UNO May 2022

Public-Private Partnership For The Ecological Transition

In recent years, Spanish society has shown itself to be increasingly conscious of the importance of preserving natural resources and deal with climate change. There is also a clear understanding of the need for an economic system that guarantees the proper maintenance and regeneration of our planet. For the energy sector, that requires an energy electrification model and a decarbonization of electricity that can guarantee supply security, especially in Spain. The importance of supply security has been tragically highlighted with the war we have witnessed  over the last few weeks.

Experience has shown that the ecological transition challenge cannot be tackled by the public sector alone, regardless of capacity or resource volume. Public institutions can steer the process, but the private sector must meet its duty to make the necessary investments in response to the regulatory and economic messages sent out by government authorities.

In this necessary division of labor, the public sector must:

-Set its main priorities in line with national climate and environmental targets that, in turn, should reasonably coincide with those set by Europe and the wider international community.

The private sector should provide the bulk of the investment effort for the ecological transition, with about 190 billion euros.

-Influence corporate expectations, particularly guaranteeing the irreversible nature of the process vis-à-vis the enormous risks and costs of inaction.

-Abide by the principles of good regulation outlined in Spanish and European legislation, respecting the criteria of need and proportionality.

-Guarantee the necessary regulatory stability and legal certainty for the investment sectors, which need to promote the transition in order to avoid sending out confusing or contradictory messages that could distort the process and help maintain the status quo.

-Guarantee a return capable of stimulating and fostering investment in infrastructure and sustainable technologies. These must enable infrastructures and technologies that will allow changes in conduct associated with the price (there is little point in incentivizing the consumption of clean energies if investment in renewable generation is not promoted; there is little point in promoting electric vehicles if the infrastructures in place and charging services available are insufficient).

-Make sure that taxation and other fiscal and budgetary policy instruments can guarantee internalization in external climate and environmental prices.

-Establish a pace of transition that can be accepted by society and the economy, but always in line with the urgency of the challenge. The need for transition periods cannot be used as an excuse for delay.

-Manage the social aspects of the process, ensuring reasonable compensation to the most vulnerable groups that may potentially be affected, with a focus on fair transition.

In decentralized unitary states like Spain, proper coordination between the various public authorities is also essential.

The actions by each one must consider the legal framework of the pertinent institutions and should be taken in a harmonized and coordinated fashion that seeks coherence with all aspects of public interest.

Based on that institutional framework, any contribution from the private sector must be based on investment efforts and its ability to execute, as well as knowledge and investment focused on the medium and long-term. The ultimate goal must be for objectives of general interest to be achieved as efficiently as possible within a competitive context that encourages investment.

The ecological transition requires investment in new facilities and infrastructure and, therefore, environmental review processes.

The figures on necessary investment are high: the Integrated National Energy and Climate Plan (2019) includes 240 billion euros for the energy transition alone. In line with the division of labor mentioned above, it is estimated that the public sector will need to invest some 50 billion euros (mainly infrastructure and subsidies) while the private sector would need to provide the lion’s share of the investment effort at around 190 billion euros. A correct combination of public and private investment will enable forecasts to be realized, especially when the proper design of subsidies and infrastructure is included to guarantee the highest level of encouragement for private investment.

Public-private partnership allows for various legal channels and tools. It is important for the necessary legal instruments to exist and be accessible. Other countries have been applying formulas for some time that, with the necessary safeguards in place, allow for close and constructive collaboration between the public and private sectors. Consider the “open-book” tendering process or the option given to the private sector to propose future projects (“private initiatives”) in areas of public interest and with a sufficient return for the investor. Meanwhile, the mere tendering of ordinary concessions in Spain has become practically unworkable for some time since conditions and obstacles with regulatory requirements of disputable public utility are often imposed.

Finally, the ecological transition requires investment in new installations and infrastructure, and therefore various environmental review processes. It is essential for these to be undertaken rigorously and seriously: Spain is a country with enormous natural wealth that must be preserved. These processes also need to internalize the environmental impact of the investment in order to prevent climate change. Environmental protection in the medium and long-term is unquestionable. To achieve that, these environmental review processes need to benefit from human and material resources in proportion to the importance and urgency of the climate-environmental challenge, and reasonable processing times need to be guaranteed. We should not equate the rigor needed by these processes to an extension of the time required to complete them; it is possible to conduct demanding environmental reviews in reasonable time periods when the necessary resources are allocated.

public-private partnership must find “the best of both worlds”: a symbiosis of public and private action operating independently but collaboratively

In summary, public-private partnership must find “the best of both worlds”: a symbiosis of public and private action operating independently but collaboratively. Each stakeholder should bring their unique skills and abilities to the table so the best possible synergies can be obtained. This has been the foundation on which the European climate position was built. Strengthening that foundation for the future will be key to effective and fluid development of the next stage of the ecological transition, which is even more delicate than the last.

Joaquín Mollinedo
Chief Institutional Relations Officer of the Acciona group / Spain
Mollinedo graduated with honors from Complutense University of Madrid’s School of Law. Within the public sector, he has worked as an attorney and secretary-general of the Parliament of La Rioja, Spain, and Madrid Assembly, as well as chief counsel-general of the studies section of the Spanish General Council of the Judiciary. Mollinedo has served as a professor of public and constitutional law at the Universities of Zaragoza, Carlos III and San Pablo CEU. In the private sector, he has been director of institutional relations at Amena and Auna, a member of the board at Orange and secretary-general of Vocento. He currently works as the chief institutional relations officer with Acciona group. [Spain]

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