The Spanish Climate Change and Energy Transition Law (A supporting document for journalists) 1. THE AIM OF THE PROPOSED LAW This law aims to ensure compliance with the Paris Agreement, accelerate the full decarbonisation of the economy, and implement a model of sustainable development that generates stable and quality employment, and provides economic and regulatory signals that give stability and security to investors and other economic actors. It is a law fit for the purpose of establishing a transition to a fully decarbonized economy by 2050. It provides a framework that anticipates the risks that arise from the impact of climate change, and delivers security and regulatory stability to mobilize the necessary investments, thus making the most of the socioeconomic opportunities that the process of change will generate. Context: The main objective of the Government's regulatory proposal on climate change and energy transition is to give clear signals, certainty and confidence to all actors, administrations, the private sector, investors and the general public in order to promote the new development model we are moving towards. 2. OBJECTIVES: MAXIMUM AMBITION WITHIN THE EU NATIONAL OBJECTIVES: The Law on Climate Change and Energy Transition has two main deadlines for reducing emissions, introducing renewable energies and improving energy efficiency: 2030 and 2050. 2030 Target:     Reduce greenhouse gas (GHG) emissions by at least 20% compared to 1990. Achieve a penetration of renewables in final energy consumption of 35%. The electricity system must have at least 70% generation from renewable energy sources. Improve energy efficiency by at least 35% compared to the baseline in accordance with Community legislation. Context: Currently our emissions are 17% above the 1990 level. Therefore the 2030 target is to reduce them by 37 percent. No other country within the European Union has such an ambitious aim. Achieving a 20% reduction in total emissions by 2030 compared to 1990 will mean that in that year emissions have to be 230 million tonnes, thus by 2030 a third of our emissions must be eliminated. 2050 Target:   GHG emissions shall be reduced by at least 90 per cent below the 1990 level. The electricity system will be based exclusively on renewable sources of generation. 100% renewable These objectives are in line with the achievement of a carbon-neutral economy in the second half of the century, as established in the Paris Agreement, and may be revised to comply with that agreement and with European regulations; to adapt them to technological advances, and due to environmental, social or economic circumstances, BUT their modification must not lead to a reduction in the level of ambition. 3. PLANNING TOOLS: Energy and Climate Plans and Strategy to 2050 The Law will be accompanied by cross-cutting plans: Integrated National Energy and Climate Plans     These will constitute the national strategic planning tool and will reflect Spain's contribution to the achievement of the European Union's energy and climate objectives. Progress reports on the Integrated National Energy and Climate Plan will be drawn up periodically and submitted for consideration by the Council of Ministers and submitted to the European Commission. These plans will define the energy mix, as they will include quantitative national and sectoral targets and contributions for GHG emission reduction and sink removals, renewable energy and energy efficiency; and the corresponding policies and measures to achieve those targets. The National Energy and Climate Plans may include an indicative fiveyear carbon budget, which will establish the amount of carbon available for the Spanish economy as a whole during those 5 years. Low Emissions Strategy by 2050 for the Spanish economy  This strategy will mark out the path to achieving emissions neutrality by 2050 and will be an indication of whether what is being done in the present is consistent with our future goal.  On this path there will be at least one indicative intermediate emission mitigation target in 2040 relative to 1990.  The path will be reviewed every 5 years. 4. RENEWABLE ENERGY and NETWORKS The law aims to give a decisive boost to renewable energy. To this end, it is envisaged that:    The Integrated National Energy and Climate Plans will include measures to promote the integration of energy from renewable sources. These measures will specify, in an orderly and efficient way, the penetration quotas of renewable energy for periods of five years. During the period 2020-2030, the Government will develop competitive calls for tender to promote the installation of a minimum of 3,000 MW of power per year from renewable electricity sources. In addition, the Government may develop new regulatory instruments for the promotion of electricity generation from renewable sources to be granted through competitive procedures. In this way, the Government is given a mandate to establish a stable, predictable, efficient and clear regulatory framework for the generation of energy from renewable sources. The development rules will be aimed at simplifying administrative burdens and procedures. The principles of the remuneration system will also be established. Priority will be given to the installation of plants that generate of electricity from renewable sources over those that use other types of technologies. Renewable energy will also have priority in access and connection to electricity transmission and distribution networks. Energy networks Four aspects are regulated under this heading: 1) The planning of the electricity transmission network, one of whose purposes will be to comply with the objectives of the Law. In addition, the Government is authorized to modify, on an exceptional basis, specific aspects of the planning of the electricity transmission network when situations arise that prevent the achievement of the objectives for generation with renewable energy sources. 