On Tuesday, October 15, at the launching of FAES' new report: 'Propuestas para una estrategia energética nacional' FAES proposes a national energy strategy to boost growth and competitiveness

15/10/2013

    _ It sets forth forty recommendations on market efficiency, legal certainty, independence and innovation, and strategic vision

    _ The strategy must be underpinned by a national view of energy, with clear and stable objectives, and principles that are consistent with them.

    _ The report updates the one published in 2011 and reflects the changes in the national and international energy scenario in the last two years

    _ Alberto Nadal, Pedro Mielgo and Miguel Marín addressed the audience at the launch

FAES Foundation launched on Tuesday 15th its new report, Propuestas para una estrategia energética nacional (Proposals for a national energy strategy)in which it proposes a new energy strategy to boost growth and competitiveness in Spain in the next decades. Additionally, it offers forty recommendations regarding market efficiency and competitiveness; legal certainty; managing efficiency; supervision excellence; independence and innovation, and energy vision. The report argues that this strategy must be underpinned by a national view of energy, with clear and stable objectives, and principles that are consistent with them. 

This new FAES report, which updates and summarises the one published in 2011, reflects the changes in the national and international energy scenario in the last two years. With this new scenario in mind, it updates the analyses and describes the conditioning factors affecting the energy sector in Spain. Its aim, as in 2011, is to present new ideas for the energy debate, necessary because it focuses on a key issue for Spain.

The presentations of Propuestas para una estrategia energética nacional were delivered by Alberto Nadal, Deputy Minister for Energy; Pedro Mielgo, president of Nereo GreenCapital, who coordinated the works for the report; and the director of FAES Economy and Public Policy department, Miguel Marín, who directed it. In Marín's words, “the report provides a balanced, sensible and coherent analysis that offers as a result, a perfect mix of objectives and a path to follow in the next few decades, optimising the contribution of the energy sector to growth and competitiveness and respecting the environment and the well-being of the Spanish people.”

OBJECTIVES AND PRINCIPLES

The report highlights the fact that Spain needs to define an energy strategy on the basis of clear and stable objectives and principles that are consistent with them. Depending on the correctness of decision making and investments in the energy sector in the next few decades, energy will either be a lever for growth in Spain or a heavy burden that society will have to pay for.

According to the report, those objectives are: ensuring the security of supply; contributing to growth and competitiveness; serving the defence of national interest; having a positive impact on the economy and industry, and properly addressing and respecting the environment.

According to FAES, the achievement of those objectives must also be supported by principles that are consistent with national targets. The energy policy must be in line with the economic policy, and be consistent with it. Those principles are:  a market energy policy; legal certainty, as a condition for an efficient action performed by economic agents, particularly on the subject of long-term investments; and regulatory authorities that exercise their supervisory role with excellence. They must be reliable and independent and provided with necessary resources.

Along with these principles, others like promoting competitiveness through an efficient allocation of resources; a long-term and clear international vision of the energy policy; and sustainability over time, having all the primary energy and all the technologies available.

ABSENCE OF DEBATE

A large group of first-level specialists has been working for nine months, gathered around several seminars and executive meetings, to write Propuestas para una estrategia energética nacional. As a starting point, the acknowledgement that energy debate in Spain has been non-existent for decades, and the little debated has been conditioned by ideological positions rather than by rationality. As a consequence, there has not been a proper national energy strategy taking our geo-strategic position, potentialities and the restrictions that we are facing into account.

Pedro Mielgo has stated during his address that “the quality in the discussion of issues of national interest, such as energy, is a good thermometer to measure a healthy society's civil health”. “Suffice to say that in OECD countries, the energy bill accounts for 4.5 and the 7.0 per cent of their GDP; also, in Spain we have one of the highest degrees of energy import dependence of the EU and the OECD. In addition, most of the current geo-strategic tensions are related to energy, and competitiveness of the companies depends, among others costs, on the cost of energy” he said.

The document also claims that the crisis that the Spanish economy is going through has triggered a demand for political realism and solid and viable and solid proposals, in the area of energy as well. The awareness that it is necessary to address reforms strictly and without prejudice is rapidly emerging. In this respect, Marín highlighted that with the publication of this report, “FAES fulfils once again the task of generating debates and providing ideas based on exactitude and the monitoring international trends, with the aim to improve the functioning of the Spanish society”.

STRENGTHS AND WEAKNESSES

The report starts reviewing the energy scenario worldwide, the geo-strategic, technological and regulatory changes and the three axes that serve as a benchmark: security of supply; competitiveness, economic growth and environmental protection. It then lists the strengths and weaknesses of the Spanish energy sector. The strengths, among others, are: having efficient and internationalised companies, succeeding in technological implementation and quality in basic logistics networks. And among the weaknesses: regulatory uncertainty and high final electricity prices as a result of additional costs.

Similarly, the report also identifies the technical-economic and strategic-political problems that plague the energy policy in Spain. At this point, the document takes into account the Spanish energy dependence; it considers that the degree of self-sufficiency amounts to 24 per cent at the end of 2011, in contrast with 54 per cent of the EU-27 average. Along with it, the report mentions a rapidly changing energy mix, which makes its operational management more expensive and complicated; the obligation to use domestic coal, which is expensive and low-quality; and market intervention and distorted prices.

Among the strategic and political constraints, it includes, once again, the lack of a national, global and strategic vision; an erratic and changing regulation; chaos in the process of supporting renewable energies and the unfinished liberalisation of the sector.

NEW ELEMENTS

Once the scenario has been described, the document moves to the analysis and diagnosis of the current situation of the Spanish energy sector, according to the different sources. Also, at this point, some of the new elements that have had an impact on it in the last two years, such as the increase of the electricity deficit, the higher final price of power, the transposition of the Third Directive on Gas and Electricity into national law, the impact of the crisis on energy demand,, and the new regulation model, are described; and those are just the most significant.

The report states that the dynamism of the energy sectors is evidenced in a multi-directional manner, and calls for taking those and other slowly-emerging changes into account when designing national and supranational strategies. The strategies and policies are not and cannot be static, but they must evolve in a manner consistent with the changes in the scenarios and factors involved.

In short, this new FAES report states that the energy policy must be consistent with the main national objectives; not only with the short-term ones but also and most of all, with the long-term objectives that try to define the future economic and political positioning of our country. One of its most genuine expressions is the long-term energy mix, which must be the guide and direction of the specific actions that develop the aforementioned policy.