the Next Generation EU proposal, the total mobilisation of funds aimed at galvanising a greener economy would amount to approximately 1.37 trillion euros over 10 years, which corresponds to an annual investment of 137 billion euros (1% of EU-27 GDP in 2019). This is in comparison to the EC’s own estimate that, in order to achieve the aforementioned objective of the Paris Agreement (i.e. a 40% reduction in GHG emissions), an annual investment of 240 billion euros would be required.10 If we take into account the proposed new target (a 50% reduction in emissions instead of 40%) and we assume a similar relationship in the investment required to reduce each unit of GHG emissions, then we reach the conclusion that the annual investment requirements increase to approximately 300 billion euros. Thus, the Green Deal Investment Plan would represent 45% of the necessary investment, meaning that the private sector and Member States would still need to be more ambitious.

Far from being an obstacle, the COVID-19 epidemic could act as a catalyst for the green transition

The humanitarian, economic and social cost of the health crisis triggered by COVID-19 will undoubtedly be extremely high, and the efforts of the authorities must focus on minimising the cost in lives, mitigating the economic impact of the lockdown and supporting the recovery of economic activity. On this last point, the measures taken to date could accelerate some of the trends that had already been taking place at the productive and institutional level which will contribute to curbing climate change:

In February, the EC launched an appraisal of the EU’s fiscal framework with the intention of adapting it to the challenges that have been laid down (the Green Deal, digital transformation, reducing inequality, etc.)11 and, following the outbreak of the health crisis, some of the issues raised at that time have been accelerated. For instance, the EU will issue its own debt – something it had already done on certain previous occasions – to finance the Next Generation EU proposal. In addition, it is once again looking at the possibility of collecting some taxes directly (such as a digital tax or green taxes). If these proposals were to be implemented and become the norm, they would give the institution greater decision-making autonomy and greater funding capacity. This, in turn, would allow it to be more ambitious in its policies to address challenges, such as climate change, that go beyond the scope of the Member States themselves.

The COVID-19 epidemic has shown that remote working is a valid system for many businesses and occupations and that it has benefits both in terms of achieving a better work-life balance and in tackling the climate emergency. As explained in another article of this same report,12 in Spain around 30% of people in employment can work from home, a percentage that increases in urban areas up to 40%. Thus, if remote working were implemented in Spain two days a week for these workers, annual GHG emissions from land transportation would be reduced by 3%13 – a small step, but a step nonetheless.

In short, it is only fair to acknowledge that the EC has made a firm commitment to combating climate change. However, it lacks the necessary strength to achieve this goal by itself, so the action of states and private initiatives will be key if we are to avoid global warming in excess of 2°C. Taking advantage of a turning point like the current one could be vital in tipping the balance, in the medium and long term, towards a sustainable and environmentally friendly economy.

Ricard Murillo Gili

1. By climate neutral, we mean that GHG emitted into the atmosphere are captured by natural carbon sinks or using carbon removal technologies, which have not yet been implemented. The slower the reduction in emissions, the more important the deployment of these technologies will be, as there will be more GHG in the atmosphere increasing the temperature of the planet.

2. Second European Investment Bank climate survey.

3. This was the proposal prior to the economic recovery programme presented on 27 May.

4. The EU budget for 2021-2027 is currently being negotiated, and the health crisis triggered by the COVID-19 outbreak could significantly change its size and the amounts earmarked for the climate emergency.

5. For more details, see the article «The necessary move towards a green financial sector» in this same Dossier.

6. For more details on the Just Transition Mechanism, see the article «The EU’s climate transition: a question of justice» in this same Dossier.

7. In this regard, albeit outside the framework of the Green Deal, the EIB aims to make 50% of the financing it offers in 2025 green, compared to the current level of 25%.

8. For further details on how the EU ETS works, see the article «How to act in the face of climate change? Actions and policies to mitigate it» in the Dossier of the MR11/2019.

9. In the resolution proposed on 12 May 2020, the EC was alerted to «the use of financial wizardry and dubious multipliers» to announce ambitious figures.

10. This figure increases by 100 billion euros and 130 billion euros when taking into account, respectively, the additional investment required to develop a green transport infrastructure and to meet other environmental objectives besides global warming. See European Commission (2020). «Identifying Europe’s recovery need».

11. See the Focus «A step towards a reform of the fiscal rules in Europe?» in the MR03/2020.

12. See the Focus «The COVID-19 outbreak provides a boost to remote working» in this same Monthly Report.

13. To calculate this figure, we have taken mobility data from the Enquesta de mobilitat en dia feiner (Working-day mobility survey) conducted by Barcelona’s metropolitan transport authority, ATM, as well as emission data from the Oficina Catalana del Canvi Climàtic (Catalan Office for Climate Change) and other data from the Labour Force Survey.

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    im06-20_ei_d2_02_en.png
    Long-term trends

    Climate change & green transition

    What polices can be implemented to stop climate change? What are the implications of shifting towards a more sustainable economy?