Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Spain Environmental Export Market Plan

Chapter 2

THE ENVIRONMENTAL SCENE

Spain and the European Union
Spain received about $1.375 billion in 1997 from the EU Cohesion Fund for environmental projects. It will also receive Cohesion Fund grants in 1998, 1999, and 2000. However, the amount will fluctuate depending on the number of proposals presented by the Spanish Government for funding and the number of projects approved by the EU.

In 1996, the EU announced a new council directive, as part of a major initiative to create an integrated pollution prevention and control (IPPC) regulatory framework for all the member states. It called for the implementation within a three-year period of a plan that imposed environmental protection mechanisms in the energy, chemical, and metal/mineral processing sectors. Among other things, the IPPC calls for the creation of a “competent authority” within each of the member states, including Spain, that will prequalify European and international prospective suppliers of environmental technologies within the EU concept of “best available techniques (BAT).”

Under the BAT concept, each of the 15 member states is to cooperate in the creation of best available technologies lists to control emissions harmful to the environment to assist in the formulation of new EU-wide emissions limit values (ELV) or standards for the IPPC. So far, there has not been a link between BAT lists and public or private sector procurement of equipment or import restrictions. However, the potential exists for possible restrictions in the introduction of technology imported from outside the EU. The IPPC directive does not exclude non-European companies from consideration for their technologies to BAT lists.

In summary, the role of the EU in promoting environmental programs in Spain is critical to understand the dynamics of the market. The EU sets standards, and provides direction and needed financing for environmental projects in Spain.

Pollution Prevention and ISO 14001
ISO 14001 certification is slowly becoming an important competitive advantage for the private sector, though less than 2 percent of Spanish firms are certified. ISO 14001 is intended to encourage manufacturers around the world to voluntarily implement environmental management systems, together with quality control ISO 9001. These standards, designed by the International Standards Organization (ISO), were adopted by the EU, in October 1996.

Some critics in Europe claim that the EU standard, the European Eco-Management and Audit Scheme (EMAS), adopted in 1993 (1836/93), is higher than the ISO 14001. The EMAS is the environmental standards that the EU is trying to implement in all EU member countries. Representatives of some sectors in the EU believe the EMAS is the better standard. They argue that the frequency and depth of EMAS audits are better and that EMAS requirements imposed on subcontractors are higher. Other sectors are in favor of ISO environmental standards, because they are recognized and used worldwide.

The Spanish Environmental Market
The Environmental Sector Defined
For the purpose of this publication, the environmental sector is defined as, and includes issues related to, water treatment and delivery, sewage infrastructure, waste collection, recycling and treatment, air pollution control technologies, environmental engineering and consulting services, hazardous waste management, and remediation. Based on this definition, the products and services are:
--Water pollution control, equipment, and services;
--Wastewater treatment equipment and services;
--Pumps, pipes, valves, chemicals, and other items needed for water delivery and discharge equipment;
--Management and operation of potable water and wastewater treatment plants;
--Solid waste management;
--Equipment for collection, recycling, handling, incinerating, or otherwise disposal of municipal solid waste;
--Management of landfill sites, technology for the operation of landfills, as well as biological, thermal,
and other treatments of waste; and
--Nuclear waste management and equipment.
The Environmental Market's Size
The Spanish Government has estimated that over $12 billion will have to be invested in Spain to meet current EU environmental standards within the timetables that have been set by the EU over the next 10 years. These estimates include public and private investments. However the best estimate of how much the national, regional, and local governments will invest in environmental infrastructure is based on the percentage of the EU Cohesion Fund invested in it. Based on a 25 percent Spanish counterpart funding, one can estimate that the Spanish Government will invest about $344 million in new infrastructure. The Spanish Ministry of Environment estimates that the Spanish private sector is investing $2.06 billion per year in environmental technology. The private sector will be able to deduct about $69 million from its
tax obligations each year for investments in improved environmentally friendly technology as part of the
government policy called “those who clean up will obtain financial rewards.” Companies that invest in environmental technology will also be given special credit towards obtaining government-funded public works contracts.

