I would like to begin with a broad reflection on the decarbonisation process in which we are currently immersed. After observing electricity market prices during the spring of 2024, with an abundance of zero or even negative electricity prices, I believe we are all aware that the decarbonisation process involves more than simply adding renewable generation to the electricity sector. The market this spring has reminded us that it is not possible to produce more renewable electricity than we consume. The year 2023 closed with more than half of electricity generation coming from renewables, and more than three quarters being non-emitting. There is little left to decarbonise in electricity.
The challenge: decarbonising transport and industry
The challenge now lies in decarbonising other end uses of fossil fuels. It is worth remembering that only 25% of final energy consumption is electricity. A total of 66% corresponds to fossil fuels, with oil accounting for 50%, mainly used in transport; while natural gas represents 16%, primarily used in industry and, to a lesser extent, in the residential and services sectors.
That is the challenge: decarbonising oil and natural gas. A large part of this process will be achieved through direct electrification, while another part will need to be carried out through indirect electrification, such as the use of hydrogen and, in some cases, synthetic fuels, always making use of the bioenergy resources available in the country.
Efficiency in decarbonisation
However, this is where we must prioritise process efficiency. A vehicle can be decarbonised using batteries, hydrogen, or renewable fuels. A quick calculation leads us to conclude that to power 20 million electric vehicles, we need generation equivalent to 30 GW of photovoltaic capacity, with land use equivalent to 7% of the surface area of the Community of Madrid. If, instead of electric vehicles, we use hydrogen vehicles—much more convenient but less efficient—we would need around 85 GW of photovoltaic capacity, occupying an area equivalent to 20% of the Community of Madrid. And if we power them with synthetic fuels produced from hydrogen, there would be no need to renew the vehicle fleet, but we would require 190 GW of photovoltaic capacity and land equivalent to 50% of the Community of Madrid.
Similar conclusions are reached when analysing the residential and services sectors. Using heat pumps requires 9 GW of photovoltaic capacity. Doing so with hydrogen or synthetic methane requires five times more. The industrial sector, for its part, is more difficult to decarbonise, but a significant share of its consumption can indeed be electrified efficiently.
The bioenergy resources available in the country are clearly insufficient to replace final fossil energy consumption. Their production could be increased through energy crops, but as we know, this puts pressure on land available for food production and consequently raises prices; and in third countries it leads to severe deforestation, with effects worse than the problems it seeks to solve. Meanwhile, importing biologically derived waste—which could be considered sustainable—diverts these resources away from their countries of origin, forcing them to consume more fossil energy. In this way, bioenergy is imported, but in practice emissions are “exported”, and we must remember that global warming is a global problem.
The most efficient solution: electrification
The conclusion we reach is that it is essential to take into account the efficiency of the different decarbonisation alternatives. The most efficient solution is always electrification wherever it is feasible: road transport, the residential and services sectors, as well as part of industry. Hydrogen and its derivatives (methane, ammonia, etc.), together with the limited bioenergy resources available in the country, should be the preferred option for processes that are more difficult to electrify: non-electrifiable industrial processes, non-electrifiable maritime or rail transport, the remainder of industry, and so on. Synthetic fuels should be reserved for decarbonising the sectors that are hardest to decarbonise, such as aviation, for example.
The key: electrifying demand
The key, therefore, is the electrification of demand. However, progress in this area is falling short. Sales of electric vehicles have yet to take off and are even declining in Spain, likely reflecting drivers’ doubts about new technologies, reports of charging difficulties during peak travel periods, and the illusion created by announcements about the “unlimited” availability of renewable fuels that promise to decarbonise transport without the need to change vehicles.
The rollout of heat pumps is not performing much better either. Subsidising the regulated gas tariff during the last energy crisis, while media attention focused on electricity prices, has not exactly helped.
Meanwhile, there are numerous efforts by industry to decarbonise its processes, but these often run up against the barrier of electricity grid availability needed to support this growth. The rigidity and slow pace of electricity grid development frequently lead to relocation to other countries, sometimes with less stringent environmental regulations.
Even growth opportunities are often curtailed by this lack of grid capacity, as we are currently seeing with the obstacles to the development of data centres and other industries that face serious challenges to implementation in Spain.
If we do not change course decisively, the decarbonisation process in Spain will stall. If we do not accelerate the electrification of society, emissions will not be reduced at the desired pace and we will be unable to continue installing renewable capacity. The renewable sector will come to a halt, potentially for years, in a new moratorium that could destroy a large part of the industrial fabric that has taken so many years to build. And without more renewables, we will not be able to continue advancing in decarbonisation.
Spain has a unique opportunity to become an energy and industrial powerhouse (provided, of course, that we play our cards right), because no other country in Europe has our conditions: abundant wind, abundant sunshine and—Europe’s scarcest resource—ample land. It is an opportunity we must not (and cannot) afford to miss; far too much is at stake for everyone.