The draft of the General State Budget (PGE) for the year 2022 presented by the Spanish Government to the Congress on October 13, 2021,  includes a series of allocations oriented towards energy and industrial policy.

According to the government’s public statement, concerning this policy, the Executive proposes to allocate resources worth 11,316 million euros, of which 5,477 million come from the European Funds of the Recovery and Resilience Facility (RRF), while the rest, 5,839 million, come from the national budget.

However, only a portion of these total resources is related, either directly or indirectly, to the energy management of the industry. The projects and programs associated with this purpose depend on both the Ministry of Industry, Commerce, and Tourism (MICYT) and the Ministry for the Ecological Transition and Demographic Challenge (MITECO), and they are mainly included in the expenditure policy No. 42 (Industry and Energy), although there are also some in policy No. 46 (Research, development, innovation, and digitalization).

This report is an interpretation carried out by FIE with the aim of providing a comprehensive view on the issue based on publicly available data.

To specify an approximate figure for the portion of these 11,316 million euros that would be explicitly allocated to the energy management of the industry, in this report, we have identified three types of resources:

1. Direct Resources: those that have a direct relationship with this specific management.
2. Cross-cutting Resources: those that, although not solely focused on the energy management of the industry, can be considered cross-cutting.
3. Undefined Resources: those that have an indirect relationship, or whose allocation for energy management of the industry is not clearly defined.

These are resources that represent a direct investment for the industry and its energy management, either through transfers (e.g., grants or non-repayable aid) or through financial assets (loans). This includes, for example, programs for cost compensation of carbon emissions.

We consider cross-cutting resources to be those that, although not exclusively focused on industrial energy management, may involve the allocation of a portion for this purpose. This includes programs like the ‘Support Line for Strategic Projects for Industrial Transition-PERTE,’ which refers to innovative projects “involving a real transformation of the industry in terms of energy efficiency, sustainability, and digital transformation.” It also includes projects deemed essential for the development of industrial energy management , even if they can also be applied to other areas. For example, projects like the Hydrogen Roadmap and its sectoral integration

These are resources in which, although they may be related to energy management, it is not possible to allocate to the industrial sector either the entirety or a portion of them. This includes a significant portion of the Institute for Energy Diversification and Saving (IDAE) projects aimed at “societies, public and business entities, foundations, and the rest of the public sector.” For example, the State Budget plans to allocate 435 million euros to the “Development of Innovative Renewable Energies integrated into buildings and production processes,” which only affects publicly-owned entities, among which there are marginal industrial participations (part of the State-owned Industrial Holdings Company, or SEPI + some autonomous communities).

For the preparation of this report, we have exclusively considered direct and cross-cutting resources. The undefined resources are not included in the total figure, although a table of these is included at the end of the report.

Applying the criteria defined in the methodology, it can be established that 30.9% of the total resources allocated to Energy and Industrial Policy have a direct or indirect relationship with industrial energy management. This amounts to 3,499.15 million euros, with 1,295.3 million euros (37%) in financial assets, meaning loans, and 2,203.8 million euros (63%) in capital transfers, meaning grants.

Regarding the origin of these resources, the majority come from the Recovery and Resilience Facility (RRF). At least 3,149.7 million euros, almost 90%, originate from this European project. Therefore, this policy does not stem from an increase in current spending but is drawn from the Capital Transfers Chapter.

By ministries, the total distribution of these resources is 2,923.7 million euros for the Ministry of Industry, Commerce, and Tourism (MICYT) and 590.45 million euros for the Ministry for the Ecological Transition and Demographic Challenge (MITECO).

An initial analysis of the key figures in the draft of the 2022 State Budget reveals that the budget item most directly related to energy management in the industry is the sum of 270 million euros allocated to the program for compensating indirect costs resulting from the implementation of the Emissions Trading System (179 million euros) and the Program for compensating electro-intensive consumers for costs related to the financing of renewables, high-efficiency cogeneration, and costs in island and extra-peninsular areas (91 million euros). These aids, according to the State Budget, will benefit 170 and 316 private companies, respectively.

