Spanish climate change Act 7/2021: Main topics

On 22 May 2021, at last, Act 7/2021, of 20 May, on Climate Change and Energy Transition, came into force. Its main provisions are as follows:

1. On a regulatory level, the minimum national targets for 2030 and 2050 already foreseen in the PNIEC[1] regarding the reduction of greenhouse gas emission, renewable energies, and energy efficiency have been incorporated. Additionally, these targets may be subject to an upwards adjustment by the Council of Ministers from 2023 onwards.

2. The number of planning instruments set out is noteworthy: In addition to (i) the PNIECs, (ii) the Decarbonisation Strategy by 2050 of the Spanish Economy, to be approved by means of a Royal Decree, which will establish a path for reducing emissions and increasing the number of sinks, every 5 years, (iii) the National Adaptation to Climate Change Plan (PNACC), which is the planning instrument to promote the coordinated action against the effects of climate change (strategic objectives, impact indicators, risk reports), and (iv) the Housing Rehabilitation and Urban Renewal Plan with the objective of improving the existing building stock, regardless of its ownership, following the indicators set out in the (v) long-term strategy for energy rehabilitation in the building sector in Spain (ERESEE).

The approval of (vi) specific plans for the promotion of renewable gases which contain obligations for   parties involved in the sale or consumption of natural gas, and with an industrial approach, (vii) a            timeline for the review of aid and measures favouring the use of energy products of fossil origin, (viii)     basic guidelines for the adaptation to climate change of Spanish natural ecosystems and wild species,    and (ix) a vulnerability map for agricultural, mountain and forest soils, has been foreseen.

3. Pumping: Hydro concessions with reversible plants will have the priority, without prejudice to the efficient management of water resources and environmental protection as at present provided for in water legislation (which is already guaranteed by the corresponding regulations). Technical regulation is foreseen for pumping, storage and turbine. It is yet to be considered how this regulation will affect the exploitation of water resources in operation.

4. Hydrocarbons and radioactive: The Act 7/2021 establishes that no new exploration authorisations, research permits and hydrocarbon exploitation concessions will be granted throughout the national territory, including the territorial sea, the exclusive economic zone and the continental shelf. With regard to existing concessions, holders must submit a report, five years prior to the end of the term of the exploitation concession, which reflects the potential for reconversion of their facility or their location for alternative uses of the subsoil (in particular, the establishment of renewable energies, geothermal energy), which include consideration of the levels of maintenance of employment,

Neither will new exploitation, research permits, or concessions for the exploitation of radioactive minerals be granted, nor will new requests for authorisation of radioactive facilities be accepted.

On the other hand, it is stipulated that the application of new tax benefits to energy products of fossil origin must be duly justified on the basis of social and economic interest given the non-existence of technological alternatives.

5. Service and electrical recharging stations: In order to guarantee the existence of sufficient electric recharging infrastructure, the Act introduces obligations to install electric recharging infrastructure for the following service station owners:

Sales turnover in 2019	Recharging station	Deadline for implementation
≥ 10 M litres	1, with power ≥ 150 kW	22 February 2023.
10 < ≥ 5 M litres or If none in the province, the island or the autonomous city, the one that has reached 10% of the annual turnover in these areas	1, with power ≥ 50 kW	22 August 2023.
Irrespective of their volume, in cases of new installation, renovation or revision of administrative entitlement	1, with power ≥ 50 kW	From the date of entry into operation.

A ministerial ordinance will identify the service stations involved, as well as the exceptions and technical impossibilities for compliance. However, this publication must not be delayed since the dies a quo for the implementation period is 22 May 2021. In 2023, and every two years thereafter, a Resolution of the Secretary of State of Energy will establish the list of new fuel and combustible supply facilities obliged according to the sales turnover indicated in the table above, as well as the exceptions and technical impossibilities for compliance. In this case, the deadline for the entry into operation of recharging infrastructure shall be understood to commence from the publication of the respective resolution.

As for concessions on state road networks, the above obligations shall be met by the concessionaries, with no reference to the need for rebalancing, nor to the cases of leasing of developments.

