According to a McKinsey Report, possessing natural endowments and mature industrial infrastructure, Spain and Portugal have an unprecedented opportunity to lead the energy transition and create significant value for the region.
For a number of decades, Europe has been on a steady deindustrialization trajectory following the emergence of new, low-cost manufacturing centers, predominantly in Asia. Both Spain and Portugal have borne the cost of a marked decline in their industrial output. Since 2004, European industry has lost 3 percent of its gross value added (GVA), while Spain’s industry GVA has decreased 20 percent during that time.
In parallel, the world is increasingly feeling the effects of climate change. There is now a broad and growing global consensus on the need for urgent, concerted action to mitigate the negative effects of economic activity on the planet. Governments and companies have committed to ambitious climate goals, including the landmark Paris Agreement, which aims to limit warming to 1.5ºC above preindustrial levels. A crucial step in meeting these goals is the transition away from fossil fuels toward a net-zero energy system.
This urgent imperative for decarbonization could be a significant opportunity for the Iberian region. Spain and Portugal’s unique geographic endowments—including ample opportunities for cost-effective renewable energy production and significant raw materials—as well as their mature industrial base, mean they are well placed to capture the “green growth” that the energy transition can deliver.
However, the window for action is closing in the fast-moving global energy landscape. Iberia is at an inflection point and currently has the chance to become a strong industrial player through the energy transition, and also to emerge as a key energy exporter in Europe. Spain and Portugal may need to take swift action to seize this opportunity.
For a number of decades, Europe has been on a steady deindustrialization trajectory following the emergence of new, low-cost manufacturing centers, predominantly in Asia. Both Spain and Portugal have borne the cost of a marked decline in their industrial output. Since 2004, European industry has lost 3 percent of its gross value added (GVA), while Spain’s industry GVA has decreased 20 percent during that time.
In parallel, the world is increasingly feeling the effects of climate change. There is now a broad and growing global consensus on the need for urgent, concerted action to mitigate the negative effects of economic activity on the planet. Governments and companies have committed to ambitious climate goals, including the landmark Paris Agreement, which aims to limit warming to 1.5ºC above preindustrial levels. A crucial step in meeting these goals is the transition away from fossil fuels toward a net-zero energy system.
This urgent imperative for decarbonization could be a significant opportunity for the Iberian region. Spain and Portugal’s unique geographic endowments—including ample opportunities for cost-effective renewable energy production and significant raw materials—as well as their mature industrial base, mean they are well placed to capture the “green growth” that the energy transition can deliver.
However, the window for action is closing in the fast-moving global energy landscape. Iberia is at an inflection point and currently has the chance to become a strong industrial player through the energy transition, and also to emerge as a key energy exporter in Europe. Spain and Portugal may need to take swift action to seize this opportunity.