For RI’s recent country snapshot on Spain, please click here.
The day Responsible Investor talks to Teresa Ribera, Spain’s Ecological Transition Minister, news emerged about the latest defeat of Spain at the International Centre for Settlement of Investment Disputes.
NextEra Energy (the US renewables firm with shareholders such as BlackRock, Vanguard, State Street and Norway’s global sovereign fund) has won the largest arbitration award of the long list of investor-state disputes cases registered against Spain (leading the tally with 42 cases).
Litigation under the Energy Charter started when the previous government withdrew incentives for renewable energy that had enticed investors to harness Spain’s potential.
Ribera was appointed by the new government in June 2018 to lead a ministry that merged energy and environment policies under one department. The Socialist party had just taken over from the Conservative government after a parliamentary vote of no-confidence ousted former Prime Minister Mariano Rajoy.
Ribera had been the Executive Director of the Institute for Sustainable Development and International Relations (IDDRI), the Paris-based think tank founded by France’s Climate Change Ambassador and Special Representative for COP21 Laurence Tubiana.
During her French stint Ribera is credited with having played a key role in IDDRI’s negotiation of the Paris Agreement. And prior to that she served as Secretary of State for Climate Change under a previous Socialist government, from 2008 to 2011.
When RI talks to Ribera, media outlets are also reporting on the student-led climate strikes called for the following day.
Interestingly, a search of the RI archive will show that, in 2013, Ribera was an advisory council member of the UK’s ‘Push Your Parents Campaign’, in some ways a forerunner of the current student movement.
This initiative of Oxford students was advised by SRI professionals and encouraged students to get their parents to write to their pension funds to demand action on climate change.
Once in office, one of Ribera’s flagship projects has been to conclude the Spanish Climate Change Act, which the previous government said was on its way for about two years but nothing came of it.
Under Ribera’s tenure the Bill was first expected by the end of last summer, then pushed back to the COP24 UN climate talks in November, then delayed further to the end of 2018.
Finally, last February, the Ministry issued the long-awaited consultation (which is open until March 22) in the form of a “Strategic Framework”.
It encompasses not only a Climate Change and Energy Transition Bill but also drafts of a Just Transition Strategy and an Integrated National Energy and Climate Plan for 2021-2030 (the latter being a requirement for member states of EU Regulation 2018/1999 on the Governance of the Energy Union and Climate Action).Ribera says: “To be honest, I was very optimistic and thought we could have it ready very soon, but we wanted to offer a serious proposal that addresses the big picture. We came to the conclusion that it was better to wait and unveil the three documents at once.”
Meanwhile, however, the government called a snap election for April 28 after failed attempts to pass its budget. With parliament already dissolved, Spain’s Climate Change Bill will be voted on by the next legislature.
“We wanted to offer a serious proposal that addresses the big picture.”
This should not be a reason to shelve the project, according to Ribera.
“This consultation presents a comprehensive institutional framework which sends the first regulatory signals to integrate the climate question into the action of not only government but also the finance and corporate sectors,” she says.
The bill sets national GHG reduction targets of at least 20% by 2030 (with 70% of renewable-sourced electricity generation by then) and at least 90% by 2050.
The success of the framework requires investments worth €236bn by 2030, of which only 20% would come from public finances. As such the importance of providing investors with legal certainty and reliable policies is stressed in the consultation.
“In Spain we have faced a crisis of confidence from investors on the back of the renewables. We need to regain their trust. This is urgent, the scale of the change we are proposing requires funding.”
Green sovereign bonds have also made it into the framework, although the mention is only made indirectly in an introductory memorandum.
Ribera says: “We believe, and I echo the Finance Ministry here, that it would be convenient to start issuing regularly green sovereign debt. Green sovereign bonds are more and more attractive in capital markets and its issuance would convey a powerful message.”
The bill aligns with the EU’s Sustainable Finance Action Plan and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Spanish equivalent of France’s ‘Article 173’ climate reporting law has been kept with key market players required to disclose climate-financial risk, and supervisors to oversee it accordingly.
Ribera is running for congress in her constituency of Madrid, as number four in a ballot led by the Prime Minister and the Deputy Prime Minister. That means she will get a seat in Parliament.
But what about the future of the Bill? As if Ribera was warming up for the campaign trail, she says:
“We’ve built enough consensus around our proposals. But there is a huge difference between a government that firmly believes in this agenda and another one which has been fearful of progress.”
She adds: “I’m optimistic. We are winning this election and [Responsible Investor] will continue this interview once we form government.”