VAT Cut and Cogeneration Measures in Spain’s Energy Package
In a move tied to the Greater Energy Security plan, a royal decree has been approved to reduce the value-added tax on natural gas from 21 percent to 5 percent, effective from October 1. Government estimates indicate this change could save families around 190 million euros by the end of the year. The decree is part of a broader package designed to stabilize energy costs and support domestic production while the market remains volatile. remarks and official briefing materials.
The General Assembly completed its voting on the proposal with a tally of 284 in favour, 0 against, and 64 abstentions. Within a separate vote, however, the draft law did not go into immediate effect, as 167 supported and 178 opposed, with 3 abstentions, reflecting a cautious approach from lawmakers about the timing and scope of the reforms. roll call data.
Teresa Ribera, the Third Vice-President and Minister for Ecological Transition, urged all parliamentary groups to approve the royal decree as a key element of energy security. In her address, she called for a united front and emphasized the importance of swift parliamentary consent to implement the plan. briefing and parliamentary records.
The minister highlighted cogeneration as a focal point in the policy package. This sector, which simultaneously produces heat and power, tends to be more efficient than separate heat and electricity production methods. The royal decree, approved by the Cabinet on September 20, allows cogeneration facilities to temporarily waive certain regulated charges and operate under the Iberian mechanism similarly to combined cycle plants in the electricity market. notice and regulatory overview.
Since October 1, 56 percent of installed cogeneration capacity has already benefited from the gas price cap, according to data provided by Ribera. While the energy crisis pushed many industries toward shutdowns, it also underscored the need for faster access to these protections for cogeneration facilities. policy data briefing.
Critics from various parliamentary groups argued that the government delayed granting access to the system for cogeneration, warning that further delay could jeopardize industrial stability during peak demand periods. The discussion reflected a broader debate over how quickly relief measures could translate into tangible cost reductions for consumers and industries alike. debate summaries.
One notable critique came from Guillermo Mariscal, the vice president of the Republican-leaning bloc, who urged his party to adjust expectations and push forward with the new cogeneration auctions and pricing, along with other related initiatives. The call underscored a demand for concrete implementation steps alongside policy announcements. statements.
VAT Reduction Details
Beyond cogeneration, the royal decree prioritizes lowering VAT on gas for all consumers, including neighboring communities, starting October 1. The measure aims to ease monthly energy bills during a challenging winter period and is framed as part of a broader strategy to cushion households from price fluctuations. policy brief.
In response, opposition voices urged the government to extend the relief and consider additional tax reductions, noting that winter conditions can last well beyond December. Proposals included cutting taxes on heating fuels, particularly those used in rural areas, to address regional disparities in energy affordability. statements and public hearing summaries.
Proponents argue the decree safeguards electricity sector stability and supports cogeneration, which they say will benefit a significant portion of the industry. The government’s plan also covers VAT reductions for products used in energy generation, such as chips, pellets, and firewood, reinforcing the affordability aims of the package. analysis and regulatory notes.