Covid-19: Spain gears up to convince EU it can spend recovery funds wisely – business news

Spain may be about to access as much as 140 billion euros ($158 billion) if the European Union can agree on proposals to finance the bloc’s economic reconstruction next month and the government in Madrid is determined to show it can make the most of the windfall.

The government already has detailed plans to shift toward a greener economic model and ease its reliance on outdated manufacturing sectors like gas- and diesel-powered autos, and the recovery fund is a chance to accelerate that transformation, according Deputy Prime Minister Teresa Ribera, who’s responsible for the economic and environmental transition.

“It’s not just that we have projects,” Ribera said in an interview at her office in Madrid last week. “The focus of this recovery is green and digital, and that fits well with the economic agenda that the government had been working on for a long time.”

Premier Pedro Sanchez will meet his fellow EU leaders in July as they look to nail down details of a giant stimulus package that will help the region’s economy recover from the devastating consequences of the coronavirus lockdown.

Jobs, Growth

Spain has been among the worst hit countries in Europe, with its economy expected to shrink by 12.4% this year and unemployment forecast to surpass 18%. The nation wants to spend the European funds in projects that can boost jobs and economic growth while cutting greenhouse gas emissions, in line with the EU target of turning the recovery into a tool to fight climate change.

“If Spain is going to have access to such significant resources, then it makes sense that our partners look line by line at how we’ll spend it,” Ribera said. “We’ll use our national plan on energy and climate as an investor guide.”

Since returning to government when Sanchez took office in 2018, Ribera has been working on plans to upgrade virtually every sector of the economy from energy and manufacturing to tourism and construction to reduce their impact on the environment and their contribution to climate change.

“These packages were designed to be applied very slowly,” Ribera said. “Then this imploded and suddenly, unexpectedly, you have the opportunity to bring it all forward.”

The government’s climate bill, which went to parliament in May, outlines the path for the country to become carbon neutral by 2050. Spain aims to reduce its greenhouse gas emissions to 20% below 1990 levels in 2030. To do that, it wants to boost the presence of renewable energy on its grid to 74% in 2030, and to 100% before 2050. Last week, it approved a decree to streamline the approval of new projects.

Youth Unemployment

In a separate bill presented in early June, the government proposed to ban the sale of single-use plastics from mid-2021 and to bar the free distribution of items such as plastic cutlery, straws, cups and cosmetics containing microplastics by 2023.

Next in line will be old industries and water management. The country’s giant tourism industry, which attracted over 83 million tourists last year and is among the hardest hit sectors, will also need a revamp, Ribera said.

“Tourism is not just renovating a hotel facade,” she said. “It is about regenerating the environment and guaranteeing mobility that’s low in emissions.”

The government wants programs to have a social focus to make sure the green transition leaves no one behind, Ribera said, wary of the Yellow Vest backlash in France that saw older people protesting against President Emmanuel Macron. Refurbishment of old buildings and urban areas to improve energy efficiency and sustainability must happen in poor neighborhoods first, and the recovery needs to deal with Spain’s youth unemployment, which is one of the euro area’s highest at 33%.

“When young people see degradation in the oceans, water shortages, struggling industrial and employment models and other global risks that could have been anticipated and haven’t, that leads to disengagement,” Ribera said. “I don’t want young people to become Yellow Vests.”

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