Main climate regulations, policies and authoritiesInternational agreements
Do any international agreements or regulations on climate matters apply in your country?
Spain adopted the United Nations Framework Convention on Climate Change (UNFCCC) on 9 May 1992, which entered into force on 21 March 1994. The UNFCCC was developed by the Kyoto Protocol on 11 December 1997, which was ratified by Spain on 29 April 1998. The Kyoto Protocol provided for certain emission targets of greenhouse gases (GHG) and established a specific time frame for their fulfilment. On 22 April 2016, Spain ratified the Paris Agreement resulting from the Paris climate conference (COP 21). The agreement sets out a global action plan to avoid dangerous climate change by limiting global warming to well below 2°C. The agreement will enter into force in 2020.
The European Union has approved several regulations on climate change with the aim of obtaining a reduction of the GHG emissions of the member states. Directive 2003/87/EC of 13 October 2003 (as subsequently amended) establishing a scheme for greenhouse gas emission allowance trading within the EU is the main regulation approved by the EU. This Directive was implemented in Spain through Law No. 1/2005 of 9 March 2005 (also amended several times to implement the amendments to the Directive).
The EU has also approved the 2030 climate and energy framework that sets three key targets for 2030:
- at least a 40 per cent cut in greenhouse gas emissions (from 1990 levels);
- at least a 27 per cent share of renewable energy; and
- at least a 27 per cent improvement in energy efficiency.
The framework was adopted by EU leaders in October 2014 and was built on the 2020 climate and energy package.
For more detail on applicable regulations see question 4.International regulations and national regulatory policies
How are the regulatory policies of your country affected by international regulations on climate matters?
As explained in question 1, Spain is a party to all relevant treaties, such as the UNFCCC, the Kyoto Protocol and the Paris Agreement. Spain is also an EU member state. Therefore, the Spanish internal regulations and policies are highly influenced by international and European regulations and objectives. Indeed, the aim of most of the Spanish regulations and policies on climate change is to comply with the objectives and policies previously set by the European authorities. In addition, other policies, such as those on construction and waste, also take into consideration climate change concerns.Main national regulatory policies
Outline recent government policy on climate matters.
According to the information published by the Ministry for Ecological Transition, the main guides of the climate change policy of the current government consist of:
- integrating climate change in all the public policies that could affect the climate;
- coordinating all public authorities to avoid duplication and to optimise the use of the available resources and information;
- managing Phase III of the emissions trading scheme (ETS);
- preparation of a roadmap to reduce GHG emissions in several industry sectors; and
- promoting and developing the Spanish Carbon Fund to increase the number of national initiatives to help reduce GHG emissions.
Identify the main national laws and regulations on climate matters.
The main national laws and regulations on climate change are as follows:
- Law No. 1/2005 of 9 March 2005 regulating the GHG emissions trading scheme (as amended);
- Law No. 40/2010 of 29 December 2010 on the geological storage of carbon dioxide;
- Law No. 2/2011 of 4 March 2011 on sustainable economy;
- Royal-Decree No. 1722/2012 of 28 December 2012 implementing aspects relating to the assignment of emissions allowances within the framework of Law No. 1/2005;
- Royal-Decree No. 235/2013 of 5 April 2013 approving the basic procedure for the energy efficiency certification of buildings;
- Royal-Decree No. 163/2014 of 14 March 2014 creating the carbon footprint, offset and carbon dioxide absorption projects registry; and
- Royal-Decree No. 56/2016 of 12 February 2016 on energy efficiency relating energy audits, accreditation of providers of energy services and auditors, and promotion of the efficiency of energy supply.
The regional authorities have also issued certain rules of their own on climate change matters.National regulatory authorities
Identify the national regulatory authorities responsible for climate regulation and its implementation and administration. Outline their areas of competence.
The Ministry for Ecological Transition is the administrative body that, at a national level, is responsible for the implementation and administration of climate change policies.
Within that Ministry, certain subsidiary administrative bodies have been created with different responsibilities, such as:
- the Spanish Climate Change Office (in charge of setting out the national climate change policy);
- the National Climate Commission (in charge of issuing recommendations in relation to climate change-related plans, programmes and lines of action); and
- the Climate Change Policies Coordination Committee (which coordinates the national authorities and the authorities of the autonomous regions).
In addition, the autonomous regions have created specific bodies to implement policies on climate change within the scope of their competences. Among other matters, regional authorities are competent to issue the authorisation that activities subject to the ETS are required to have.
General national climate mattersNational emissions and limits
What are the main sources of emissions of greenhouse gases (GHG) (or other regulated emissions) in your country and the quantities of emissions from those sources? Describe any limitation or reduction obligations. Do they apply to private parties in your country?