The Organization for Economic Cooperation and Development (OECD) estimates that Spain disburses about 40 percent of its environmental investment for water treatment, about 30 percent for air management, and 20 percent for soil and solid waste management. The remaining 10 percent is divided among other environmental activities. The largest private sector investors in pollution control are the chemicals (35 percent), utilities, (35 percent), automotive (8 percent), and mining (6 percent) industries.

The Spanish market for American environmental technologies is growing at an annual average rate of 25 percent, based on official Ministry of the Environment figures. Spain's investment in the environment increased sixfold in four years, from $506 million in 1990, to $3 billion in 1994. By comparison, other EU members only doubled their investment in the environment during the same time period. In 1996, the Spanish national government spent approximately $8 billion on environmental improvements, which is equivalent to a little over 1 percent of gross domestic product.

Spanish Government Environmental Infrastructure Investment in 1990-1996
In 1990, the Spanish Government invested $506 million in the environment. By 1994, the figure had increased to $2.9 billion.

The Spanish Government invested an estimated $1.9 billion in environmental projects in 1995 and 1996. The estimated figure for 1997 was $2.9 billion.

The Spanish Government approved new pollution control plans for water, soil, and toxic waste at an estimated cost of $14 billion from 1995 to 2005. The national government was to provide about 25 percent of the money; the rest was to be provided by the autonomous regions and local governments.

The national government approved investments of $158 million for the construction of infrastructure for waste treatment in Salamanca, Fuenlabrada, Gijón, Palencia, San Sebastián, and Benidorn.

A new coalition government under the leadership of the conservative Partido Popular (PP) took office and created the Spanish Ministry of Environment. The new government also amended investment projections and introduced new concepts that called for greater participation of the private sector in infrastructure development and environmental projects.
Source: OECD Environmental Performance Reviews. Spain. Paris: 1997.

Spanish National and Regional Environmental Resources
The Spanish Ministry of Environment maintains an Internet home page http://www.mma.es:8088/, which provides up-to-date information on developments in the Spanish environmental scene. Of particular interest is a section on procurement and bids for environmental infrastructure and services previously published in the Official Bulletin. Procurement information can be obtained at: http://www.mma.es:8088/BOErobot/subastas.html.

Environmental information on the 17 regional governments can also be accessed from the Ministry of Environment's home page. Another source on the Internet for information is http://www.mma.es:8088/G.../contenido/normaativa.htm. Each region has its own equivalent of the national government's Official Bulletin. Among other things, these regional publications carry
procurement information, as well as regional environmental regulations.

European Financing of Environmental Projects
The EU established the Cohesion Fund in 1992 with the purpose of strengthening economic and social cohesion by reducing differences in standards of living in the member countries. This special fund is available to member countries that have less than 90 percent of the gross national product (GNP) average for the EU. Spain, Ireland, Greece, and Portugal qualify for this program. The primary use of this fund is for investment in the public transportation infrastructure and the environment.

Municipal and regional governments coordinate their proposals with their national government, and then apply for assistance from the EU for their environmental programs and projects. Programs that have received funding are water quality, water supply, sewage treatment, and waste management projects. The allocation of assistance to each of the eligible member states has been fixed by the EU Council as follows: Greece 16-20 percent, Ireland 7-10 percent, Portugal 16-20 percent, and Spain 52-58 percent. An appropriate balance must be ensured between financing for transport infrastructure and environmental projects. The European Commission has set a target of a 50-50 share between the two categories.

Table 5: European Union Cohesion Fund Investment
(In billions of U.S. dollars)

1997	1998	1999	Total
$3.22	$3.28	$3.35	$9.85

Note: This table reflects projections of all EU investment in Spain, Portugal, Greece, and Ireland. These funds are spent on transportation infrastructure or in environmental projects.
Source: European Union, Annual Report of the Cohesion Fund for 1996.

