A crisis such as the corona pandemic requires firm measures. The EU has released 723.8 billion to help the European economy out of the recession caused by the corona virus with the Corona Recovery Fund (Recovery and Resilience Facility; RRF). Member States submit a plan to the European Commission to claim a share of that large pocket of money. In the Decarbonizing Europe series, we put those plans under a magnifying glass.
The Portuguese recovery plan – ‘Recuperar Portugal, Construindo o futuro’ (Repair Portugal, build the future) – was the first plan to appear on the table of the European Commission. On June 16, 2021, the plan was given the green light: €13.9 billion in grants and €2.7 billion in loans will be released. The more than three-hundred-page plan by the Portuguese is designed around three pillars: economic, territorial and social resilience, the climate transition and the digital transition.
With almost half (45 percent) of the total budget, the focus is on investments that increase economic, territorial and social resilience. 16 percent is reserved for the digital transition and 38 percent of the total budget is allocated to the climate transition. A percentage with which the country barely meets the EU requirement of 37 percent.
In the recovery plan, the government focuses on investments in sustainable mobility and energy, hydrogen, the decarbonisation of industry and the energy efficiency of buildings. The measures contribute to CO2reduction of 55 percent by 2030, but it is not stated how much reduction the investments from the plan together should provide.
Climate action is an important topic in Portugal, both on a social and political level, explains Sofia Simões. Simões is head of the resource economics unit at The National Laboratory of Energy and Geology (LNEG). “We are vulnerable to climate change, we are already experiencing its effects. That makes it an urgent topic.”
In Portugal, the consequences of climate change are knocking on the door more and more. Also according to the recently published IPCC report, Portugal is among the European countries most vulnerable to climate change.
Portugal, for example, is struggling with an unprecedented drought: there has been virtually no rain since October. On February 15, the Portuguese Institute of Meteorology (IPMA) found that 90 percent of the territory was in severe or extreme drought. Simões sees that the consequences of climate change promote inequality. “I fear that the people living in rural areas will be hit the hardest. They get their income from agriculture, but our water supply is running out.”
The shortage of water is problematic for drinking water and agriculture, but Portugal also gets a large part of its sustainable energy from water. The country has about sixty hydroelectric power stations, which together produce thirty percent of the annual energy demand. Due to the ongoing drought, the government has had to temporarily close some of the power plants.
“I fear that the people living in rural areas will be hit the hardest. They get their income from agriculture, but our water supply is running out.”
Climate change is also causing the country to suffer from forest fires. The fires destroy entire ecosystems and lives. In the summer of 2017, a series of wildfires in central Portugal caused a disaster that left 64 dead and 204 injured. The problem is exacerbated by the fact that much of the land is privately owned, Simões explains. “Many of the owners live in the city and no longer look back at the piece of land they inherited from their grandparents. That makes it difficult to tackle the problem properly.”
“I’m afraid it will escalate,” the climate scientist continues. “We have the people in the city who drive electric cars and who are consciously working on climate change. And we have people who are suffering the effects of climate change in the rural areas. That inequality seems to be increasing. We have to pay attention to that.”
Portugal must allocate money to fight the impacts of climate change and make the country more resilient – measures not covered by the green transition, but under the resilience pillar of the recovery plan. For example, €615 million has been reserved for protecting forests against forest fires and €390 million for better water management.
In 2019, fossil fuels accounted for 75 percent of the primary energy supply. Portugal must import all fossil fuels and an important focus of climate policy is therefore on energy independence. By 2050, the government wants to be only 19% dependent on imports.
The country is making progress in increasing the share of renewable energy sources in the energy supply, especially for electricity. Thanks to hydropower and wind energy, 54 percent of electricity generation in Portugal was renewable in 2019. In the recovery plan, €370 million has been reserved for investments in green hydrogen and sustainable energy.
Energy efficiency, decarbonisation of industry and sustainable mobility
One sector that is pre-eminently dependent on energy imports is public transport. In 2019, 94 percent of the energy demand in this sector was met by oil. Sustainable mobility is therefore the largest component of investments in the climate transition at €967 million. Investments in the metro networks of Lisbon and Porto are the largest cost items.
At €715 million, decarbonising industry is the second cost item when it comes to climate investment. Despite this huge amount, the plan doesn’t get much more concrete than “investments aimed at decarbonising the industrial and business sector”.
The government is allocating €610 million to make buildings energy-efficient. Half of the budget is reserved for making private houses energy efficient, the rest of the amount goes to government buildings. An important topic, because Portugal scores high on the European Energy Poverty Index: 64 percent of households cannot keep their house warm in winter. To illustrate: in the Netherlands that percentage is seven percent. “The people with a higher income who turn on the heating are also a problem,” says Simões. “The buildings are so poorly insulated that a lot of electricity is needed to heat them up and keep them warm, which results in a high CO2-emissions.”
The focus of the recovery plan – however hard the consequences of climate change may be – is on investments that increase the social resilience of Portuguese society. For example, the country has to contend with a housing problem. More than twenty percent of the Portuguese with an average income complain about leaking roofs, little sunlight and mold in their houses. The largest pocket of money (€ 2,733 million) therefore goes to a reform of the housing system through a national housing plan. The aim of the reform is to develop legislation and regulations regarding housing, to realize social rental housing and student housing and to help 26,000 families with decent housing.
Photo: Solar power plant in Portugal. © Riccardo Totta
Here you can read all the other stories of our Decarbonizing Europe series.