According to the National Inventory of GHG Emissions of 2018 (published in June 2019), in 2018, Spain emitted 332.8 tonnes of CO2 equivalent. 44 per cent of GHG emissions in Spain came from power production and transport activities, 19 per cent from industrial activities (including waste management activities) and 12 per cent came from agricultural activities.
No specific limits on GHG emissions apply in Spain. However, activities subject to the ETS must obtain specific authorisation and must have emission allowances covering their emissions so as to achieve a global reduction of emissions at the national level.
Those facilities that do not belong to sectors or subsectors exposed to a significant risk of carbon leakage could receive free GHG emission allowances in a percentage that in 2020 could not exceed the 30 per cent of their total GHG emissions. From 2013 to 2020, the activities included in the sectors or subsectors exposed to a significant risk of carbon leakage will receive free GHG emission allowances covering 100 per cent of their emissions.
Since 2013, free allowances have not been allocated to electricity generators, capture facilities, pipelines for transport or carbon dioxide storage sites. These activities must acquire GHG emission allowances for an amount equivalent to their total GHG emissions per year.National GHG emission projects
Describe any major GHG emission reduction projects implemented or to be implemented in your country. Describe any similar projects in other countries involving the participation of government authorities or private parties from your country.
The Spanish authorities have promoted different projects with the aim of reducing GHG emissions. One example is the climate projects developed by means of the Spanish Carbon Fund (FES-CO2). The goal of this fund is to contribute to build a low-carbon model productive system. These climate projects are executed in Spain and are developed in the ‘diffuse sectors’ (not subject to the ETS), such as the transport, residential or waste sectors.
In 2012, during the first round of the climate projects, the FES-CO2 approved the acquisition of the reductions generated by 37 projects. In 2018, 64 projects were approved. The projects included biogas, biomass and purine plants, climate control projects and electric car-related projects, among others.
Additional examples of projects aimed at emissions reduction are as follows:
- the Environmental Promotion Plan (PIMA SOL, approved by Royal-Decree No. 635/2013) aims at reducing GHG emissions in the Spanish tourism industry. Specifically, it promotes the reduction of direct GHG emissions at hotel facilities; and
- the PIMA Company Plan, approved on 6 November 2015, includes subsidies for the companies to reduce their GHG emissions; or
- the PIMA Waste, approved on 2015 and renewed on 2018, and the PIMA ‘Frío’ approved by Royal-Decree 1114/2018, which includes measures aimed at reducing greenhouse gasses emissions in the fields of waste production management and distribution of frozen foods, respectively.
Domestic climate sectorDomestic climate sector
Describe the main commercial aspects of the climate sector in your country, including any related government policies.
The intention of the Spanish policy is that climate change concerns permeate all the economy so that it becomes more efficient as a whole from this point of view.
However, there are certain Spanish economic sectors that have been more affected by climate change policies than others. It may be considered that the sectors that felt the new regulations on GHG emissions more intensely are those included in the non-diffuse group, namely power production facilities, cement production, etc.
In addition, public investments have been carried out to promote renewable energies to substitute conventional energy based on fossil fuels.
The transport industry has also been directly affected, since the aviation industry has been included within the ETS; also, the Spanish government approved the Strategic Infrastructure and Transportation Plan with the aim of promoting public transport as an alternative to using private vehicles.
Other economic sectors are also affected by policies directly or indirectly linked to climate change policies. As an example, the construction sector may be mentioned: the Technical Building Code (Royal-Decree No. 314/2006), the Regulation on the energy efficiency certificate (Royal-Decree No. 235/2013) and the Regulation on energy audits (Royal-Decree No. 56/2016) impose energy efficiency-related criteria for new buildings constructed or refurbished.
Other affected sectors are mentioned in question 9.
General GHG emissions regulationRegulation of emissions
Do any obligations for GHG emission limitation, reduction or removal apply to your country and private parties in your country? If so, describe the main obligations.
To comply with international commitments on climate change, the EU promoted the ‘20-20-20’ initiative for 2020, consisting of reaching a 20 per cent reduction in EU primary energy consumption, a further 20 per cent reduction in GHG emissions and increasing the contribution of renewable energies to 20 per cent of consumption.
