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Spain urges a great 'green deal' to accelerate key energy investments in the face of the threat from the US and Asia


The Government asks the European Commission for an agreement that encompasses everything from tax rules to competition reforms and the electricity market months after the Spanish presidency

Spain wants to bring together all the debates that have been open these months in the European Union related to the energy transition.

The Government has proposed to Brussels a great pact for a green economy.

According to the response that Vice President Nadia Calviño has sent to Brussels, to which EL PAÍS has had access, this agreement must include the reform of the electricity market, the review of State aid and its financing through the Recovery Fund, the RepowerEU plan, the reform of the Stability and Growth Pact and, lastly, the promotion of pending trade agreements with Latin America.

The letter also points out sectors that, in Madrid's opinion, should be strategic and should be prioritized when "expediting strategic investments", such as green hydrogen, biogas,

Just five months after Spain takes over the Presidency of the EU, the Government of Pedro Sánchez has taken advantage of the open debate on the review of State aid in the EU to present something similar to its priorities for that second semester de in Spain will have to take charge of the Council of the European Union.

They are in the letter that Calviño sent to the vice president and head of Competition of the Commission, Margrethe Vestager.

She was responding to the one that the Danish commissioner had sent to the capitals last January asking for opinions on the revision of the State aid model that France and Germany are pushing with the argument that Europe cannot lose footing in the green and digital transition in the face of to China and the United States, which has just approved a law that subsidizes green investments.

In the Spanish text it is pointed out that this great green pact must have four legs and is the concretion of something that the Executive defines as “open strategic autonomy”.

The concept of "strategic autonomy" is very fashionable in Brussels in recent times.

The paternity is French and had, in principle, a clear geostrategic orientation, although without forgetting the geoeconomic part.

This part has grown in recent months due to the consequences of the Ukraine invasion on energy markets plus inflation, the growing challenge from China and its control of supply chains, and lastly, massive US subsidies for boosting the digital transition that threatens to lead to investment flight in the EU.

Hence, Spain adds the adjective "open" when proposing this concept for its presidency.

The first leg of the agreement that Spain is demanding comes directly from one of its workhorses in Brussels in the last long year: the reform of the electricity market.

After months crying out in the desert, the explosion of the energy crisis as a result of the invasion of Ukraine charged the Spanish third vice president and Minister of Ecological Transition, Teresa Ribera, with arguments.

The Commission is already working on this reform which, for Madrid "is a top priority", because it is the "main disadvantage of European industry".

The second point enters fully into the main open debate between the Member States and the Commission on the revision of the model of public aid to companies.

Brussels is going to present its plans next Wednesday and before that it requested the opinion of the Twenty-seven, and this document by Calviño is framed here.

Spain, like Germany and France, fears that the multimillion-dollar subsidies from the United States will cause a flight of investments in Europe, which is why it is committed to "an accelerated procedure for strategic projects within the framework of the National Recovery Plans and in key sectors, which provide greater strategic, technological and energy autonomy, such as clean energy, semiconductors, electric vehicles or critical technologies”.

But at the same time,

The key sectors that Spain is targeting are 10: deployment of renewable energy, storage and other energy sources such as "renewable hydrogen, offshore wind energy and biogas", "investments in existing industries and investments in new facilities that allow the decarbonisation of industrial production processes”, hydrogen generation, circular economy (recycling), electric vehicle and components, solar panels, semiconductors, development of 5G and artificial intelligence, agri-food and less environmentally aggressive processing of critical raw materials.

All this involves money, hence the next pillar of the pact is “green finance [...] to mobilize the necessary public and private investment through a coherent package of key reforms and legislative files that will most likely reach maturity under the next Spanish presidency”.

Here another of the Spanish priorities reappears: the revision of the fiscal rules, which Brussels wants to have ready this quarter to raise the legal texts below, that is, under the aforementioned presidency.

“National budget support could be provided subject to adequate fiscal rules in a renewed Stability and Growth Pact,” he notes.

He adds another milestone that will probably correspond to the second half of this year,

Here Spain marks one of the red lines in the revision of the rules on State aid: "Any new financial instrument should not be based on reallocation of funds from existing instruments, such as the Recovery Fund, cohesion funds, etc."

One of the risks of facilitating the granting of subsidies is that the countries with the most fiscal space (Germany, the Netherlands) and the largest (France) give more aid to their companies, placing them in an advantageous position in the single market.

This risk has led the Commission to propose a corrective tool, which it calls the sovereignty fund, although there are still no details about it.

There are countries that would like this tool to be financed with the issuance of new debt and, therefore, with an increase in the Community budget.

There are others who prefer existing resources to be rearranged, arguing that there is a lot of money to be spent.

The Spanish Executive, for now, is in an intermediate position.

In Madrid they have almost 180,000 million in community funds to invest until 2026, adding the recovery plan, the RepowerEU and the just transition fund.

And to that we should add the money from the cohesion funds.

Conclusion: Spain wants facilities to invest what it is going to receive, it does not place the emphasis on giving it more.

The last part focuses on trade agreements with Latin America, which with the need for strategic raw materials in the energy transition have become vital, because until now Europe is highly dependent on China or Russia.

The EU has yet to update the trade agreement with Mexico, something that has already been reached with Chile, and also the revision of the pact reached with Mercosur (Argentina, Brazil, Uruguay and Paraguay).

This has been blocked due to French reluctance and the European Parliament on the grounds that Bolsonaro's policy on the Amazon caused deforestation.

Lula's arrival in power in Brasilia opens an opportunity that Spain and Brussels want to take advantage of.

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Source: elparis

All business articles on 2023-01-27

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