European Commission officials asked Spain to explain both the methods and the timeline for winding down its fossil fuel subsidies. The 2030 plan known as the National Integrated Energy and Climate Plan (PNIEC) includes fossil fuels, and the Community Manager published an assessment this week detailing the evaluation of each member state’s plan with recommendations due by June 30, 2024.
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The dominant subsidy for fossil fuels in Spain takes the form of lower tax rates on diesel and gasoline. This reduced tax burden, observed in EU-wide monthly fuel reports by the National Markets and Competition Commission (CNMC), is viewed as a subsidy for these fuels. Diesel remains taxed at a level that is notably lower than gasoline, underscoring the gap in fiscal support for the two fuels.
In the PNIEC, subsidies are defined by the Ministry for Ecological Transition as exemptions or reductions in certain taxes granted to specific groups. This includes refunds of hydrocarbon taxes for diesel used in agriculture, animal husbandry, professional activities, and the transport of goods and passengers. It also covers diesel used in private or agricultural vehicles, heating purposes, as well as LPG, natural gas for occupational use in non-fuel or stationary engines, and oils used for non-fuel purposes.
The ministry, led by Teresa Ribera, has proposed tentative steps such as halting new permits for hydrocarbon exploration and exploitation while boosting renewable alternatives. The European Commission has called on Spain to provide more detail on how and when fossil fuel subsidies will be eliminated.
water management
Brussels also urges Spain to pay close attention to water management. Energy production faces risks from outages, floods, heat, and drought. Last year’s drought lowered hydraulic production to a historic low, pushing electricity prices higher as gas-fired plants became a more prominent alternative. The Commission requests an explicit plan to reduce energy consumption in public buildings and to set measurable, specific goals funded by clearly described financial resources. The plan should outline how energy poverty will be addressed and the concrete steps to achieve these targets.
Additionally, the commission asks Spain to specify how it intends to cut gas demand and to provide an internal assessment of the policies and measures to reach this goal by 2030. It also seeks details on biomass energy objectives and additional measures to promote sustainable biomethane production, given Spain’s biomass potential, gas consumption profile, and existing infrastructure. Sedigas has estimated a production potential up to 163 terawatt hours, potentially decarbonizing about 45 percent of domestic natural gas demand.
Further scrutiny is requested on the oil infrastructure, including refineries and reserves, to serve as a sub-target for reducing oil demand and shifting toward low-carbon alternatives. The plan should explain reforms and measures to mobilize private investment in transport, potentially totaling €250 billion, toward advanced biofuels and renewable fuels of non-biological origin.
tension as a group
The overarching aim of these national plans is to help the European Union meet its climate goals, targeting at least a 55 percent reduction in greenhouse gas emissions by 2030. Current projections show a reduction around 51 percent, according to the European Commission. The overall share of renewable energy in final energy stands at 39.3 percent, with a 42.5 percent target for energy efficiency. Spain is among the six countries pursuing a renewable target aligned with the EU approach, yet its efficiency target sits below the EU expectation of 11.7 percent, at about 7.37 percent.
The Vice President and Minister for Ecological Transition, Teresa Ribera, commented on the review during a press briefing with the Environment Council. She described these recommendations as a strong demonstration of how well some countries understand the weak spots in their energy policies.