Economic Demographics
- Population: 47.3 million (2020)
- Per capita income: US$ 27,132
- GDP: US$ 1.28 trillion
- Percent Composition of GDP:
- Services: 74.2%
- Industry: 20.2%
- Manufacturing: 11%
- Agriculture: 2.7%
Agriculture contributes around 2.7% of Spanish GDP and employs 4% of the workforce. The industrial sector accounts for 20.2% of GDP and of total employment. Manufacturing is the most important industry as it accounts alone for around 11% of GDP. The industrial sector is dominated by textiles, industrial food processing, iron and steel, naval machines, and engineering. New sectors such as outsourcing of electronic components production, information technology, and telecommunications provide high growth potential. The tertiary sector contributes to 67.9% of GDP and employs 76% of the active population. The tourism sector is pivotal to the country’s economy, being Spain’s main source of income (12.4% of GDP in 2019), as the country is the second-most popular tourist destination in the world (83.7 million tourists in 2019, for a seventh straight year of records). The banking sector is also important and is composed of 12 banking groups which include 52 private banks, two saving banks and 61 cooperative banks (Spanish Banking Association). According to the Spanish National Institute of Statistics, the GDP generated by the services sector fell by 21.3% during the second quarter of 2020.
Located in southwestern Europe, Spain is a member of the European Union (EU). The country borders the Mediterranean Sea, North Atlantic Ocean, Bay of Biscay, and the Pyrenees Mountains. Although Spain’s close trade partners are mostly other EU members, the United States (U.S.) remains an influential partner. Spain’s major economic challenges include continued recovery from the 2008 financial crisis; however, Spain has had several years of positive economic growth since 2013. The economic activity in 2013 surpassed Spain’s pre-crisis peak prior to 2008. Spain currently faces several environmental issues. These challenges include the following: pollution of the Mediterranean Sea from raw sewage and effluents from the offshore production of oil and gas; water quality and quantity nationwide; air pollution; deforestation; and desertification. U.S. companies in the environmental technologies sector will find trade opportunities in Spain as the country works to address the environmental issues.
Market Overview
The Spanish government has expressed a commitment to services and industries that address climate challenges, especially in air pollution and carbon dioxide emissions, which is considered to pose the greatest threat to climate change and conservation of natural resources. The government’s focus issues related to water shortages and loss of biodiversity to waste management; green and blue technology; environmental, water, air pollution control; soil remediation; and waste technology.
In 2020, Spain’s carbon dioxide emissions decreased by 18.9% from the previous year, which significantly surpassed the decrease of emissions by the European average (12.3%) and the global average (6.3%). Simultaneously, Spain’s renewable energy production increased by 12.9% and coal-fired energy production decreased by 60.4%. This level is 27.8% lower than it was in 2019, and 67.5% below the emission levels registered in 2007.
Spain’s largest Green House Gas (GHG) producer was from the transportation sector, accounting for 27% of total emissions. Between 2005 and 2019, transport emissions decreased by 11.4% but increased in the share of total emissions by close to 5%. Additionally, within this timeframe, Spain’s energy sector demonstrated a 56.8% reduction in emissions, which contributed to the country’s overall reduction in emissions of 59%. Spain’s industrial process, which accounts for 8% of the country’s total emissions, significantly reduced its emissions by over 41%.
The Spanish government has outlined its new regulatory framework for reducing carbon emissions and promoting the development of renewable energy. On May 22, 2021, Spain enacted Act 7/2021 on Climate Change and Energy Transition Plan. The act established energy targets for 2030 and 2050 for the reduction of greenhouse gas emissions, renewable energy, and energy efficiency. These targets are subject to upward adjustment by the Council of Ministers from 2023. There are several plans and strategies that will be instrumental in reaching the objectives established by the Climate Change and Energy Transition Plan, including:
- Spanish Economy Decarbonization Strategy by 2050, which establishes the path for reducing emissions and increasing the number of carbon sinks, every five years;
- The National Adaptation to Climate Change Plan, which is the planning instrument for promoting coordinated action against the effects of climate change (strategic objectives, impact indicators, and risk reports); and
- The Housing Rehabilitation and Urban Renewal Plan, which has the objective of improving existing building stock, regardless of ownership, following the indicators set out in the long-term strategy for energy rehabilitation for the building sector in Spain.
