Climate change is a real threat to Portugal’s economy

It is necessary to take decisive action in a crisis like the corona epidemic. The EU has released €723.8 billion In an effort to use Recovery and Resilience Facility, (RRF), to pull the European economy from the recession caused by corona. Each member state must submit a plan for the European Commission in order to be eligible to receive a portion of this large amount of money. We examined those plans in the series Decarbonizing Europe.

The Portuguese recovery plan – ‘Recuperar Portugal, Construindo o futuro’ (Restoring Portugal, building on a future) – was the first plan that appeared before the European Commission. On 16 June 2021, the plan was given the green light: €13.9 billion in subsidies and €2.7 billion in loans will be released. The Portuguese plan has more than 300 pages and is built around three pillars. The climate transition is a catalyst for economic, social and territorial resilience. The digital transition.

The focus is on investments that increase social, economic, and territorial resilience. This accounts for nearly half (45%) the budget. The digital transition is another 16 percent. 38 percentThe climate transition is covered by a third of the total budget. This is a small percentage that barely meets the EU 37 percent standard.

Climate transition

The government’s recovery plan focuses on investments in sustainable mobility, energy, hydrogen, decarbonization, and energy efficiency of buildings. These measures should contribute to 55 percent of the required CO.₂Emissions reduction by 2030, but not the total amount.₂These particular investments should yield.

Climate is an important issue in Portugal, both on a social and political level, Sofia Simões states. Simões is head of the resource economics unit at LNEG: the National Laboratory of Energy and Geology. “We are vulnerable to climate change, we are already experiencing its effects. That makes it an urgent issue.”

Inequality

Portugal is seeing the effects of climate change worsening. The newly published IPCC-rapportPortugal is one of the most at-risk European countries from climate change.

The country is experiencing unprecedented drought, it almost hasn’t brained since October. The country is experiencing unprecedented drought, almost without brain since October. Portuguese Institute of Meteorology (IPMA) Ninety percentThe majority of the territory was in severe or extreme drought. Simões sees that the effects of climate change are creating inequality. “I’m afraid that people who live in rural areas will be the ones to suffer most. They derive their income from agriculture, but our water supply is running out.”

Portugal has a lot of renewable energy, even though water scarcity is a problem for agriculture and drinking water. The country boasts sixty hydropower stations, which together produce approximately 60 million kWh. 30 percentIts annual energy demand. Some of these plants had to be temporarily shut down because of the drought.

“I’m afraid that people who live in rural areas will be the ones to suffer most. They derive their income from agriculture, but our water supply is running out.”

Sofia Simões

Forest fires

Forest fires are another problem that is being caused by climate change. These fires can destroy entire ecosystems and even lives. A series of forest fires that erupted in central Portugal in the summer 2017 caused a catastrophe that left behind 64 killed and 204 hurt. The problem is aggravated by the fact that much of the land is privately owned, Simões explains. “Many of the owners live in the city and no longer take the time to have a good look at the piece of land that they inherited from their grandparents. That makes it difficult to address the problem properly.”

“I’m afraid it’s going to escalate,” the climate scientist continues. “We have people in the city who drive electric cars and are conscious about climate change. Then there are the rural people who are most affected by climate change. This disparity seems to be growing. We need to be mindful of that.”

Energy-dependent

Portugal needs to free up money to fight the effects of climate change and make the country more resilient – measures that do not directly fall under the green transition aspect but rather that of the resilience dimension of the recovery plan. For example, €615 million has been set aside to protect forests from fires, and €390 million is reserved for better water management.

In 2019, fossil fuels were accounted for 75 percentof the primary energy supply. Portugal must import all its fossil fuels. This makes energy independence a major focus in climate policy. The government wants to be less dependent on imports by 2050.

The country is making great strides in increasing the use of renewable energy sources for its energy supply, particularly electricity. Thanks to hydropower, wind power 54% of Portugal’s electricity generationIn 2019, renewable energy was available. The recovery plan has earmarked €370 million for investments in green hydrogen and renewable energy.

Energy efficiency, industry decarbonization and sustainable mobility

The public transport sector is one of the most dependent on energy imports. In 2019, 94 percentOil covered the majority of the sector’s energy needs. Sustainable mobility is, therefore, the largest component of the investment in the climate transition at a sum of €967 million. The largest cost drivers are the Lisbon and Porto Metro Networks investments.

With €715 million, decarbonizing the industry is the second-largest cost item where climate investment is concerned. The plan is not more specific than this, despite the huge sum. “investments aimed at decarbonizing the industrial and business sectors.”

The government is allocating €610 million for making buildings energy efficient. Half of this budget will be used to make private homes more energy efficient. The rest will go to government buildings. This topic is important because Portugal ranks high on the European Energy Poverty Index. 64 percentMost households can’t keep their homes warm in winter. This is why the Netherlands has a seven percent figure. “The people with higher incomes 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 make and keep them warm which in turn causes high CO₂ emissions.”

Social resilience

The focus of the recovery plan – no matter how hard climate change impacts are knocking on the door – is on investments that increase the social resilience of Portuguese society. The country is facing a housing crisis. More than 20 percentPortuguese with an average income complain about their roofs, homes that don’t get enough sunlight, and mold. As a result, the largest bag of money (€2,733 million) is going towards reforming the housing system through a national housing plan. The reforms aim to create a law around housing, create social rental housing, student accommodation, and help 26,000 people find decent homes.

All other stories from the Decarbonizing Europe series are available here Here.