On the 1st of July 2023, Spain started its six-months rotating Presidency of the Council of the European Union. It inherits the work carried out by Sweden and kicks off the new “Presidency trio” together with Belgium (January-June 2024) and Hungary (July-December 2024) with a joint programme directed at reinforcing the EU’s global competitiveness, ensuring a fair transition, and strengthening international partnerships.
Spain’s programme follows the line of its predecessor Sweden and aims to take it further with its four priorities: a reindustrialisation of the EU ensuring an open strategic autonomy; ecological transition and environmental adaptation; social and economic justice; and European unity, exemplified by the motto of the new Presidency: “Europe, closer”.
With industrial EU policy files on climate high on the Presidency agenda, Spain will have the possibility, and responsibility, to finalise them.
Industries and open strategic autonomy
As its first priority, the Spanish Presidency will focus on industries and trade, with the aim to reindustrialise the European Union and reduce dependence on third countries in different key sectors, such as energy. To do so, the new Presidency “will promote those dossiers which foster the development of strategic industries and technologies in Europe”, stating that they will pay ‘special attention’ to the Critical Raw Materials Act (CRM), the Net-Zero Industry Act (NZIA), and the Ecodesign Regulation (ESPR).
Bellona provided feedback to the Commission on all three files (CRM, NZIA, ESPR), while being particularly engaged in the NZIA legislative process.
The Net-Zero Industry act (NZIA) is a key file to support the deployment of climate relevant technologies to reach Net-Zero in the EU industries by 2050. Bellona recognises the potential of the NZIA to support EU industries in realising their key role in a just transition of the EU. It does so in particular by addressing bottlenecks related to carbon capture and storage (CCS), a key decarbonisation technology for heavy industry.
The file introduces an ambitious storage injection capacity target of 50 Mtpa, which must be developed by oil and gas producers within the EU. This obligation is of extreme importance, as it allocates unprecedented accountability on entities that bear responsibility for their historic contributions to global warming and by extension climate change. Nevertheless, it will only be effective if combined with an appropriate penalisation in case said entities fail to comply with the set target.
It is also necessary to prioritise multi-modal CO2 transport, with a particular focus on open access and transparency in pricing to avoid monopolistic tendencies. To do so, Bellona highlights the need for separate guidelines and regulatory measures for market regulation for a European CO2 network. Due to the different starting points, resources and geologies influencing the early participation of various regions in a European CO2 infrastructure network, it is necessary to provide proportional support to facilitate the development of CCS technologies across Europe.
The NZIA also supports electrolysers as one of the key technologies needed to contribute to the industrial transition in the EU. However, this support, as for any other technology, must be given under the condition that the electrolysers are powered by renewable energy sources and therefore contribute to significant emission reductions in hydrogen production.
Furthermore, the embodied carbon of various materials should be recognised and used as a key metric to prioritise projects that plan to procure low-carbon materials.
The Spanish Presidency, together with the Presidency trio, is committed to ensuring clean, secure, and affordable energy through a “reform of the electricity market” that will promote the speed-up of renewables deployment, reduce electricity prices and improve the system’s stability.
With ongoing contentious discussions surrounding the Electricity Market Design (EMD) reform, Bellona believes that the Spanish Presidency must seek a more equitable electricity system with increased renewable generation and strengthened consumer protection, all while preventing European fragmentation. The outcome of the EMD process should establish favourable conditions for renewable energy investment while safeguarding vulnerable consumers.
Furthermore, securing financing for grid investments is of utmost importance to maximise renewable energy integration. The new electricity market should incentivise demand-side flexibility, enabling the adjustment of electricity consumption during periods of abundant renewable energy supply.
Finally, on the EMD, it is imperative to transition away from fossil gas peakers and prioritise the adoption of highly efficient technologies. Initial discussions showed progress towards a fairer electricity system and greater integration of renewable generation, but certain provision need to be strengthened, as further detailed in Bellona’s consultation response on the EMD.
