Energy efficiency improved in Spain between 2005 and 2008, mainly due to the slowdown in construction, but to a lesser extent than in European countries specialising in higher value added activities, the report said. Achieving an energy intensity which is on a par with the average of surrounding countries would save Spain energy equivalent to between 1.5% and 3.5% of Gross Domestic Product (GDP), depending on the price of a barrel of oil. A stark reminder of Spain’s poor levels of energy efficiency is that in 2008, Spain required 180 tonnes of oil equivalent (toe) to produce a million euros: 28 times more than the average of the surrounding countries, i.e. the EU-15.
These data were presented during a ceremony at the end of November, attended by the Secretary of State for Climate Change, Teresa Ribera, the Director of Economics for Energy, Xavier Labandeira, and the Director of the Institute for Fiscal Studies, José María Labeaga. The report was prepared and presented by Maria Mendiluce (Manager of Energy and Climate Change at the World Business Council for Sustainable Development) and Pedro Linares (Co-director of Economics for Energy).
During the presentation, Teresa Ribera highlighted the valuable contribution this analysis will make to establishing energy policies designed to ensure economic energy security. "Spain needs spaces like this to build up robust and solvent historical data series which serve as a benchmark in the decision making process”. Ribera also underlined the progress made by industry in “taming demand”.
More added value
According to Maria Mendiluce, who outlined the main elements of the report, in order to reduce the impact of the construction sector on energy intensity in Spain, the main objective should be to bring down energy demand in the residential and private transport sectors, which together account for 34% of energy expenditure.
Pedro Linares focused his presentation on the practical part of the study, which "proposes solutions based on analysing the data and providing a tool for decision-making by companies and the Administration”. Of these recommendations, Linares emphasised the importance of "redirecting the Spanish economic structure towards higher value added and less energy intensive activities". Something that is already happening as a consequence of the crisis, and that would exclude the construction sector and tourism.
Sharp rise in gas and renewables
According to the report, the drop in energy intensity in Spain since 2005 has mainly been due to the slowdown in the construction sector, which is a major consumer of energy due to the transport of materials and the intensive use of very energy intensive materials such as cement.
The analysis also emphasises the improvement in energy intensity in the electricity sector, which managed to generate 87% more power between 1995 and 2008 using relatively less primary energy, with inputs only rising by 25% over the same period. This improvement is explained by the sharp rise in the use of natural gas, which increased from 2% in 1995 to 39% in 2008, and renewable energy, increasing from 1% to 12.5% in 2008.
The most negative data concern the tertiary sector and residential consumption, which show worsening trends in energy intensity compared to improvements in the EU-15. The residential sector is the largest consumer of energy in the country and influences energy intensity through household consumption and private transport. Mobility of the Spanish population increased by 60% between 1995 and 2008, while electricity consumption in homes doubled over the same period.
In contrast, Spanish industry greatly improved its efficiency during the period 2004-2008. However, this relative improvement was partly due to the low efficiency of Spanish industry during the period 1995-2004, and means that Spain still lags behind the European average in terms of energy intensity. Part of the positive trend in Spain can also be explained by rising energy prices over the period, which transmit a signal to industry to improve efficiency.
Proposals
To improve Spanish energy intensity, the report proposes redirecting the Spanish economy towards high value added and low energy consuming activities, implementing policies that focus on energy saving and efficiency in the residential sector and transportation, and continuing along the current path of ramping up renewable energy use and replacing coal with gas in electricity generation.
As for how to achieve these objectives, the report suggests a combination of instruments and policies, including: the use of pricing as a signal to consumers and to avoid the rebound effect, introducing stricter building or equipment energy efficiency codes, and developing transport technology.
Economics for Energy is a private research centre that applies economic analysis to energy issues. Its mission is to inform and to advise public and private decision makers, and to foster the creation and transfer of knowledge and ideas in the field of energy economics. The centre aims to base its recommendations on rigorous research developed with a medium and long-term scope. A large number of entities including public authorities such as the Institute for Fiscal Studies), Vigo and Comillas universities, the Barrie Foundation, and companies including Acciona, Iberdrola and Santander all participate in the research effort.
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