A McKinsey report calculates that investment in the ecological transition could sustain 1,100,000 jobs on average
Sep. 28 () –
Spain could reach the milestone of net zero emissions in 2045 and reach negative emissions — absorbing more greenhouse gases than it emits — in 2050 if it invests an average of 85,000 million euros a year in green technologies or close 6.2% of GDP, according to a report by the consulting firm McKinsey & Company.
The accumulated investment would be around 2.5 trillion euros until 2050 and would be one percentage point above the estimated investment for a more conservative scenario based on current policies.
The report ‘Net zero Spain: Europe’s decarbonisation pole’ highlights the wealth of natural and technological resources that Spain has and that give it the opportunity to become “the European leader in sustainability and clean energy”.
Specifically, it mentions solar resources and the penetration of wind energy, which present “an immense potential for the development of green hydrogen”, as well as the “robust natural gas transportation infrastructure” that could be used to transport hydrogen, and the possibility of increasing the absorption of carbon dioxide through techniques such as reforestation.
KEY ROLE OF TRANSPORT AND INDUSTRY
The report specifies that transport and industry represent more than 65% of net emissions in Spain, so these sectors are key to achieving climate neutrality in 2045. Thus, electrification, green hydrogen and biofuels would be the three main areas on which the energy transition would depend in this horizon.
On the other hand, McKinsey celebrates the “clear commitment” of the public sector and adds that Spain is the second country with the largest allocations of aid funds from the European Union (more than 70,000 million euros).
The report proposes an alternative scenario to the current ecological transition policies and plans, urges to accelerate the response to climate change and suggests that the reduction of emissions at the national level by 2030 could be up to 46% compared to 2019 if they are increased the efforts.
In the case of transport, which generates almost a third of the emissions in Spain, McKinsey says that it could reach a reduction of 50% by 2030 and 100% by 2050 thanks to electric vehicles and biofuels, for which this sector should receive almost two thirds of the total investment proposed in this horizon.
As for industry, which accounts for another third of emissions and could achieve a reduction of 85% in 2050, it indicates that competitiveness and sustainability can be improved in segments such as steel, cement, chemicals or petrochemicals, in which that hydrogen, biofuels and carbon capture could play an essential role in the transformation and reindustrialization of the country.
On the other hand, the McKinsey scenario for 2050 estimates a doubling of electrical energy, since the electrification of the economy is one of the key levers for the transition, and the sector should receive between 15% and 20% of the investment to reduce 100% of greenhouse gases for that year. Finally, another 15% of the investment should go to the residential and commercial buildings sector to also achieve that 100% reduction in their emissions.
THE RISKS OF CLIMATE CHANGE
McKinsey advocates trying to “avoid the significant physical, social and economic risks that Spain could face.” The study says, for example, that if temperatures rise more than two degrees Celsius compared to pre-industrial levels, some areas of southern Spain could experience 45 days a year with maximums above 37 degrees, with the consequent impact on health. of the population and on certain economic activities.
The general increase in temperature due to the climate impact could reduce the production of four of the most relevant crops, such as grapes, olives, tomatoes and wheat, while tourism could find it difficult to maintain its current attractiveness, especially in the highest season.
“UNIQUE OPPORTUNITY” FOR SPAIN TO LEAD THE TRANSITION
The scenario imagined by the consultant would also have a direct and substantial impact on the economy, supporting more than 1,100,000 jobs on average until 2050, which is 200,000 more jobs than in the scenario based on current decarbonization policies .
Joseba Eceiza, leader of the Sustainability Practice in Spain and Portugal at McKinsey, has highlighted that “the global economy is facing the greatest reallocation of capital in history” and Spain is facing “a unique opportunity to lead this ecological and economic transition” .
Between 2007 and 2019, Spain managed to reduce its emissions by 32%, compared to 20% in the rest of Europe, mainly thanks to investment in renewable electricity generation capacity.
In order to continue making progress in the ecological transition, it will require, according to McKinsey, the joint action of all sectors of the economy in Spain, ensuring “that resources, technologies and supply chains are available at scale, that adjustments in economic variables are carried out in a sustainable and inclusive manner and that both the public and private sectors sustain their commitments and move towards their objectives in a constant manner”.
The report concludes that Spain already has the key conditions to be a green pole in Europe: it has the second highest level of wind power capacity penetration after Germany, highly competitive photovoltaic solar energy and a highly developed gas transportation infrastructure. that could be used to transport hydrogen.
David González, senior partner at McKinsey and leader of the Energy and Materials practice in Spain and Portugal, stated that “Spain could go from being one of the global leaders in the new decarbonized economy, establishing a sustainable hub with a global reach and facilitating the ecological transition of other countries in the region”.
González pointed out that “the strategic position and excellent infrastructure for natural gas could be leveraged towards the transport of hydrogen to supply the rest of Europe”, whether it is produced locally or imported from North Africa, and that Spain has “great potential of carbon absorption” as it is the eighth country in the EU with the largest forest cover, 37% of its total area, compared to 34% of the European average.
THE BANKING SECTOR AS A DRIVER
McKinsey & Company calculates that it will be necessary to invest more than 700 million euros in green technologies until 2030 to accelerate decarbonization and emphasizes the fundamental role of the banking sector in driving access to credit and the transition.
In fact, the banking supervisor is already redoubling efforts to ensure that the climate factor is considered in credit risk management, and many entities reward their clients for decisions that promote sustainability through loans for electric vehicles or improvement of conditions in mortgages with efficient energy consumption.
Individual transition plans for companies, the development of new technologies such as green hydrogen or home improvements in relation to energy consumption are also financed. McKinsey anticipates that in the coming years the financing of projects that favor the transition and of green activities will be the main focus of banking efforts, encouraged by the advancement of European legislation to complement the capital ratio with the green asset ratio.