Together with the reform of the Electricity market, Bellona welcomes the prioritisation that will be given to the Gas Market Package (GMP) and urges the Presidency to ensure the inclusion of a clear and comprehensive definition of low-carbon gases. Bellona strongly recommends that the package includes full life-cycle assessments in order to reflect any potential upstream methane leakage and maximise CO2 capture rates. Moreover, it is crucial that hydrogen is reserved only for those sectors that have no other decarbonisation pathways. To ensure this, the planning of hydrogen infrastructure must be done by assessing real needs, independently of the existing gas grid, which is not fit for purpose and cannot serve as a basis for planning. Therefore, blending natural gas and hydrogen is not a climate solution, nor is continuing investments in existing gas infrastructure under the guise of “hydrogen-readiness”.
Finally, hydrogen is also listed as one of the key technologies that will play an essential role for the full decarbonisation of our economy. It is imperative that the Spanish presidency ensures domestic and imported hydrogen production will be run on additional renewable electricity and support schemes such as the hydrogen bank will be reserved to hard-to-abate sectors.
Environment and Transport
Spanish Prime Minister Sánchez stressed the need “to move towards ecological transition and environmental adaptation”, highlighting the importance of the Sustainable Development Goals, the 2030 Agenda, and the role of the UN. Bellona welcomes the fact that sustainable products are part of the Presidency’s priority under this umbrella and urges the trio to work towards finalising the regulation on Ecodesign for Sustainable Products (ESPR) as soon as possible, setting solid environmental provisions, and thus preventing lock-ins of carbon emissions in products.
To this end, Bellona recommends a clear prioritisation of products, so that the most polluting and widely used ones (such as steel) are tackled first. The regulation must ensure that the full climate impact of products is communicated transparently and accurately, that lead markets are created for low-carbon products, and that energy savings are further increased and dependence on raw materials (from third countries and new extraction) is reduced.
The finalisation of the Energy Performance of Buildings Directive (EPBD) and quick negotiations on the Construction Product Regulation (CPR) must also be a priority, both with solid embodied carbon provisions that enable bringing down emissions in the building sector. Along with the ESPR, these three key regulations should be aligned to ensure the effective decarbonisation of the construction sector.
Transport policy files are going to be another important piece of the Spanish Presidency’s agenda. In its official programme, the new Presidency will prioritise the ongoing negotiation on the Trans-European Transport Network (TEN-T) file, regarded as a “an essential element of social and territorial cohesion”. Bellona finds it necessary to advance on this file and calls for an appropriate space for the transport of CO2 not only by pipelines, but also by ship, rail, barge and truck which are excluded in the TEN-E regulation. Bellona has long asked for coherence among different legislations, and an inclusion of different modes of CO2 transport in the TEN-T as “Projects of Common Interest” (PCIs).
The Spanish Presidency issues a general call for a more competitive, caring and fair economy. It is Bellona’s assessment that the suggested initiatives lack concrete measures to make them truly sustainable and free from greenwashing. Therefore, Bellona strongly urges the new Presidency to take the sustainability aspect of its announced measures seriously, as it is crucial in order to contribute to a Net Zero Europe by 2050.
Another notable omission from the presidency programme is the Carbon Removal Certification Framework (CRCF) which has many unresolved issues, yet slipped through the Spanish Presidency’s priorities. With an already tight timeline prior to the European elections in June 2024, the previous Presidency proposed an early first compromise position in mid-June which is still missing some key elements, such as clarifications on the use of the removal certificates. The omission of this file raises an additional question mark as to whether negotiations will be finalised during the current European Parliament’s mandate.
To sum up
Spain starts its presidency in a delicate geopolitical and economic context marked by the war in Ukraine and energy and inflation crises. Moreover, the snap general elections of the 23rd of July might threaten the stability of the presidency, while important files need to be finalised before the EU elections of June 2024. Bellona urges the Spanish Presidency to ensure that these changes do not divert attention from important climate files. To this end, the files identified here, if finalised following Bellona’s suggestions, are key to reaching climate neutrality by 2050.