Hugo Alfonso Morán, MP Socialist Spokesman at the Environment Committee of the Spanish Lower House (Congreso de los Diputados) has brought to our attention that on Friday 27 November the Spanish Cabinet approved the draft bill for Sustainable Economy, a comprehensive package of regulatory changes, aimed at providing a better regulatory environment for economic agents so they can enjoy a more competitive position during its economic recovery.

The Act is structured around three main pillars: improving the economic environment, promoting competitiveness and committing to environmental sustainability. It is part of a strategy that essentially aims to lay the foundations for a model of development and growth of the Spanish economy to make it more sustainable in the economic, social and environmental context. Indeed during the Spanish Presidency of the European Union, the Government also plans to propose a redefinition of energy taxation at EU level so that its environmental role is recognised.

Critics have argued that it should be up to the private sector to take the lead in developing the new economic model of Spain, rather than the Government. Speaking to El Pais newspaper, Instituto de Empresa  professor Rafael Pampillón, argued that "The paradigm shift must be led by entrepreneurs wishing to invest in industries of the future," he says . "And what you need for that is the confidence of the employers, which would come about through major changes in the labor market, which have not been addressed." Professor Pampillón argued that reducing labor costs and Social Security contributions are necessary if productivity is to be improved.

However London School of Economics Professor Luis Garicano welcomed the Spanish Government initiative. He believes that the draft law is a modest step forward towards deeper structural reforms, which will need to address other elements of the Spanish economic model such as the labor market and the efficiency of the judiciary system, which the Government has also promised to tackle.

Some of the key features of the environmental sustainability pillar of the draft bill are:

1 .- Reducing emissions of greenhouse gases.
The main objective here is emission reductions and to increase information transparency in corporate environmental responsibility.

A stamp to certify the emission reductions will be issued, with low carbon intensity technologies receiving higher ratings, while increasing the transparency of information on corporate environmental responsibility.

The draft law creates a public fund for the purchase of carbon credits. The certified emission reductions and emission reduction units acquired by the fund shall be constituted and state assets may be sold, particularly if they are unnecessary to meet the reduction commitments of Spain under the Kyoto Protocol, allowing self-financing of the fund.

2 .- Transport and sustainable mobility.
The draft law proposes the creation of the Bureau of Sustainable Mobility as an advisory body, which would cooperate with and provide advise to all staff involved in mobility. Its main functions will be coordinating the actions of the various public administrations, to evaluate the implemented actions and report on regulatory proposals affecting mobility. It also encourages the development of sustainable mobility plans, conditioning the receipt of state subsidies for transport on the implementation of plans consistent with the Spanish Strategy for Sustainable Mobility.

The law also promotes the development of transportation plans for businesses to encourage use of public transport and promoting sustainable mobility of workers.
Clean road transport will be promoted by applying specific rules for the purchase of clean and energy efficient by the government.

It also supports the development of electric vehicles and the needed re-powering infrastructure.

The tracks of the core network for rail freight will be adapted in order to enable the movement of freight trains at least 750 meters in length and increase road and rail connections to ports of general interest.
Existing legislation regulating collective interurban transportation of passengers (buses) will also be amended in order to facilitate new entrants to the sector.

3 .- Energy saving and efficiency. Here the law outlines the principles for energy policy: security of supply security, economic efficiency and environmental friendliness.

The savings target of 20% compared to 2005 was brought forward to 2016 for the Administration and public agencies involved. Minimum energy efficiency standards of buildings and vehicles that make up the assets of the Public Administrations were among the programs approved.

There has also been a commitment to develop a comprehensive power grid system that take into account the economic, energy and environmental aspects of the electricity market. These plans will develop, among others, the following principles: maximizing participation of renewables in the electricity generation basket, reducing the contribution of the highest CO2-polluting energy sources, and ensuring security of supply and stability of the network.

The new draft law sets the lifespan of nuclear power plants at 40 years. The government had sent a law to update the nuclear liability regime.

4 .- Rehabilitation and housing.

Boost for rehabilitation
Develop where you can apply the reduced VAT on housing rehabilitation works. This would include reforms aimed at energy efficiency, water conservation, or accessibility of housing for people with reduced mobility.

In addition, after the entry into force of the Act, a new income tax reduction of 10% for works related to energy efficiency, water use or adaptation for people with reduced mobility carried out in housing before 31 December 2012 will be established. The maximum annual deduction will be U.S. $ 3,000 and will be dependent on the taxpayer's taxable income, following the same rules as set out in the deduction for home purchase legislation. In addition, the multi-annual housing cap is 10,000 euros.

Renewal of the current environmental tax reduction scheme

The new law will see environmental tax reductions permanently embedded into corporate income tax. These reduction were scheduled to disappear in 2011. The deduction percentage will rise from 4% to 8% and it will cover investments to avoid noise pollution.