Angel Gurría, OECD Secretary-General

Launch of OECD 2015 Environmental Performance Review of Spain

 

Remarks by Angel Gurría, Secretary-General, OECD

 

2 March 2015

Madrid, Spain

(As prepared for delivery)

 

 

Madam Minister García Tejerina,

State Secretary Ramos de Armas,

Ladies and Gentlemen,

 

I am very pleased to join you today to launch the OECD Environmental Performance Review of Spain. This is the third Review of Spain: the first was published in 1997, and the second in 2004. The relatively long time that has elapsed since the last Review provides an opportunity to take stock of the results that Spain has achieved over the past decade to promote greener and more sustainable growth.

 

A decade of environmental progress despite the effects of the crisis

The ten years that have elapsed since the last environmental review have been noteworthy for the dire effects of the crisis in Span. Whilst signs of recovery have been noticeable since the second half of 2013 – offering opportunities to millions of unemployed people in their ongoing search for work and a dignified life – and much remains to be done in terms of consolidation, it is undeniable that the Spanish economy is showing clear signs of stabilisation, and we can say that we are optimistic for its future.

 

The significant battery of structural reforms is already bearing fruit, as evidenced by the recovery in activity. There has been an upturn in domestic demand and private consumption, and growth rates of around 2% are forecast for 2015. Additionally, job creation rose by 2.5%, meaning that the number of jobs increased by 443 000 between the last quarter of 2013 and the last quarter of 2014.

 

A key message that I want to share with you today is that Spain must take advantage of the recovery to promote more robust, more sustainable growth based on a more efficient economic model that is environmentally friendly. Indeed, significant steps are already being taken. Despite the economic turbulence of the past decade, Spain has made impressive progress in many aspects of its environmental performance:

  1. The carbon intensity and dependency of the economy has declined, mostly due to the increasing share of renewables in the country’s electricity generation and more stringent energy efficiency measures.
  2. Emissions of major air pollutants and air concentration of particulates have fallen significantly, although exposure to urban air pollution from ozone is still higher than the EU average.
  3. Despite pressures from the tourism and construction sectors, Spain has significantly expanded the protection of its stunning coastal and inland landscapes. The majority of bathing waters, important assets for tourism, are of excellent quality due to increased investment in wastewater treatment.

 

Key recommendations of the Review: environmentally related taxes, coastal areas and the industry sector

Overall, our Review concludes that the people of Spain are satisfied with the quality of their environment, and generally with good reason. Nevertheless, important challenges remain, and our task is to help you identify how to continue to improve so that our legacy to future generations will be a better Spain with a greater wealth of environmental assets and biodiversity.

 

The OECD Environmental Performance Review presents 28 recommendations to help address some of the main environmental challenges that Spain is facing. But allow me to highlight three issues that I think will be of particular interest to you.

These are:

  1. environmentally related taxes;
  2. biodiversity and the protection of coastal areas; and
  3. the environmental performance of the industry sector.

 

Taxation and environmentally related taxes

Regarding taxes: like other OECD member countries, energy products – particularly transport fuels – constitute the main base for environmental taxation in Spain. However, whilst revenues from environmentally related taxes have fallen steadily since 2007, the tax burden on labour has increased, suggesting that there are opportunities for a green tax reform.

 

Such a reform could generate environmental benefits but also additional revenues to help swell the public purse and alleviate fiscal pressure on job creation, especially with regard to low wages.

 

The “Lagares” report that was released last year provides a good basis for developing a green tax reform agenda. It proposed to simplify, consolidate and reform existing environmental taxes in order better to reflect environmental externalities. In this connection, the OECD recommends two areas for action:

  1. increasing the tax on diesel used in transport to at least the same level as that for gasoline to take into account diesel’s higher carbon content and its significant contribution to local air pollution, particularly from older vehicles (43% of passenger vehicles and 48% of trucks were over ten years old in 2012); and
  2. removal of fiscal measures and subsidies that are environmentally harmful and economically inefficient; such as those related to domestic coal production and coal-fired electricity generation; residential electricity tariffs; fuel for the mining and agriculture sectors; and maritime, air and rail transport.

 

We know that these are not easy measures to take; but they are necessary. Putting a high price on pollution is the best way of changing behaviour and incentivising a shift towards conduct that is consistent with the environmental cost of our activities.

 

Biodiversity and coastal areas

Regarding biodiversity: Spain is one of the world’s 25 biodiversity hotspots and hosts 30% of all endemic European species. However, this rich biodiversity has come under increasing threat, mainly from tourism, construction and transport infrastructure. Biodiversity in coastal areas has suffered particular ill-effects.

 

A number of measures were taken to address habitat fragmentation and loss of coastal biodiversity. These include the 2013 Law for the Protection and Sustainable Use of the Coast which strengthened the protection of the coast and addressed the legal and enforcement complexities of the previous system. This initiative was supported by a number of very welcome restoration projects.

 

Spain is truly a maritime country and, over many years, has contributed actively to international and regional initiatives to protect the marine environment. Marine protected areas have expanded and, by 2014, covered 8.4% of territorial waters, very close to the 10% target for marine protected areas. Let us hope it is achieved soon!

 

In the light of this legislative progress, it will be important for Spain to strengthen the role of economic analysis in setting biodiversity policy targets and to promote alternative sources of financing rather than the public purse. Greater efforts are also needed to mainstream biodiversity in sectoral policies and improve co-ordination across the various tiers of government. A notable achievement in this regard has been the rapid expansion of organic agriculture: Spain tops the EU rankings for the total surface of land under organic agricultural production (6.4% in 2012. We encourage Spain to pursue that course.

 

Industry sector

The final issue I would like to highlight today is the environmental performance of the industry sector. It has steadily improved over the past 15 years, partly because the sector represents a lower share of output and comprises relatively more small and medium-sized enterprises. Nevertheless, this sector is still a significant source of pollution, and pollution may increase as the economy recovers, particularly as the Government has the objective of increasing the share of the industry sector in the economy.

 

The environmental management of the industry sector is largely framed by EU Directives. Many EU members, including Spain, have had to take steps to simplify and streamline this unquestionably complex body of legislation to reduce both administrative costs and the costs of compliance. The important point to note here is that we must ensure that the notion of “simplifying” environmental regulatory requirements does not become an excuse to “tone them down”.

 

We would therefore encourage Spain to take new measures and streamline requirements whilst safeguarding the levels of environmental ambition and commitment. We at the OECD firmly believe that the Spanish industry sector has great potential as a result of better integration into global value chains based, in turn, on the country’s comparative advantages. Let us ensure nonetheless that full use of this opportunity is made to boost truly green industrial growth.

 

Spain has made significant progress in its environmental performance over the past decade. Despite the crisis, the country has taken firm steps forward in its efforts to protect biodiversity and rich ecosystems. We hope the analysis and recommendations set out in this report are useful to you as you continue to improve and take advantage of current circumstances. Indeed, the recovery offers opportunities to beef up and simplify environmental regulations that can lay the foundations for more robust, more inclusive and greener growth.

 

The year 2015 will be key for consolidating the recovery. It will also be a key year for environmental policies worldwide because of the COP21 meeting in Paris, an event for which the OECD is working closely with the French Government and the United Nations.

 

You can count on us. The OECD has been working with Spain for some time to facilitate the transition “from brick to brains”. It goes without saying that the brains have to be green because there will be no viable future unless we make environmental policy and sustainability the core of our concerns and set out to design, promote and implement better environmental policies for better lives.

 

Thank you very much.

 

 

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