To reach that goal, the Spanish authorities have approved several regulations aimed at reducing GHG in different sectors, such as:
- agriculture (eg, the Practical Guide to the Rational Fertilisation of Crops in Spain, which implements one of the core pillars of the Plan for the Reduction in the Use of Nitrogenised Fertilisers);
- livestock (eg, the 2008 Purine Biodigestion Plan);
- forestry (eg, the Spanish Forestry Plan);
- tourism (eg, Royal-Decree No. 635/2013 implementing the PIMA Sol Environmental Promotion Plan);
- waste (eg, Law No. 22/2011 on waste and polluted land);
- transportation (eg, the Spanish Strategic Sustainable Mobility Plan);
- public procurement (eg, the Green Public Procurement Plan); and
- renewable energies (the Spanish Climate Change and Clean Energy Strategy, Horizon 2007-2012-2020).
Are there any requirements for obtaining GHG emission permits or approvals? If so, describe the main requirements.
All facilities included in Annex I of Law No. 1/2005 that generate the emissions specified in that annex must obtain an authorisation to emit GHG, unless the facility is considered a small one. Any change in the nature, operating procedures, size of the facilities or any other change entailing a significant enlargement or reduction to the capacity of the facilities, as well as any change affecting the identity or domicile of the operator, must be notified to the authorities.
The content of the GHG authorisation may be included in the integrated environmental authorisation when this authorisation is required.Oversight of GHG emissions
How are GHG emissions monitored, reported and verified?
According to Law No. 1/2005, activities that emit GHG are obliged to send to the competent regional authority, before 28 February every year, a verified report on GHG emissions of the previous year evidencing the fulfilment of the requirements of their authorisation. This report will be assessed by the relevant authorities to verify (among other circumstances) that the operator has obtained all the required GHG emission allowances.
Law No. 1/2005 also provides for certain specific requirements applicable to the aviation operators. These operators must deliver a certified report to the Ministry of Development, which will assess the report and, if approved, notify the Ministry for Ecological Transition so that it may record the emissions in the emissions allowances registry.
GHG emission allowances (or similar emission instruments)Regime
Is there a GHG emission allowance regime (or similar regime) in your country? How does it operate?
As indicated in question 10, activities subject to the ETS must obtain a specific authorisation to emit GHG.
Once the GHG emissions authorisation is obtained, the operator should request for the allocation of GHG emission allowances it may be entitled to. A GHG emission allowance is defined as the subjective right to emit an equivalent tonne of carbon dioxide from a facility or an aircraft for a given period.
The existing trading period that started on 1 January 2013 will last for eight years (ie, until the end of 2020). Thereafter successive eight-year periods will follow. In the period 2013 to 2020 the auction will become the main method for the allocation of emissions allowances according to the rules contained in Commission Regulation (EU) No. 1031/2010 of 12 November 2010 (as amended).
In certain cases, Law No. 1/2005 provides for the allocation of free emissions allowances. In these cases, the facility owners should file an application before the Ministry for Ecological Transition applying for GHG emission allowances allocations 22 months before the commencement of each trading period. Emission allowances will be allocated by the Council of Ministers.
The facilities included in sectors and sub-sectors exposed to carbon leaks would be granted 100 per cent free allocation. In addition, other facilities could receive individual allocations that would be free for a maximum of 80 per cent of the total allocated rights; the percentage of the free allowances will gradually decrease with the aim of reaching 30 per cent in 2020.
It is important to note that power generators and facilities involved in the capture, transportation and geological storage of carbon would not receive any free allowance except certain high-efficiency cogeneration and urban heating.
Furthermore, certified emission reductions or emission reduction units obtained by means of the flexibility mechanisms could be used to fulfil the obligation of delivering a number of emission allowances equivalent to the figure of verified emissions.
In addition, 5 per cent of the total amount of available emission allowances at EU level for the period 2013 to 2020 will be reserved for new entrants.
For further details see question 14.Registration
Are there any GHG emission allowance registries in your country? How are they administered?
The Spanish GHG emission allowance registry is included in the EU Registry of the Consolidated System of European Registries, which is managed by the European Commission.Obtaining, possessing and using GHG emission allowances
What are the requirements for obtaining GHG emission allowances? How are allowances held, cancelled, surrendered and transferred? Can rights in favour of third parties (eg, a pledge) be created on allowances?
Once the authorisation to emit GHG has been obtained (see question 10), activities subject to the GHG regime must obtain emission allowances. Auctions should be carried out according to the rules contained in the Commission Regulation (EU) No. 1031/2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC. In addition, emission allowances can be purchased in the market.
The issue, ownership, transfer, surrender, delivery and cancellation of emission allowances must be registered at the Emission Allowance Registry.
The question of pledging the emission allowances is not a settled matter and there is no relevant experience in Spain in this regard. This possibility is not expressly included in the applicable regulation but it is not forbidden either.
Trading of GHG emission allowances (or similar emission instruments)Emission allowances trading
What GHG emission trading systems or schemes are applied in your country?