2) The electricity and gas transmission network: Obligations are established to inform the owners of electricity and gas transmission networks regarding compliance with the transmission network plans. The regulator may put in place mechanisms to reduce the remuneration of companies that own electricity and gas transmission networks in the event of unjustified delays in the implementation of plans. 3) Closed electricity distribution networks: The conditions under which a network can be considered as a closed electricity distribution network are established. The operator of a closed electricity distribution system shall be obliged to make the private network available if necessary to guarantee public service. 4) Extra-mainland networks: In non-mainland territories a specific energy plan will be completed, and that this must facilitate the integration of renewable energy into these networks. The installation of storage systems is also promoted. Status of energy-intensive consumers: The Government will approve a Statute of Energy Intensive Consumers that recognizes the specific needs of those industrial electrical consumers with a high use of electricity, a high consumption in hours of low electricity demand, and a stable and predictable consumption curve. 5. ENDING OF AID TO FOSSIL FUELS, HYDROCARBON EXPLORATION AND FRACKING Context: The Law must give a signal that the use of fuels that generate emissions cannot continue and that, in addition, they constitute a public health problem in large cities. Although the measures must be in accordance with the challenge we face, they must provide sufficient clarity and legal certainty such that the changes that must be generated allow for the adaptation of all actors, from administrations to companies and citizens. Regarding exploration, research and exploitation of hydrocarbons: As of the entry into force of the law, no new authorizations will be granted to carry out exploratory activities, research permits or concessions for exploitation of hydrocarbons throughout the national territory, including in the territorial sea. Nor may fracking activities be developed for the exploitation of hydrocarbons. Extensions in force may not continue beyond 2040. Regarding subsidies and investments in fossil fuels, as of the entry into force of this Law, it will be prohibited to establish new subsidies or other economic incentives that favour the consumption of fossil fuels. In addition, a report will be made on the tax regime currently applied to fossil fuels, identifying any aid and measures that favour their consumption, and the report will propose a timetable to phase out such subsidies, in line with the objectives of decarbonisation. At the same time, the Government will not make new investments in shares or financial instruments whose activity includes the exploitation, extraction, refining or processing of fossil fuels. The Government will also carry out a study of the existing situation and propose a timetable for the state public sector to divest itself of shares or financial instruments of companies that carry out activities related to fossil fuels. Finally, the Government will also have a mandate to promote biomethane and other synthetic fuels of renewable origin, and the promotion of sustainable biofuels in air transport. 6. MOBILITY AND CONSTRUCTION Promotion of zero-emission mobility Some of the most important changes to be made are those that affect mobility. For this reason, the objective is set of achieving a fleet of passenger cars and light commercial vehicles without direct CO2 emissions by 2050. The Integrated National Energy and Climate Plan will set targets for the year 2030 for the penetration of vehicles with zero or low direct CO2 emissions. To this end, from 2040 onwards the registration and sale in Spain of passenger cars and light commercial vehicles with direct carbon dioxide emissions will not be permitted. Municipalities with more than 50,000 inhabitants must have low emission zones no later than 2023. Road transport. The Government will prepare a study on the establishment of the Eurovignette, relating to the application of charges to heavy goods vehicles for the use of certain infrastructure. An obligation is established to install electric recharging points in facilities for the supply of fuels and fuels, in different periods depending on their volume of sales. Context: Our proposal is similar to that of the United Kingdom - which has announced that it will ban the sale of diesel and petrol cars in 2040 and in the year 2050 they will no longer be able to run; France has also announced that it will ban the sale of combustion cars in 2040; Denmark, Ireland, Germany and the Netherlands want to achieve this in 2030 and Norway in 2025. With these dates the government sends clear signals to direct the production of vehicles. These are steps that some manufacturers have already taken. Volvo has already announced that from 2019 it will only sell electric cars. Toyota, a pioneer in the development of hybrid engines, will stop selling diesel vehicles in Europe at the end of 2018. In Spain, there are already regions that have taken steps in this direction. The Balearic Climate Change Act will ban diesel cars on the islands in just seven years. In the roadmap to achieve an entirely electric fleet of cars on the islands in 2050, the first vehicles affected will be diesel, which the government will restrict from 2025, followed by petrol in 2035. Energy efficiency in town planning and buildings The Government, the Autonomous Regions and local authorities will give priority to retrofitting of the housing stock:     The Government will encourage the renovation of existing buildings, both public and private, to achieve energy-efficient and decarbonised buildings by 2050. At least 100,000 homes per year on average between 2021 and 2030 will be retrofitted using energy efficiency criteria. The Government will establish a long-term Strategy for energy renovation in the building sector, which will be integrated into the National Integrated Energy and Climate Plan. Aid programmes and financing mechanisms will be established to achieve energy efficiency in renovated housing, with special attention to the most vulnerable groups. 