An EU Just Transition case study: Spain

14 September 2023 


As the Just Transition Mechanism (JTM) begins to kick in across Europe to assist Member States in transitioning away from environmentally destructive practices, we look at an example of EU climate assistance in practice. Spain is set to receive €869 million from the Just Transition Fund (JTF) to help build a carbon-neutral economy that is inclusive, resilient and protects livelihoods. 

The problem

Spain’s renewable energy transition is changing the country in multiple ways. As a country once heavily reliant on coal mining, particularly in Asturias, the switch to cleaner energy production raises questions about how Spain’s local economies will adapt to survive.

The current context of transitional economics has caused negative externalities that were perhaps unforeseen. 

The growth of renewable energy production has caused discontent in rural areas. Locals in rural areas often feel they take the environmental and economic burden for climate change, whilst the benefits are reaped in the more populous and often more economically resilient cities. An example of this discontent is ‘Teruel Existe’ (‘Teruel exists’), which became a political party in 2019. Their goals are based on changing how the renewable energy economy affects rural areas like Teruel. They argue for a change to circular economy principles, rather than constant economic growth that serves major cities whilst rural regions suffer from slow population growth and lack of economic opportunities. 

The decline of coal is also problematic for the national Spanish economy. Once a key employer in Spain, employment in the coal mining sector went from more than 100,000 in the 1960s to 45,000 in 1990, 3,400 in 2012, and 1,700 in 2017. By the end of 2018, a deal was reached for most coal mines to be shut down, leaving less than 300 jobs in the industry by 2023. This has had economic, cultural and social consequences for regions across Spain, which need addressing. 

EU funding: how much and where is it going 

The Just Transition Mechanism’s contribution to Spain will protect jobs, create new green jobs and build a climate-resilient economy. The funds will run until 2027 and will support territories in the regions of Andalusia, Aragon, Asturias, Castile and Leon, Galicia and the Balearic Islands. These areas have been the most affected by the phasing out of coal. 

The government is now cracking down on the coal industry, with wind and solar plants the new favoured forms of power generation. Roughly a third of the funding will go to the Asturias region, a former powerhouse in coal production, where only one coal mine remains. 

The funds will also help Spain continue investing in clean energy, build renewable energy sources, build economic diversification, supporting those living in ‘left-behind’ areas that may suffer the worst consequences of economic transition. Projects that the EU claims the Fund will finance include:

  • A hub for technological innovation in offshore renewable energy and energy storage in A Coruña
  • Renovation of public buildings in León to improve their efficiency
  • Support for SMEs in the agri-food industry in Córdoba, especially in areas affected by the closure of coal plants in the Guadiato Valley district
  • A project using microalgae to produce renewable fuels in Cádiz
  • Smart energy systems, coworking centres, and rural and entrepreneurial workshops for women in Teruel, as well as the rehabilitation of mining and industrial heritage sites for cultural activities
  • In the Alcudia Just Transition Zone, as part of the Alcudia Tech Mar project, the rehabilitation of land at the old thermal power plant will be financed, as well as a heat network, green hydrogen installations and renewable energy for self-consumption. 
  • Apprenticeships for people between 18 and 29 years, aimed at creating green jobs and challenging Spain’s unemployment problem
  • An innovation hub for artificial intelligence in a former mining site in Asturias

Is it working?

Despite the EU discourse on its climate action measures, JTM contributions have yet to be universally perceived as beneficial to societies in Spain. Despite significant investments, there are claims that the funds are not necessarily financing the right projects and that local communities and groups consulted on efforts to monitor the performance of Just Transition projects, as was initially planned. With workers in dying industries being some of the most vulnerable in the transitional period, consulting the unions representing their interests is crucial, particularly in regions such as Asturias, where the unemployment rate stood at 14.39% in the last quarter of 2022.

Although progress may be slow in some of Spain’s struggling regions, it is clear that the JTF offers Spain and other EU Member States a far better chance of building climate resilience. JTF funding for innovation and research projects, green infrastructure and renewable energy storage facilities will be crucial for sustainable development. Moving forward, vast changes are needed at all levels of society to facilitate the green transition, including at State level and in the private sphere. The EU’s latest ESG framework developments will provide a necessary partner to JTF investment in Spain, assisting the private sector in a country with a fragmented and complicated ESG landscape

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