The original amount set aside for Spain, Greece, Ireland, and Portugal by the EU in 1992, was $19.54 billion. From 1992 to 1996, an estimated $9.8 billion was spent. Table 5 gives the amounts allocated for 1997-99.

Between 1995 and 1999, Spain will still receive the largest share of the EU Cohesion Fund, estimated to be about 52 percent of the available amount for the eligible countries (see table 6). Since EU grants require local counterpart investment, the actual value of the investment projects will practically double. Most of the money will be used in Andalucía, in southern Spain, and in Galicia, located in the northwest corner of the country. Both of these regions have high unemployment and are less developed than other areas of Spain.

In 1996, Spain received $663 million, or 49.44 percent of the Cohesion Fund grants to the group of four countries approved for environmental projects, and 50.66 percent for transportation infrastructure. The Cohesion Fund grants were earmarked for projects in three categories:
--Potable water projects presented by the national government;
--Water and sewage treatment projects, presented by local authorities, but within the parameters of the national government's hydrology plan;
--Regional projects for urban waste treatment, presented by municipal governments.

The EU gave funding priority in 1996 to projects related to the treatment of municipal wastewater and sewage treatment to help meet goals set for 1998 and 2000. Spain presented a total of 589 proposals in the environmental field for funding by the EU, with an estimated value of $1.26 billion (see table 7).

A convergence between environmental rights and taxation to make polluters pay for the damage they cause is now under serious discussion in Europe. Making polluters pay for environmental damage could bring about a new source for funding environmental infrastructure projects in the future. The EU wants to influence the behavior of producers and consumers in the direction of environmentally friendly alternatives. However, there are many questions that need to be answered. One of the fears is that the alternatives may be regressive in nature, penalizing consumers who can least afford it. However, the Cohesion Fund sooner or later will run out, and local funds will have to be raised to address environmental concerns.

The EU publishes all procurement opportunities for major projects valued at approximately $4.5 million and above in the EU Journal-Supplement, which is published almost daily. It also publishes procurement notices for supplies, that cost more than $216,000. Procurement information is also published in a website called Tenders Electronic Daily (TED). There is a subscription charge for both of these EU publications. The Commercial Section of the U.S. Mission to the European Union in Brussels conducts a thorough review of EU procurement notices, identifies those that are open to American bids, and makes the information available to American companies. For more information on these services, see chapter 7.

Table 6: Grants from the EU Cohesion Fund to Spain
(In U.S. dollars)

1995 (Actual)	1 .6 billion	(55% of the total Cohesion Funds awarded m 1995 for the four countries eligible for participation in the program.)
		784 million for environmental projects
		816 million for transportation projects
1996 (Actual)	1.3 billion
		663 million for environmental projects
		678 million for transportation projects
1997 (Estimate)	1.3 billion
1998 (Estimate)	1.4 billion
1999 (Estimate)	1.4 billion

Note: The breakdown of the use of the Cohesion Fund grants for environmental projects vs other infrastructure projects, mostly in transportation will probably prevail to 1999, based on prior year experience.
Source: European Union, Annual Report of the Cohesion Fund for 1996.

Private Sector Market
Agriculture, an important sector of the Spanish economy, is also one of the greatest sources of environmental damage. The dry Spanish climate forces extensive use of irrigation, which accounts for about 80 percent of the water used in Spain. The National Irrigation Plan, enacted in 1995, attempted to ration water use. However, marginal lands under cultivation use large quantities of water from aquifers; antiquated irrigation methods; waste water; and runoff of agricultural chemicals pollutes rivers and lakes. Animal husbandry often contaminates rivers, lakes, and reservoirs. Even near Madrid, the public
cannot use rivers and reservoirs for bathing and water sports at a nearby national park because the rivers and reservoirs are contaminated with animal wastes. The EU is forcing Spain to introduce new agricultural technology to reduce environmental damage. This measure should create market opportunities for American suppliers of environmentally friendly agricultural technology, particularly in animal husbandry.