Spain is subject to the ETS (see questions 3, 5, 6 and 10).Trading agreements
Are any standard agreements on GHG emissions trading used in your country? If so, describe their main features and provisions.
The standard agreements most commonly used are those of the International Emissions Trading Association (IETA) and the International Swaps and Derivatives Association, Inc (ISDA).
Clauses typically refer to general obligations, representations and warranties, transfer failure or assignment, among others. In practice, the clauses that usually give rise to negotiations deal with the allocation of risks or the scope of force majeure.
Sectoral regulationEnergy sector
Give details of (non-renewable) energy production and consumption in your country. Describe any regulations on GHG emissions. Describe any obligations on the state and private persons for minimising energy consumption and improving energy efficiency. Describe the main features of any scheme for registration of energy savings and for trade of related accounting units or credits.
During 2018, the annual demand for electricity (including renewable and non-renewable energy) reached 268.8TWh. The volume of gross non-renewable energy production in 2018 represented 59.9 per cent (66.3 per cent in 2017) of the total electricity production that year. This resulted in an increase of the non-renewable energy contribution to overall electricity generation. Electricity produced from nuclear fission stood at 7 per cent of the total installed capacity and 20.6 per cent of total electricity generated.
With respect to its obligations with regard to energy reduction and improved efficiency, without prejudice to the application, if any, of the regulations mentioned in the responses to the precedent questions, Spain has made a firm commitment to renewable energies and energy efficiency, not only in newbuilds but also for existing buildings.Other sectors
Describe, in general terms, any regulation on GHG emissions in connection with other sectors.
In addition to Law No. 1/2005 and its developing regulations, which affect different economic sectors such as power and cement production, tiles, etc, some other sectoral regulations and policies have been passed to contribute to the reduction of the emission of GHG. Some examples are as follows:
- the Spanish Forestry Plan provides for initiatives to promote the capture of CO2 by Spanish forests;
- the Strategic Infrastructure and Transport Plan, encouraging forms of transport as an alternative to the private vehicles;
- Royal-Decree No. 235/2013 regulating the energy efficiency certificate with the aim of guaranteeing the energy efficiency of buildings when constructed;
- Royal-Decree No. 56/2016 on energy efficiency relating energy audits, accreditation of providers of energy services and auditors, and promotion of the efficiency of energy supply; and
- Law No. 24/2013 of 26 December 2013 of the electricity sector and Royal-Decree Law No. 8/2014 of 4 July 2014, which provide for certain efficiency obligations.
For further details, see question 9.
Renewable energy and carbon captureRenewable energy consumption, policy and general regulation
Give details of the production and consumption of renewable energy in your country. What is the policy on renewable energy? Describe any obligations on the state and private parties for renewable energy production or use. Describe the main provisions of any scheme for registration of renewable energy production and use and for trade of related accounting units or credits.
The generation of renewable energy has been strongly promoted by the public authorities by means of special economic conditions (mainly financial incentives) applicable to these types of projects.
The volume of gross renewable energy production in 2018 stood at 90-92TWh. The contribution of renewables to overall electricity generation was 40.1 per cent (33.7 per cent in 2017). This was an increase of the total contribution of renewable energy to overall electricity generation compared to 2017.
According to statistics provided by system operator Red Eléctrica de España, the main renewable sources and their percentage of total generated electricity in Spain are hydroelectric (13.2 per cent), photovoltaic solar (2.9 per cent), thermosolar (1.7 per cent), wind power (19 per cent), waste (0.9 per cent) and other (1.4 per cent).Wind energy
Describe, in general terms, any regulation of wind energy.
The key pieces of legislation regulating wind energy in Spain are the following:
- Law No. 24/2013 of 26 December 2013 of the electricity sector;
- Royal-Decree No. 413/2014 of 6 June 2014 regulating electricity generation using renewable energy sources, cogeneration and waste;
- Order IET/1045/2014 of 16 June 2014 approving the remuneration parameters for standard facilities applicable to certain facilities generating electricity using renewable energy sources, cogeneration and waste;
- Order IET/1459/2014 of 1 August 2014 approving remuneration parameters and establishing the mechanism for allocating the specific remuneration regime for new wind and photovoltaic facilities in non-mainland electricity systems;
- Royal-Decree-Law No. 9/2013 of 12 July 2013 adopting urgent measures to guarantee the financial stability of the electricity system;
- Royal-Decree-Law No. 2/2013 of 1 February 2013 on urgent measures in the electricity system and the financial sector;
- Royal-Decree-Law No. 1/2012 of 27 January 2012 suspending the procedures for pre-allocation of remuneration and eliminating financial incentives for new facilities generating electricity using renewable energy sources, cogeneration and waste; and
- Royal-Decree-Law No. 6/2009 of 30 April 2009 adopting certain measures in the energy industry and approving energy assistance relief.
