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Spain’s efforts to meet Kyoto commitments

  Question: What country among those making up the European Union (EU) is showing the greatest concern for the effects of climate change. Reply: Spain, according to the European Commission’s Eurobarometer. Question: what member state of the EU most fails to meet the main commitment in the fight against climate change, the Kyoto Protocol? Reply: Spain, again. How are we to interpret these contradictions? Are they indeed contradictions? Let’s examine each point in turn.

  It should be remembered that the Kyoto Protocol is an international agreement signed in 1997, which the EU has had to meet as of 2003, aimed at restricting gas emissions that cause a greenhouse effect (GHG). For this purpose it establishes an emission limit by country which must be met on average for the period 2008-2012. In the case of Spain, this objective was negotiated as an increase of 15% over the emissions in the base year (1990 for CO2, CH4 and N2O; 1995 for fluoride gases). The latest figures available (referring to 2005) show growth since then of 53%.

  The discrepancy is indeed notable. How can it be explained? In fact, the EU set an overall quota which was later assigned by country. When the Council divided up emissions limits in 1998 the impression then taken of Spain’s economy was quite different from that current today, especially in terms of economic growth and demographic strength. Nevertheless, the explanation based on economic growth above that expected is insufficient. Whereas in other countries carbon intensity (that is to say, the ratio of GHG emissions per person or per unit of gross domestic product) has appreciably dropped, in Spain this has taken place only to a marginal degree in the case of GHG emissions per GDP unit or has even increased, as in the case of GHG emissions per capita, which in 2005 were 38% higher than those in 1990.

  How is it possible that in 15 years of development the economy continues to show such a large appetite for carbon? One explanation arises when we look at those sectors that have most contributed to the increase in emissions, namely energy and transport, the big contributors of emissions in absolute terms. The former is responsible for 31.5% of the increase in GHG emissions between 1990 and 2005, a figure practically identical to 31.2% for transport. Industry (manufacturing and construction) generates some 21.9% of additional emissions compared with those in 1990. All other sectors together barely make up 15.4% of the total.

  Therefore, in order to properly understand why Spain is moving away from the Kyoto objectives, we should focus our attention on energy and transport. To start with, it should be pointed out that, in spite of showing similar figures in terms of the additional volumes of GHG emissions, the transport sector shows a more troubling performance seeing that it has increased its emissions by 83% compared with 1990, whereas energy has shown an increase of 62%. While in both cases it is a matter of major discrepancies and, in fact, discrepancies higher than those of the economy as a whole (whose GHG emissions grew by 53% in the 1990-2005 period, as mentioned earlier), the above figures are indicative of two different courses being followed due also to different factors.

  In the case of energy, the main reason for the increase was that, in view of the big increase in demand for electricity due to strong economic growth, the response has been more power-stations run by coal, oil and gas. As a result, electrical power generation with no emissions in 2004 was 42% of the total, 10 points less than in 1990. Transport, in turn, has raised its contribution mainly because the sharp increase in demand has largely been met through recourse to road transport as against other modes that are more efficient from a pollution point of view. As a result, the share of road goods transport rose by nearly six points between 1991 and 2005.

  In such a situation, what are the prospects of meeting the Kyoto Protocol? The latest «Progress Report» from the Spanish government dated 2006 makes a projection of current trends up to 2020 starting out from emission control policies in force in 2005. This scenario suggests a discrepancy of the order of 50% compared with the objective for 2008-2012, with the industrial and energy sectors showing a 37% deviation and the rest (basically transport) standing at 65%. Later on, at the beginning of 2007, Spanish Strategy on Climate Change establishes the objective of a maximum discrepancy of 37% on average for the reference period. This result would be met by limiting the deviation in the non-industrial and non-energy sectors to 37% (and not the 65% as mentioned earlier) and by maintaining the deviation in industry and energy at 37%.

  Although this may not happen immediately, if this tough deviation objective of 37% were to be reached, Spain would be complying with the Protocol. This apparent contradiction (after all the Kyoto objective is 15% and not 37%) is due to the fact that this compromise establishes three instruments whose effects «subtract» from the total figure for a country’s emissions. The first instrument is the trading of supplementary GHG emission rights, a mechanism through which Spanish companies needing them may acquire supplementary emission rights or, if they have a surplus, they may sell them. Those companies that may issue or compensate emission rights are the owners of 1,045 large polluting sources in the energy and industrial sectors for which the government establishes annual emission limits through what is known as the National Emissions Assignment Plan. The second instrument is called Clean Development Mechanisms (CDM) which consist of projects financed by Spanish companies or the government aimed at reducing emissions in developing or industrialized countries and generate emission credits in Spain. Finally, a third mechanism that makes it possible to discount total emissions is called «carbon sinks», that is to say, basically, an increase in forested areas.

  The government is confident that these new mechanisms will absorb 2% of total emissions. The lion’s share of the adjustment will thus fall on the CDM and acquisitions in the carbon credits market, given that they would account for the remaining 20%. According to government estimates, some 58 million tons would have to be acquired annual between 2008 and 2012, with 55% of this by the government through recourse to Clean Development Mechanisms with an estimated cost of 220 million euros annually and 45% by companies in the market, with a cost of 400 million euros annually.

  It is obvious that, even in the case where measures of flexibility provide the results forecast and at the estimated cost, the situation remains complicated. Maintaining emissions at 37%, that is to say, below the 400 million equivalent tons of CO2, will mean having to go from a growth path to one involving reductions, at least in some years. The problem with energy is quite clear. Either we substantially change the mix of electrical power generation or we take a giant step in terms of energy efficiency. If we don’t, the deviations will not be reduced.

  The basic difficulty, however, is to be found in the transport sector. This sector falls within what is known in Kyoto jargon as a «diffuse sector», that is to say, that, as opposed to what happens with energy or industry, it does not have emission rights assigned to it and does not benefit from the possibility of using the carbon rights market. For this purpose, new instruments are needed that create adequate incentives to reduce the carbon intensity of the sector. The scope of these measures must be manifold, given that the usual problems cast over transport are also multidimensional. In this respect, the most relevant instrument is the Strategic Plan for Infrastructures and Transport designed to improve transfer between modes and to rationalize Spain’s infrastructures network. While well aimed, especially because of its integrated system focus, its effects will be felt only over the long term. Nor will other measures under way, such as modification of taxation on cars by giving preference to less contaminating models, have any immediate impact.

  Finally, the government authorities are trying to react to the environmental effects of very high economic and population growth in a situation where public opinion has been made aware of the effects of climate change. The risks lie, first, in that emphasis may be placed on the use of instruments whose effects are more immediate and controllable (that is, the control of non-diffuse sectors) without taking greatly into account the costs these involve. Fortunately, emission rights assigned by the government to industry and energy in its latest National Assignment Plan are what may be described as «ambitiously possible» in the sense that they will not suffocate the production fabric nor at the same time give up trying to balance economic activity and emissions. A second risk is that short-term goals will be given preference in a matter of such a structural nature. It is essential to make it possible that the measures adopted, such as the Strategic Plan for Infrastructures and Transport mentioned above, and ambitious measures such as the Plan for Renewable Energy, setting out ideas that seem quite proper but whose effects will not be noted over the short term, come to fruition at the proper time.

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