How Much Will It Take For A Just Climate Transition In Spain?

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It’s imperative that the climate transition in Spain work to phase out coal for energy production ahead of its 2030 initial energy scheme planning. If successful, the end result will be a region invested in energy efficiency, circular economy, and clean energy sources. It will foster economic resilience, renewables, and jobs.

And it looks like it just might happen. Spain will receive almost €869 million from the Just Transition Fund (JTF) following the adoption of the Just Transition Program, which includes its Territorial Just Transition Plan (TJTP).

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The Just Transition Mechanism (JTM) is a key tool to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind. The JTM addresses the social and economic effects of the transition, focusing on the regions, industries, and workers who will face the greatest challenges, through 3 pillars.

• A new Just Transition Fund of €19.2 billion in current prices, is expected to mobilize around €25.4 billion in investments.
• The InvestEU “Just Transition” scheme will provide a budgetary guarantee under the InvestEU program across the 4 policy windows and an InvestEU Advisory Hub that will act as a central entry point for advisory support requests. It is expected to deploy €10-15 billion in mostly private sector investments.
• A new Public Sector Loan Facility will combine €1.5 billion of grants financed from the EU budget with €10 billion of loans from the European Investment Bank, to marshall €18.5 billion of public investment.

The JTF will invest in solar, offshore wind, renewable hydrogen, and the green transformation of the country’s industry in several concerning areas, according to the EU:

• the province of A Coruña in Galicia
• the provinces of Teruel in Aragón, León, and Palencia in Castilla y León
• the provinces of Almería, Cádiz, and Córdoba in Andalusia
• a group of municipalities around Alcúdia on the island of Mallorca

The region of Asturias will receive almost one third of the Spanish JTF funding, in part to support an innovation hub for artificial intelligence in a former mining site.

The JTF will help develop solutions and new technologies that provide new economic activities for the territories affected by the transition. The Fund will:

• finance a hub for technological innovation in offshore renewable energy and energy storage in A Coruña
• support the renovation of public buildings in León to improve their energy performance
• promote an innovative project using microalgae to produce renewable fuels in Cádiz

Financial assistance will be provided to small and mid-sized enterprises (SMEs) and projects that lead to economic diversification, targeting sectors that are considered strategic for these territories. The JTF will support:

•  SMEs in the agri-food industry in Córdoba, in particular in the municipalities affected by the closure of a coal power plant in the Guadiato Valley district
• the Alcúdia Tech Mar initiative, which aims to reconvert the area around the local thermal power plant creating new opportunities for SMEs and spear-heading innovation in the maritime and aquaculture industry
• investments on incubator services for 160 SMEs and new process or product innovation for 90 SMEs

Local partners and all stakeholders can also get support and exchange best practices and experiences all across the EU via the Just Transition Platform. Several regions will develop projects fostering sustainable and cultural tourism as well as the conservation of the ethnographic heritage.

• In Teruel, the JTF will support the rehabilitation of mining and industrial heritage sites for cultural activities, honoring the legacy of mining municipalities.
• In Palencia, in the municipality of Cervea de Pisuerga, a youth hostel will be rehabilitated with EU funding to help create permanent employment.

The JTF will pay special attention to the training and reskilling of unemployed persons, SME staff, and workers in carbon-intensive industries, developing the qualifications needed for a sustainable development of the territories and for workers to find well-paid jobs. Tailored apprenticeships will foster job creation for young people between 18 and 29 years. Overall, 6,000 jobs are expected to be created in entities supported with the JTF.

Background to the Climate Transition in Spain

The transformative impact of Spain’s plan is the result of a strong combination of reforms and investments which address the specific challenges for Spain. The reforms address bottlenecks to lasting and sustainable growth, while investments are targeted to accelerate the transition towards a more sustainable, low-carbon, and climate-resilient economy, to maximize the benefits of the digital transformation and to ensure social cohesion.

The plan also intends to improve connectivity within the country, boost labor market performance, foster innovation capacity of the economy, and make public spending more efficient and sustainable. All reforms and investments have to be implemented within a tight time frame, as the Regulation on the Recovery and Resilience Facility foresees they have to be completed by August, 2026.

The JTF ensures that the transition towards a climate-neutral economy leaves no one behind, in particular in the regions that face the most difficult transition. Those territories were identified during negotiations of the 2021-2027 Partnership Agreements and the associated programs between the Spanish authorities and the Commission. The Partnership Agreement with Spain was approved in November, 2022. The TJTPs, developed by the national and regional authorities in close consultation with local partners and the Commission, identify the challenges and development strategy and needs in each territory and the objectives to be met by 2030. They also identify the planned actions with specific governance mechanisms.

The approval of TJTPs opens the door to funding by the JTF as well as to dedicated financing under the other two pillars of the JTM: a just transition scheme under InvestEU and a Public Sector Loan Facility for Just Transition that combines Commission grants with European Investment Bank loans. The JTM provides targeted support to help mobilize around €55 billion over the period 2021-2027 in the most affected regions across the EU.

The starting point for the Urgent Action Plan was the Framework Agreement for a Just Transition for Coal Mining and the Sustainable Development of Mining Regions for the period 2019-2027, signed by the government, trade unions, and mining companies in October 2018. This agreement guarantees immediate support measures for mine workers, economic support for mining areas and the necessary short-term funding.

Secondly, the Agreement for a Just Energy Transition for Thermal Power Plant Closures was signed in April, 2020 between the companies that own the plants, the trade unions, and the government. This agreement is resulting in the relocation of workers and the search for alternative employment in the affected areas, carried out both by the companies (through renewable energy projects and other activities) and by the government, and with the participation of the trade unions to facilitate and monitor adherence to the commitments.