In addition, all electric recharging service providers must electronically submit to the Ministry of Ecological Transition and Demographic Challenge updated information on the location, characteristics, and availability of these facilities, as well as the retail price of the electricity or recharging service.

6. Building: The use of materials with the lowest possible carbon footprint, improvements in the accessibility of building, and incentives for the introduction of renewable energies in the renovation of housing, facilitation photovoltaic installations for self-consumption in property-owner’s communities –or horizontal property communities, as the new act refers to them- and zero-emission heating and cooling systems are encouraged.

In addition, obligations are imposed with regard to recharging points in the sense that before 1 January 2023, all building for use other tan privative residential use that have a parking area with more than twenty parking spaces must comply the requirement regarding the minimum provisions for electric vehicle recharging infrastructure established by the Technical Building Code. This Code is to be amended in this sense.

7. Ports and maritime transport, water and coasts: Act 7/2021 stablishes measures to promote the incorporation of renewables, sustainable logistic chains and rail intermodality in ports and maritime transports. In coastal and water, the implementation of both a Strategy for the Adaptation of the Coast to the Effects of Climate Change and a Strategy for the Water Ecological Transition, are foreseen.

8. Regulated activities: The principle of financial caution is included regarding the remuneration methodologies for these regulated activities, such as the transportation and distribution of natural gas and electricity, in order to put an end to indebtedness.

Additionally, Act amends regime concerning the communication of the taking of shares of groups of companies designated as electricity and natural gas transmission network managers, due to their possible impact on the security on the supply of gas and electricity systems.

 

9. Urban mobility plans: Measures will be taken to achieve a fleet of cars and light commercial vehicles without direct CO2 emissions by 2050. The new passenger cars and light commercial vehicles, excluding those registered as historic vehicles not intended for commercial use, will gradually reduce their emissions, so that by 2040 at the latest, they will be vehicles with emissions of 0 g CO2/km, This seems to give scope for all categories of VEAs[2], and not only for pure electric vehicles.

Municipalities with more than 50,000 inhabitants (and those with more than 20,000 exceeding the emissions set out in RD 102/2011) and islands will adopt urban mobility plans consistent with air quality plans, establishing, among other provisions, “Madrid Central” type of zones. The islands considered as Autonomous regions, which are more vulnerable to climate change, may urge the State to establish measures to promote clean mobility, by means of restrictions on the circulation of cars and vans.

10. Fair transition: The act provides for the Fair Transition Strategy, as a nationwide instrument aimed at optimising opportunities in activity and employment in the transition to a low greenhouse-gas-emission economy, and regulated the Fair Transition Agreements as instruments to materialise these actions.

11. Cessation of domestic coal production. The granting of operating authorisations, permits, concessions, extensions or transfers of the coal resources of the production units included in Spanish Closure Plan for Non-Competitive Coal Mining, will be subject to the repayment of the aid granted under that regulation and corresponding to the entire period covered by the Closure Plan. This will be applicable to requests for operating authorisations, permits or concessions regulated by mining legislation, as well as to extensions or transfers being processed already.

12. Public procurement: In the area of public procurement, it provides for the inclusion in tender specifications of award criteria linked to the fight against climate change and specific technical specifications that establish the necessary reduction of emissions and carbon footprint.

13. Financial sector: It also establishes a framework to facilitate sustainable investments. Reporting obligations for the financial sector and companies are included. It introduces the obligation to submit an annual report assessing the financial impact of the risks associated with climate change generated by the exposure of their activity. From 2023, credit institutions must publish specific decarbonisation targets for their lending and investment portfolio.

 

14. Governance and public participation: The Committee of Experts on Climate Change and Energy Transition is the body responsible for evaluating and making recommendations on energy and climate change policies and measures, including regulations. Otherwise, CCAA must report to the Climate Change Policy Coordination Commission on the energy and climate plans as of 31 December 2021.

Likewise, within six months of its approval as Act, the Government will set up a group of experts to evaluate a tax reform that will also assess green taxation. In any case, the modifications introduced in this area will be in line with the economic situation.

[1] National Integrated Energy and Climate Plan
[2] Alternative Energy Vehicles