Also directly linked to the energy management of the industry is the ‘Program to support innovation and sustainability plans.’ According to the State Budget, the General Secretariat of Industry and SMEs, within the industrial policy proposed by the European Commission and its Industrial Investment Support Framework, promotes financial support for the manufacturing industry, specifically for process,  organizational innovation, and demonstrator projects. The strategic goal is for the industrial company to incorporate innovation as a continuous process within its normal operations by executing avant-garde projects that can lead to new processes and products in the short term, supporting the transformations currently undertaken by the industry through the incorporation of new equipment that bring technological improvements to industrial processes and advance toward the sustainability of industrial production.

Specifically, in this program, the draft budget foresees an investment of financial resources (loans) amounting to 23.6 million euros for circular economy and eco-innovation projects applied in value chains, as well as 35.4 million euros for decarbonization, energy efficiency, and new energy sources projects.^[1]

The sum of both budget items will amount to 329 millon euros, which accounts for 10.3% of the total resources allocated to Energy and Industrial Policy, all of which are under the purview of the Ministry of Industry, Commerce, and Tourism (MICYT). The details of these items can be found in Table 2.

[1] These allocations represent 20% and 30%, respectively, of a total of 118 million euros.

Some of the items included in the budgets share objectives and are not solely focused on industrial energy management. For example, the draft allocates a total of 2,594.7 million euros to a support line for Strategic Projects for Economic Recovery and Transformation (PERTE), mobilized in 210 innovative projects ‘involving a real transformation of the industry in terms of energy efficiency, sustainability, and digital transformation.’ Although it is not specified what portion of these resources will be specifically allocated to energy efficiency, these aids can be considered cross-cutting in nature. Therefore, we include them in this report as another part of the resources allocated to industrial energy management.

The relevance of this budget item, called ‘Support Line for Strategic Projects for Industrial Transition-PERTE,’ is crucial for the analysis, as it constitutes 74% of the resources allocated to industrial energy management. These resources come entirely from the European Recovery and Resilience Facility funds and are distributed almost equally between transfers (subsidies) and financial resources (loans). (Table 3)

The remaining items related to industrial energy management  are under the purview of the Ministry for the Ecological Transition and Demographic Challenge (MITECO) and are focused on resources managed by the Institute for Energy Diversification and Saving (IDAE). They consist of transfers and loans amounting to 590.45 million euros, almost all of which are transfers.

The main item is the program ‘Renewable Hydrogen: A National Project,’ which is financed with European Recovery and Resilience Facility funds and amounts to 555 million euros, constituting 17.5% of the total resources allocated to Energy and Industrial Policy.

* 1,326.4 allocated to private companies
** 1,213.2 allocated outside the public sector

• The programs in the 2022 General State Budget (PGE) directly allocated to industrial energy management represent 10.3% of the total planned investment in Energy and Industrial Policy in the State Budget Draft. These programs include initiatives to offset costs such as CO2 emissions and support from the Secretary General of Industry and SMEs for specific innovation and sustainability plans. In the latter case, it involves financial resources, namely loans.

• However, there are other programs, mostly funded by European funds from the Recovery and Resilience Facility (RRF), which, while not exclusively targeted at industrial energy management, play a significant role in this area. The resources for these programs are focussed on two main areas: support for Strategic Projects for Industrial Transition (PERTE) and “Renewable Hydrogen: A National Project” by IDAE. Together, they represent nearly 90% of the resources.

• The absence of specific allocations for new technologies outside the field of green hydrogen and the lack of a section for the development of other technologies present in the Spanish power mix may pose a problem for future innovation and research.

• The resources allocated by the Ministry of Science and Innovation (MICYT) are significantly higher than those allocated by the Ministry for the Ecological Transition and the Demographic Challenge (MITECO) – 83.5% versus 16.5%. While this situation may seem logical and can be justified by the importance of PERTE, which accounts for almost a third of the resources, there is a need for more specific projects from MITECO in the field of industrial energy management, beyond cross-cutting projects like the aforementioned one on renewable hydrogen.