Spain needs to further factor the environment into its recovery agenda, says OECD | WPN World People News

The OECD’s latest Environmental Performance Review of Spain finds the country has decreased the energy and carbon intensity of its economy, reduced industrial pollution and cut per-capita waste generation since 2000. Yet it warns that higher industrial output could put new pressure on the environment as the economy rebounds.

Environmental and labour taxes as % of GDP

“Spain has visibly improved its environmental performance since the turn of the century,” said OECD Secretary-General Angel Gurría, presenting the Review in Madrid. “Spain must now ensure that its economic recovery does not undo that work. There is scope to both strengthen and simplify environmental policies to achieve growth that is robust, inclusive and green.”

Relative burdens on companies from environmental regulations

Spain has made important progress in many aspects of its environmental performance since 2000. However, there is ample room to apply more green taxes and reduce charges on labour as a way to spur economic growth, according to the Review.

Spain could also do more to simplify and streamline its environmental regulations, building on steps already taken in this direction, as its complex rules and decentralised management still create heavy green tape burdens on firms, the Review says.

Noting that green tax revenue has fallen to among the lowest in Europe at 1.6% of GDP in 2012 while labour taxes have risen, the Review supports the idea of a reform to broaden and raise environmental taxes. Raising the diesel tax in line with petrol tax, for example, could help preserve the environment while enabling a reduction in payroll taxes.

Spain has one of the most ambitious biodiversity laws in the OECD area and an industrial sector with a relatively small environmental footprint. However, the construction boom of the early 2000s, tourism and population growth in coastal areas have created environmental pressures that need to be monitored.

The Review highlights the high volume of requirements in environmental regulations and their relatively uncoordinated implementation across 17 Autonomous Communities. Despite some progress in streamlining the system, more could be done to lighten the burden on firms and the cost to the economy without compromising environmental standards.

Other findings of the latest OECD Environmental Performance Review of Spain include:

● The energy intensity of the Spanish economy (the amount of primary energy used to create a unit of GDP) fell by 15% over 2000-12 and by a further 5% in 2013. Overall energy consumption followed the economy’s “boom and bust” cycle, rising sharply until 2007 and then decreasing. In 2012, energy consumption was 1% lower than in 2000.

● Spain generates 20% less CO2 per unit of GDP than in 2000, due to a rising share of renewables in power generation, more stringent energy efficiency and the effects of the downturn. Renewable energy supply has surged by 147% since 2000 to make up 14% of primary energy supply in 2013, with a jump in wind and solar since 2005.

● About 29% of Spain’s land and 8.4% of territorial waters have some form of nature protection, among the highest levels in the OECD area. Biodiversity is also rich. Yet, the conservation status of some 40% of habitats and species is unfavourable.

● While Spain has one of the highest intensities of water use of OECD countries, abstracting around 30% of its total available renewable freshwater, water use in the manufacturing sector dropped by 60% over 2000-10.

Source: Organization for Economic Co-operation and Development