In addition to agriculture, the following industries are expected to make the largest investments in environmental technology: chemicals, utilities, steel and nonferrous metal, textiles, construction, automotive, and mining. The tourism industry, which contributes about 4 percent of GNP, is also expected to invest heavily in environmental technology. It will do so to protect its market share in the very competitive tourism market as tourists place a higher value on ecotourism.

According to Organization for Economic Cooperation and Development (OECD) estimates, there are about 430 enterprises in Spain working in the eco-industry. They employ about 19,000 people and have annual sales of pesetas 240 billion. About 55 percent of them are involved in the production of goods and equipment, about 30 percent in engineering services, and about 15 percent in waste management.

These enterprises are potential clients and joint venture partners for American companies. They are familiar with the local market and business customs, and may ease market access to other countries for U.S. firms. (See chapter 7 for more information.)

Table 7: Proposals Presented by Spain in the Environmental Field for Cohesion Fund Approval in 1996

	% of total	# projects	Total Cost in $U.S.
Water supply & water quality projects	23	41	349 million
Waste treatment	14	49	126 million
Clean up of contaminated sites	45	85	631 million
Urban environment		14	102 million
Reforestation	4	386	55 million
Sea coast environment	4	14	4 million
Total	100	589	1,267 billion

Source: European Union, Annual Report of the Cohesion Fund for 1996.

Institutional Organization
The primary authority responsible for the environment in Spain is the Ministry of the Environment, created in 1996. The ministry is divided into three main organizations: the Secretariat for Water and Coastal Areas, which has the primary responsibility for planning, conservation, and improvements in the use of hydraulic resources and coastal areas; the Secretariat for the Environment, which is primarily responsible for protecting the nation's natural resources and sustaining environmentally friendly economic growth; and the Undersecretariat for the Environment, which is primarily responsible for the management of the Ministry of the Environment.

Each of the 17 regional governments and the city of Madrid coordinates its own environmental program (see table 8). In addition to the regional authorities, there are about 8,000 municipal governments throughout Spain that operate varying levels of environmental services.

In the past few years, municipal and provincial governments have come together to more efficiently deliver environmental services. For example, the Andalucian government, encompassing eight provinces in the south, enacted a regional environmental plan. The regional Environmental Affairs Office created the Environmental Management Enterprise (EGMASA) as a corporation to implement the regional environmental plan. All of EGMASA shares are owned by the regional government, but EGMASA functions as an independent private for-profit enterprise. In 1996, the company billed approximately $80 million and turned a profit. The corporation has both public and private clients.

EGMASA is active in several environmental areas. It owns and operates greenhouses and reforestation programs throughout the region. It also works with the national park service to protect endangered plants and animals and operates several industrial waste treatment plants that handle hazardous, and inorganic/organic wastes. (These services are sold to private industrial clients.) EGMASA also engages in the engineering design, construction, and operation of municipal urban waste recycling and composting plants and sanitary landfills. It treats, recovers, and seals contaminated sites. On contract with local authorities, it provides air quality monitoring and testing services as well as water quality testing services for rivers, lakes, and coastal waters. It has an extensive research and development operation.

EGMASA is not only active in Andalucía, but operates in other regions of Spain and internationally. For example, it manages waste treatment plants in Uruguay and Morocco. The corporation also invests in joint-venture businesses to start new environmental services. One of these investments was a used oil recycling plant. After other private companies entered the recycling business and it became profitable to collect and recycle used oil, EGMASA reduced its participation to a minority position and went on to establish other environmental business enterprises.

EGMASA is a client of environmental technologies as well as a service provider. It is a potential joint-venture partner for American companies for projects in Spain and in other countries, and could possibly hold the key to obtaining European financing for projects in other regions of the world.

