Spain and Italy: A tale of two recovery funds

May 30, 2021

In late April Italy and Spain, the two biggest recipients of the EU’s €750 billion recovery fund, set out their differing plans for economic recovery. Among the measures to boost their Covid-stricken economies, both have officially earmarked roughly 40% of the total budget for climate measures. The similarities end there, though.

Under NextGenerationEU, a total of €140 billion will be allocated to Spain until 2026 with the recovery fund structured around four pillars: green transformation; digital transformation; social cohesion; and gender equality.

Key to this green transformation is electric mobility, which will receive almost 10% of the total recovery fund alone. The plan targets at least 250,000 electric vehicles and 80,000 to 110,000 additional charging points by 2023. Spain has made electric car manufacturing its top priority to take advantage of its position as the second biggest car producer in Europe.

Isabell Büschel, Spain director at T&E, said: “Spain’s focus on electric mobility will not only drastically reduce transport emissions but will help to put it at the centre of one of the twenty-first century’s most valuable supply chains. This is a plan that’s good for the environment and good for jobs.”

€1.5 billion will also go to green hydrogen to be used as a renewable energy source, including in Spain’s transport sector. According to T&E it remains to be seen whether Spain’s support for at least 5,000 – 7,500 cars and trucks fueled by hydrogen, as well as hydrogen charging stations, will help the technology to effectively take off in the road transport sector, given that it is far more inefficient and costly than direct electrification. T&E has also said it is alarmed by the projected purchase of 1,400 gas trucks and 850 gas-powered buses.

Italy, the biggest recipient of EU funds, has requested almost €200 billion in total to get the economy back on its feet. Its National Plan of Recovery and Resilience (PNRR) will see most of the money go towards improving Italy’s infrastructure as well as boosting environmentally sustainable development and digital innovation. The plan includes ambitious reforms targeting Italy’s public administration, taxation and justice system, together with schemes to boost employment opportunities for women and young people. However, in terms of mobility, T&E says the plan falls well short of what is needed.

Italy is pumping €25 billion into medium and long-distance railway infrastructure and has committed an additional €10 billion for the further development of high-speed railways over the next 10 years. This would cut just 2.3 million tonnes of CO2 per year. In comparison, just €8.5 billion has been allocated to urban mobility despite 70% of passenger CO2 emissions coming from trips less than 50 km.

Veronica Aneris, Italy director at T&E, said: “When it comes to transport, the Italian government is prioritising the wrong things. Improving train connections is all well and good, but it doesn’t address the reality of the trips most Italians are making on a daily basis. This plan will have a negligible impact on emissions.”

T&E and Kyoto Club, a fellow NGO, estimate that Italy’s recovery plan is short of at least 15,000 electric buses and 4,000 km of urban cycling infrastructure that it would need to achieve the government’s already approved Sustainable Urban Mobility Plan (SUMP). That plan aims to reduce the air pollution which, currently, 2 million Italians are exposed to critical levels of.

But where the Italian plan diverges most from other European countries, including Spain, is in its lack of support for electric mobility. Whereas Spain has made electric mobility a key part of its industrial strategy, Italy will allocate less than 1% to electric mobility and it has put aside nothing for greening its struggling automotive sector.

Aneris said: “Italy risks wasting this historic opportunity to electrify its transport sector. While other countries are using this opportunity to set out a green industrial strategy, Italy’s mobility plans are stuck in the past. It seriously risks failing to meet its own climate plan target of six million electric vehicles by 2030.”

Like Spain, Italy is also committing itself to hydrogen. It plans to invest €3.5 billion in the fuel. However, it is unclear whether this will be renewable hydrogen or not. T&E has questioned the decision to finance 40 refuelling stations for cars and trucks, despite the fact that the technology is unlikely to be ready within the timespan of the recovery plan.

The European Commission will approve both plans within the next two months.

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