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PERTE for industrial decarbonisation: a path to modernisation
The Strategic Project for the Economic Recovery and Transformation (PERTE) of the Manufacturing Sector is known as the PERTE for industrial decarbonisation. This is a sectoral initiative, but with clear transversal objectives, given the bandwagon effect of the sector as a supplier to and client of other sectors.
Specifically, the motivation of this Strategic Plan is to contribute to the achievement of the objectives set by the European Green Deal. It calls for climate neutrality by 2050, and this would be very difficult to achieve without a significant contribution from industry. To achieve this, a large investment of €11,800 million is envisaged, including a public contribution of €3,100 million. And this would take place in a time frame that would span until the year 2026.
What does the Strategic Project aim to achieve with industrial decarbonisation?
A proposal has been made for 7 complementary objectives:
- Decarbonisation of production processes: This is logically the priority objective. It seeks to prepare the manufacturing sector for increasingly stringent legal restrictions. It should also be borne in mind that fossil fuels are the main source of polluting gas emissions. And you should not forget that emission allowance prices are expected to rise in the future.
- Improving energy efficiency: Energy consumption has greater preponderance in manufacturing than in other sectors, so technologies that aim to reduce consumption need to be adopted.
- Improving the competitiveness of the manufacturing sector: A more restrictive regulatory and pricing environment for emission rights could be a burden for the future of the manufacturing sector. Decarbonisation aims to avoid this undesirable effect. The sector also provides solutions for energy efficiency and this generates opportunities for growth, investment and job creation.
- Promoting Spain's energy security: It especially aims to reduce gas consumption in the manufacturing sector. It should be remembered that Spain currently consumes much more hydrocarbons than it produces. In this context, price rises greatly affect the electro-intensive industry and generate detrimental effects for the economy as a whole.
- Promotion of the use of renewable energies: Manufacturing, like other sectors, cannot ignore the increasing preponderance of renewables in its energy consumption. They also favour the achievement of other objectives, such as reducing dependence on fossil fuels.
- Environmental protection: To achieve this, the aim is to increase the use of by-products from the manufacturing sector and to add value to the waste produced. In short, what is being sought is a comprehensive approach to the life cycle of products.
- Job creation: There is expected to be significant demand for professionals who apply their knowledge to industrial decarbonisation. The Strategic Plan should therefore promote training in this field.
The Strategic Project for Economic Recovery and Transformation’s measures for industrial decarbonisation
A number of measures have been proposed to achieve the objectives of the Strategic Project:
Support for comprehensive measures
This support may be in the form of loans or grants, and each request should hinge on a single leading project aimed at the decarbonisation of a single industrial installation. This leading project may consist of one or more primary projects which should contribute to the decarbonisation of the main installation through possible lines of action described in the guidelines.
However, every primary project should contain actions that fall within at least one of the following two categories:
- Reduction of direct emissions from the installation.
- A substantial improvement in energy efficiency to save electricity.
Support from the IPCEI for hydrogen
An IPCEI is an Important Project of Common European Interest. One of them is hydrogen and, within this, there is a theme aimed at the decarbonisation of industry through the use of clean hydrogen.
Within the sphere of the IPCEI for hydrogen, there are a number of subsidies that are affected by the Guidelines for State Aid with regard to climate, environmental protection and energy. They seek to prevent distortions of competition through State aid while promoting, through the granting of aid, the objectives of the European Green Deal.
In this case, the Strategic Project for Economic Recovery and Transformation focusses on aid related to industrial processes and their decarbonisation through hydrogen. Specifically, it concerns State Aid affected by the guidelines to finances projects that would not be profitable without that aid.
Support fund for carbon difference contracts
Companies in the manufacturing sector can make investments to reduce their emissions. There may be reasons of environmental or social commitment behind it, to try to avoid damage to nature or people's health.
However, there may also be financial reasons for this practice. A company subject to the Emissions Trading System might think that, with fewer emissions, it would need fewer allowances. You could get returns from being able to sell emission allowances, or from not having to buy them.
The problem is that, although you can predict with a fairly narrow margin how many emissions will be saved with the investment, it is not so easy to know how much the rights will be worth in the future. The price of these fluctuates, so the financial risk for the investment is quite high.
To avoid this, it is intended to create a fund that can guarantee a price for emission allowances. If, in the end, the market price ends up being higher than agreed, the company would compensate the fund. If it is lower, it would be the fund that would compensate the company. In short, it would be a way of hedging the risk arising from fluctuations in the prices of emission allowances.
What the Strategic Plan initially proposes is to start by making a study to create the fund. The next step would be to launch a pilot project in a subsector of the manufacturing sector. The horizon would be to generalise the experience in the sector as a whole.
Highly efficient and decarbonised manufacturing installations
In this case, the aim is to launch aid programmes for companies that use the best technologies for decarbonisation within their sector. However, they need to be compatible with the European guidelines that aim to combine the European Green Deal with the guidelines on not creating false competition through state aid.
Other measures that enable the Strategic Project for Economic Recovery and Transformation for industrial decarbonisation
In addition to the main measures, there are others that are not directly linked to this Strategic Plan, nor are they financed by it, but are considered to support it:
- Synergies with other Strategic Plans, such as renewable energies, renewable hydrogen and storage, and the circular economy.
- Training measures.
- Promoting R+D+i.
- Measures to promote financing.
- Measures to promote sustainability and digitalisation.
Overall, the Strategic Plan for Economic Recovery and Transformation for industrial decarbonisation represents an important change of context for the manufacturing sector. There will be both public and private investment, regulatory changes, public aid for companies that comply with the objectives of the European Green Deal, new financial instruments and a boost to training and R+D+i in this field.
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