The outcome of Spain’s upcoming snap federal elections in late July will become a key driver of the European Union’s climate and energy agenda now that Madrid has assumed the rotating leadership of the Council of the EU, a crucial institution of the 27-member bloc. The incumbent liberal and ecologically-focused Spanish government led by prime minister Pedro Sanchez aims to push for stronger renewables and fossil-free energy adoption and advance the European Green Deal. However, if he loses his bid for re-election, a more EU-sceptic government coalition with less ambition on climate policy will take over. Crucially, Spain holds the last complete six-month presidency before the 2024 EU elections, which increases the pressure to bring important energy and climate legislation to a close before the end of this year as well as to maintain European democratic institutions. Temporarily based in Madrid, lead blogger and podcaster Michael Buchsbaum reviews some of what’s at stake.

Looming reversal of green transition

Following big gains by right-wing and far-right parties in local and regional elections in May 2023, incumbent prime minister Pedro Sanchez, who heads a leftist coalition government, took what many see as a risky decision to bring forward the general elections slated for December to July 23.

His opposition, made up of a right-wing coalition between the conservative People’s Party (PP) and far-right Vox parties have signalled an intent to create major changes both at home and throughout the EU.

Situated on the south-western Iberian Peninsula, Spain has among Europe’s best conditions for solar and wind power production.

Sanchez’ government has just presented a new draft climate plan, including a higher 2030 emissions reduction target and increased renewables expansion.

With a target of 39 gigawatts (GW) of installed photovoltaic (PV) capacity by the end of the decade, under the tenure of Teresa Ribera Rodríguez, Minister for Ecological Transition and Demographic Challenge, Spain is already on track to reach 49 GW by 2025.

Given this upward trajectory, Madrid has upwardly revised its target for renewable energy’s share in electricity production from 73 percent to 81 percent.

To reach these objectives, the current government plans to double wind energy generation, quadruple solar energy generation, and evolve into a continental leader in renewable hydrogen—with plans for the construction of a hydrogen pipeline between Spain and France as it seeks to become the continent’s green hydrogen hub.

However, if the right-wing coalition government does come to power, it likely will drastically change Spain’s green energy policies, particularly around the on-going nuclear phase out.

’It will be a policy of my government to reverse the planned decommissioning and extend the life of our nuclear power plants’, PP leader Alberto Núñez Feijóo said recently.

Generating about a fifth of the country’s electricity, media reports say members of Feijóo’s team have already held talks with the nuclear sector.

Experts and industry players say the price to keep nuclear plants running could be over €4 billion over two decades.

Additionally, all this solar energy flooding the market can result in the price of electricity going negative. The more this happens, the less profits the sector is realizing – which could lead to reduced investments.

The continued reliance on Chinese components plus a lack of adequate storage remain major obstacles for the Spanish solar transition.

A victory for the right will likely exacerbate these structural constraints. Feijóo has promised to throttle back green investments and re-introduce a tax on renewable energy, threatening to ignite a wave of solar bankruptcies.

Holding the EU presidency

With the presidency of the Council of the European Union rotating among EU Member States every six months, it is not only responsible for setting policy priorities and planning and chairing meetings among ministers but it must also try and reach agreement on laws with the EU’s other legislative bodies – the Parliament and the Commission.

‘We will promote a reform of the electricity market aimed at accelerating the deployment of renewable energies, the reduction of electricity prices and the improvement of the system’s stability’, the government wrote. ‘We will work to accelerate the legislative files related to Fit for 55, such as the gas and hydrogen package, and the energy efficiency regulations’.

On reindustrialising the EU, prime minister Sanchez said that if the bloc ‘gets things right in this decade, it could become a benchmark in the production of renewable energy, electrolysers, digital connectivity services, advanced robotics, biofertilisers and cutting-edge pharmaceutical products’.

Regarding energy and climate, this includes several files that are part of the European Green Deal, such as the controversial Nature Restoration Law, the Critical Raw Materials Act, which is part of the Green Deal Industrial Plan – a key element of Europe’s reply to green tech support under the U.S. Inflation Reduction Act, and intended to enhance the competitiveness of Europe’s industry on the path to net-zero greenhouse gas emissions.

The new Presidency ‘will promote those dossiers which foster the development of strategic industries and technologies in Europe’, stating that they will pay ‘special attention’ to the Critical Raw Materials Act (CRM), and the Ecodesign Regulation and the Net-Zero Industry Act (NZIA).

The NZIA contains the European Commission’s Carbon Capture and Storage (CCS) ambitious storage injection capacity target of 50 Mt per year, which must be developed by oil and gas producers within the EU by 2030.

Spain is also championing the reform of the EU’s electricity market, something already bogged down in previous debates.

The European Commission’s proposed reform, tabled in mid-March, seeks to avoid a repeat of last year’s energy crisis when record-high gas prices (which directly led to record oil and gas industry profits) pushed up the costs of electricity, leaving consumers with soaring energy bills.

When the Energy Council met in June, ministers tripped over two issues: coal power subsidies and financing for the lifetime extension of existing nuclear plants.

The coal subsidy issue is now in Spain’s in-tray as are issues around nuclear power.

The French, for their part, are adamant that financing is necessary to underwrite the lifetime extension of its nuclear fleet.

The EU has to deliver effective and ambitious climate diplomacy at the upcoming UN climate change conference COP28 in the United Arab Emirates (UAE), where Spain would lead and coordinate the EU’s negotiation team and push back against the petro-state’s fossil-fuel friendly agenda.

With polls tightening between liberal and conservative candidates and parties, experts say the election’s outcome should not have a major impact on Spain’s presidency programme stating that the elections and the drawn-out coalition talks which will follow will likely divert focus away from the EU.

Though EU leaders voice confidence in the strength of Spanish government institutions, these views are not shared by the right-wing candidates leading in the polls.

For those wanting to go deeper, journalist Sarah Padovan has put together an excellent overview of key issues on Spain’s presidency policy agenda for Politico. The outlet has also released a very insightful podcast featuring interviews with Ecological Transition Minister Ribera and First Vice President Nadia Calviño.

Readers can also find more about Spain detailed presidency programme here.

The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.