7. MOBILIZATION OF RESOURCES TO TACKLE CLIMATE CHANGE AND FINANCE THE ENERGY TRANSITION Fiscal policy will incorporate elements that configure the tax system to encourage a low-carbon, climate-resilient economy. In addition, national budgets will be progressively directed towards activities that have a positive impact on climate change. Taxation and resource mobilization    At least 20% of the National Budget must have a positive impact in the fight against climate change. This target will be revised upwards by 2025. Revenue from the auctioning of emission rights will be used to meet the objectives set out in this law. To this end, the National Budget laws for each year will specify the use of these revenues, a percentage of which may be used for just transition. The Government will adopt an international climate financing strategy. Public contracts    The emission reduction and carbon footprint criteria will be incorporated into the contracting of the National Administration and all bodies and entities of the state public sector. New buildings tendered after the entry into force of this law will be almost zero energy consumption. From January 1 2025 they must meet the requirements for maximum energy ratings of buildings. The National Government and all bodies and entities of the state public sector may only lease buildings that have almost zero energy consumption. Current leases that do not meet these conditions may not be extended beyond 2025. Listed companies and the financial sector   There will be a mandatory climate risk report for all listed companies and credit institutions subject to the Bank of Spain's supervisory regime. Every two years, the Bank of Spain will draw up a report on the assessment of the risk to the Spanish financial system arising from climate change and the policies to combat it. This report will be sent to the Congress of Deputies. The climate risk report for listed companies has already been adopted in France with its famous article 173 and allows entities to become aware of their responsibility for climate change and how they can redirect their financial flows towards activities that promote decarbonisation. Working on climate is not just an environmental issue. It is essentially an economic, social, industrial issue. Initiatives such as this are already part of the economic and financial reality of countries such as the United Kingdom, France, Norway and Germany. They allow us to learn to identify and anticipate risky situations for the Spanish economy and its companies, and directly address the cost of financing. 8. GOVERNANCE     The Climate Change and Energy Transition Committee will be created to provide independent advice to the Government. This Committee will prepare an annual report on progress and setbacks in terms of targets. It shall include recommendations to the Government and shall be duly published and forwarded to the Government and the Congress of Deputies. The Government shall give a reasoned assessment of the Committee's recommendations. Approval of regional energy and climate plans by 31 December 2021. Local energy and climate plans for municipalities with more than 100,000 inhabitants by 31 December 2021. 9. ADAPTATION TO CLIMATE CHANGE     The National Plan for Adaptation to Climate Change (PNACC) is the planning instrument for promoting coordinated action against the effects of climate change in Spain. It will be developed through work programmes and sectoral plans. The Ministry for Ecological Transition will prepare and publish periodic reports on the evolution of risks and impacts derived from climate change, and on the policies and measures aimed at increasing resilience and reducing vulnerability to climate change. Planning and management of water, coastline and transport infrastructure should take into account the risks arising from climate change. Biodiversity protection and forest management should also take into account the risks of climate change. Context: For the first time, adaptation is recognized in a law. Thus, we will not only work with the available information on how climate change impacts and risks evolve, but also integrate these risks into hydrological planning and management, coastal management, and transport infrastructure. Measures are also envisaged to protect biodiversity and habitats against climate change, including provisions relating to land use, forestry policy and rural development. 10. JUST TRANSITION The objective of the Just Transition Strategy is to identify and adopt measures that ensure equitable and supportive treatment for territories and workers in sectors particularly affected by the transition to a low-carbon economy. The strategy will be valid for five years.    It will include measures to boost the economic recovery of the sectors concerned, active employment policies aimed at retraining, and social protection measures. As part of this strategy, just transition contracts will be drawn up. Just transition contracts will be established through agreements between the Ministry of Ecological Transition and other Public Administrations, in particular local entities in geographic areas vulnerable to the transition to a low-carbon economy. They will also involve affected actors, including businesses, workers' representatives, universities, educational institutions, associations and NGOs. Context: Just transition contracts already exist in France. They are established as agreements between the different Public Administrations that aim to promote the employability of workers vulnerable to the transition to a lowcarbon economy, particularly in cases of closure or reconversion of energy infrastructure.