An alliance of Spanish-Portuguese multinationals made up of Santander, BBVA,Iberdrola, Naturgy, Repsol, Moeve and EDP in addition to senior partners from McKinsey & Company, have presented today a plan to turn the Peninsula into the focus of the reindustrialization taking advantage of the competitive advantage of a cheaper energy (between 20% and 25% lower than that of Central Europe).
The so-called Iberian Industry and Energy Transition Initiative (IETI) aims to promote the “unique position of Spain and Portugal to contribute to revitalizing European competitiveness and promoting the energy transition” something that would translate into the creation of a million jobs (700,000 in Spain and 300,000 in Portugal), 20% of which would be highly qualified, in addition to increasing the state revenue between 5% and 10% and total national exports by up to 20%.
Taken together, the plan’s potential to capture high-value industries “it has the potential to increase Iberia’s GDP by up to 15%”according to McKinsey & Company estimates.
The Spanish-Portuguese companies allied in this initiative have presented the IETI in a work session with Teresa Riberaexecutive vice president of the European Commission for a Clean, Fair and Competitive Transition, together with the CEOs involved.
According to McKinsey & Company analysis, “in view of the recent wave of deindustrialization and loss of competitiveness in Europe, aggravated among other reasons by the lack of investment in R&D and high energy prices, the energy transition represents both a challenge as an opportunity for the continent to close the productivity gap with leading regions. The potential value at stake is considerable, with. up to one billion euros in value added by 2030, which is equivalent to three to six times the incremental annual investment needed to achieve the net zero emissions target.”
The document highlights that, in addition to abundant renewable resources, an existing robust capillary network that serves as a basis for future improvements, large tracts of land for the development of renewable energy, and an extensive market for PPA contracts (30% of the EU market in 2023), Spain and Portugal can also boost the production of biofuels and hydrogen-based fuels to become European leaders, taking advantage of the efficient refining system in Iberia (in the top quartile of Europe)its strategic location and its existing infrastructure (third largest refining capacity).
“Seizing the opportunity to produce cost-effective green hydrogen, which is 10% to 20% cheaper than equivalent facilities in Central Europe, would help Europe achieve its domestic production targets,” the report underlines.
To take advantage of the potential to attract industries, the plan proposes effective incentives to close the cost competitiveness gap between green solutions and fossil fuel-based alternatives, effective and stable regulatory frameworks that include mechanisms of remuneration for capacity,reduce administrative burdens and shorten permitting processes to minimize long authorization periods, creating centralized processes for green hydrogen permits, accelerating permitting processes for attract battery production capacity and the simplification of approval processes for network connections according to demand.
Likewise, the signatories ask to develop solid projects to guarantee robust financing schemes and stable, including greater availability and adoption of PPA contracts, and implement an urgent and efficient deployment of the electrical networksimproving long-term planning.