Market Opportunities
Spain has explored guidelines to address the effects of climate change on its natural ecosystems and wild species, and created a vulnerability map for agriculture, mountains, and forest soils. However, some areas of development have received less scrutiny. For example, Spain has prioritized some projects related to reversible hydroelectric plants, despite a lack of scrutiny towards efficient water resource management and environmental protection. Additionally, although technical regulations are expected to help navigate processes related to pumping, storage, and turbines, their effects on water resource exploitation are unclear.
Public investment in environmental protection in Spain was previously 47% lower than the European Union average. In recent years, Spain has improved process efficiency and increased investments in all sectors related to environmental protection and reduction of emissions—a change spurred by the economic impacts of COVID-19. The drastic decrease of GDP in 2020 led to critical responses at the national, regional, and global level. In Spain, the government implemented the Recovery, Transformation and Resilience Plan, which outlined the national agenda for the next few years. The €3.2 billion investment under this plan included an ecological and digital transition, and promotion of research and innovation in clean energy sources, energy infrastructure, management of water resources and waste, and sustainable transport.
At the regional level, the European Union implemented the Next Generation EU fund as a recovery package to support member states negatively impacted by the COVID-19 pandemic. The fund is worth €750 billion and seeks to address the economic and social damage brought about by the pandemic. Additionally, the fund will also impact greater investment in all environmental areas in Spain. The fund seeks to make Europe more environmental, digital, and resilient for current and future challenges.
Spain anticipates that the increased investment towards climate change environmental protections will increase demand for environment, waste, water, soil and air pollution, green and blue equipment, technology, and services in the coming years. Subsequently, many of these sectors will prioritize digitalization.
The Spanish Ministry for the Ecological Transition and the Demographic Challenge anticipates a public investment of €7 billion in water until 2027. These investments will be included in the hydrological plans of the hydrographic demarcations, which the Ministry is finalizing, and will be executed through the General Directorate of Water, the Hydrographic Confederations, and the State Societies. The Recovery, Transformation and Resilience Plan will contribute greatly to the development of these investments, framed within the principles of the European Green Pact, which will be articulated in three strategic lines: hydrological planning, water protection and water management risks, and the management of the Public Hydraulic Domain and water security.
The Recovery, Transformation and Resilience Plan ultimately plans to invest about €1.7 billion in the management of water resources until 2024: €800 million will be allocated to the recovery of rivers and aquifers; €225 million to promoting river restoration; €225 million to minimizing flood risks with preferably natural retention measures; €350 million to the reduction of groundwater extraction due to the application of alternative resources; and €650 million to promote general sanitation, purification, and reuse.
The Ministry wants to dedicate €250 million to the digitization of the water administration. Digital transformation of this sector will allow great advances in water management such as: the improvement of the digital administration of the resource; the knowledge and control of the use of water; the incorporation of automatic hydrological information systems to the control of ecological flows; the digital transformation in the monitoring and control procedures of the Hydraulic Public Domain; or the use of new support tools such as drones or big data analysis.
Industry Contacts
Environmental law enforcement in Spain works on three levels: national, regional, and local. The new administration has demonstrated increased devotion to energy and environment through the Ministry of Ecological Transition. The ministry’s aim is to propose and execute the government’s policy on energy and the environment to a more ecological and productive social model. Some departments related to the Ministry of Ecological Transition include the Ministry of Agriculture, Fishing and Food which advances initiatives such as forestry environment and conservation, agricultural irrigation, and marine reserves protection.
The Autonomous Regions, or regional governments, develop basic legislation in their territorial scope and approve regional environmental plans. At the local level, the main environmental powers of the municipalities relate to municipal environmental permits, urban waste, water treatment, air pollution, and noise limits. Spain is leading the creation and maintenance of sustainable urban populations. A large number of Spanish cities and towns are successfully pioneering smart city projects related to climatic conditions, geographic locations, city structures, and activities. In addition to these three levels, other national and regional agencies take part in the enforcement of environmental law within specific sectors, such as hydrographic confederations, the Spanish Climate Change Office (OECC), and the police in charge of the protection of the environment (Seprona).
Contact Us
U.S. Commercial Service Spain:
Carmen Adrada, Senior International Trade Specialist
Tel: +34 91 3081542
E-mail Carmen Adrada