The autonomous regions may also have passed regulations of their own.
Facilities for the production of wind energy must obtain an administrative authorisation after following a complex administrative procedure.
Although there has been a reduction in the public funds devoted to the promotion of this type of energy, operators still receive financial incentives from the authorities according to the specific and complex rules contained in the regulations mentioned above.Solar energy
Describe, in general terms, any regulation of solar energy.
The production of solar energy is governed by the main rules mentioned in question 20 and is subject to a very similar regime from the legal and economic perspectives.Hydropower, geothermal, wave and tidal energy
Describe, in general terms, any regulation of hydropower, geothermal, wave or tidal energy.
In addition to the general regulations on the power production industry and renewable energies referred to in the preceding questions, there are some specific provisions applicable to the hydropower and wave and tidal energy industries. Specifically, the Law on water approved by Legislative Royal-Decree No. 1/2001 of 20 July 2001 and one of its developing regulations (Royal-Decree No. 849/1986 of 11 April 1986) provide for certain specific rules applicable to this kind of power production facility.
Regarding the geothermal energy industry, in addition to the general rules on power production, Law No. 22/1973 of 21 July 1973 on mines provides for specific rules that would also apply.Waste-to-energy
Describe, in general terms, any regulation of production of energy based on waste.
The general rules on the power generation industry referred to in the previous questions may apply; in addition, provisions contained in Law No. 22/2011 of 28 July 2011 on waste and polluted land should be taken into account for this purpose.Biofuels and biomass
Describe, in general terms, any regulation of biofuel for transport uses and any regulation of biomass for generation of heat and power.
Law No. 34/1998 of 7 October 1998 on hydrocarbons is the main regulation on biofuels in Spain. This law has been complemented by certain additional provisions regarding biofuels, such as:
- Royal-Decree No. 1597/2011 of 4 November 2011 regulating bio-fuels and bioliquid sustainability criteria, the National Sustainability Assessment System and the dual value of certain biofuels for calculation purposes;
- Ministerial Order ITC/2877/2008 of 9 October 2008 establishing a mechanism to promote the use of biofuels and other renewable fuels for transport purposes; and
- Royal-Decree No. 61/2006 of 31 January 2006 determining the specifications for petrol, gasoil, fuel oil and liquid petroleum and regulating the use of certain biofuels.
The installation and operation of biomass plants is subject to several administrative and environmental authorisations, as well as registrations within public registries. As with the rest of power generation plants under the special regime, if certain conditions are met a special remuneration system applies. There are different plans, both at national and regional level, promoting the use of biomass, especially those of forestry and agriculture.Carbon capture and storage
Describe, in general terms, any policy on and regulation of carbon capture and storage.
Law No. 40/2010 of 29 December 2010 on geological carbon dioxide storage establishes the main regulations on this matter. In addition, the rules contained in Legislative Royal-Decree No. 1/2016 of 16 December 2016 on integrated pollution control should be taken into account.
In addition, there are the government measures on forestry and reforestation, such as the 2002 to 2032 Spanish Forestry Plan.
Climate matters in transactionsClimate matters in M&A transactions
What are the main climate matters and regulations to consider in M&A transactions and other transactions?
Depending on the kind of companies involved in an M&A transaction or in any other transaction, the fulfilment of the obligations related to climate change provisions could be crucial. Certain industrial facilities need to purchase a specific amount of GHG emission allowances to operate. Therefore, in this kind of transaction it is very important to verify that the facilities have obtained the relevant authorisation to emit GHG, to establish that the amount of GHG emission allowances required every year have been obtained and to verify that the company has fulfilled its obligations of obtaining, registering and returning the GHG emission allowances. Otherwise, large penalties could be imposed and the functioning of the facilities could be affected.
Update and trendsEmerging trends
Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?Emerging trends27 Are there any emerging trends or hot topics that may affect climate regulation in your country in the foreseeable future?
The central government has prepared a draft law on climate change and energy transition that includes several and stringent measures applicable to transport, industry, real estate, energy and public procurement, among others. The draft law is aimed at reducing greenhouse gas emissions from these sectors and promoting the transition to a decarbonised economy. The draft has not yet been subject to the parliamentary proceeding so there is uncertainty as to when it will be approved. In the meantime, certain autonomous regions have passed their own regulations on climate change imposing, in some cases, restrictive conditions on certain sectors (eg, road transport). It is expected that the national law, once approved, will introduce common goals and measures applicable within the entire country.