Selected Issues Papers

Spain aims to cut greenhouse gas emissions, which implies further 30 percent cut from 2023 levels by 2030, requiring new measures beyond current efforts. Emission intensity varies widely across Spanish firms, offering potential for reductions by incentivizing laggards to match less-polluting peers. Relying mainly on public spending, like subsidies or investments, would be costly and insufficient. Carbon pricing is the most effective, cost-efficient, and fiscally attractive option, especially given Spain's limited fiscal space. The ongoing EU-ETS expansion could be complemented with domestic actions to enhance carbon pricing's role.