EGMASA illustrates the diversity and complexity of the Spanish environmental market. The Andalucian regional government has taken full advantage of the EU Cohesion Fund to address its environmental needs. It has gone into business to sell services to the private sector and to local governments in the region. It has also demonstrated considerable creativity in promoting environmental programs.

Table 8: Environmental Infrastructure in Large Spanish Cities

City/Population	Incineration	Composting	# of Controlled Landfill Sites	Service Provider	Comments
Alicanta 265,473	2* Elche,Campello	1	0	PB	There are 4 to 5 small incineration plants in the province of Alicante. Only the one in Campello is private. There is a controlled landfill next to the composting plant. Part of the waste reaching the composting plant is dumped in this landfill.
Almeria 155,120	0	1*	1	PB	The composting plant is very small and not well accepted by the inhabitants of that area.
Barcelona 1,643,542	2	2	3	PB	2 out of the 3 landfills are for building materials waste.
Bilbao 369,839	0	0	1	PB	Bilbao is planning to call for bids for the construction of one incineration plant.
Burgos 169,278	0	0	1	PB	Burgos is planning to call for bids for the construction of one composting plant.
Cadiz 154,347	0	1* Puerto Real	4* Medina, Olvera, Los Barrios, Chiclana	PB
Cordoba 302,154	0	1	5* Cordoba, Dostorres, Montalban	PB	2 of the 5 landfills are for building materials waste. Cordoba has one transfer plant for selection and separation of waste prior to the recycling process at the recycling plant.
Coruña, A 246,953	0	0	1	PB	The largest hospital at A Coruna has a crematory for hospital waste.
Granada 255,212	0	2	1	PB
Las Palmas 354,877	0	1	1	PB	A project for the construction of a composting plant is under development.
Madrid 3,010,492	3 (RDF)* 4 (USW)	6	2	PB	Three of the composting plants (managed by Tegemesa,Tirmadrid, and Vertresa-Proces-RWE respectively) are for USW and they also have recycling facilities. One of them is part of the incineration plant. The other one under construction, has a landfill next to it. The other three composting plants are: one for garden/plants waste (under construction) and two for wastewater sludge composting (managed by Sufi and Fertimar respectively). One of the controlled landfills is currently under construction. RDF:Refuse Derivated Fuel/USW: Urban Solid Waste.
Malaga 522,108	0	3* Mijas, Cazares, Malaga City	1	PB	The composting plant in Malaga city is currently under construction. It will be operating in 1998.
Oviedo 196,051	0	0	1* Serin	PB	Glass, paper and cardboard waste is recycled in the landfill plant.
Palma de Mallorca 296,754	1	0	1	PB
Salamanca 162,888	0	0	1	PB
San Sebastian 171,439	0	0	2	PB	1 of the 2 landfills is for debris and building products waste.
Santander 191,079	0	0	1* Meruelo	PB	An incineration plant is currently under construction.
Sevilla 686,028	0	0	1* Dos Hermanas	PB

PB=Public
* Denotes that the installation is located in the Province, outside the city.

Environmental Organizations
Spanish environmental organizations and Spanish branches of international environmental organizations are very active. For example, they educate the public and take legal action to stop construction of major projects such as highways, airports, and factories. They also have been successful in lobbying for environmental impact studies and decreasing public sector tolerance with industrial polluters. Appendix C lists a number of Spanish environmental organizations.

Environmental nongovernmental organizations (NGOs) are a relatively new phenomenon in Spanish society. During the last five to seven years, they have played an increasingly prominent role in raising awareness of conservation issues. In some cases, they are eligible for state financial support. Some NGOs (for example, the Foundation for Ecology and the Protection of the Environment) organize educational and training programs. The Spanish Ornithological Society contributes to a project in which its historical records on the size of bird populations have being incorporated into the national wildlife databank.

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