Spain is strategically positioned to enhance its sustainable fuel production, potentially becoming a major contender in Europe’s shift toward net-zero emissions. The European Union (EU) has set forth an aggressive goal to cut greenhouse gas (GHG) emissions by 55% by 2030 from 1990 levels, necessitating substantial transformations in energy practices across member states, particularly in Spain.

Transport Sector and Emissions Reduction

In 2021, the transport sector contributed roughly 30% of Spain’s GHG emissions, underscoring the urgency of its decarbonization. Although the transition to electric vehicles (EVs) is vital, the deployment of sustainable fuels remains crucial, especially for the existing fleets of internal combustion engine (ICE) vehicles, as well as in hard-to-decarbonize sectors like heavy-duty transport, aviation, and maritime operations.

Biofuels: The Beginning of a Sustainable Journey

Iberia’s venture into biofuels commenced with the integration of conventional biodiesel and bioethanol, significantly diminishing the reliance on fossil fuels within the transportation system. This foundational step has facilitated compliance with national and EU renewable energy directives, enabling the necessary groundwork for advanced biofuels and future innovations.

Understanding Hydrotreated Vegetable Oil (HVO)

Among the diverse array of sustainable fuels, Hydrotreated Vegetable Oil (HVO)—also known as hydroprocessed esters and fatty acids (HEFA) in aviation contexts—emerges as a leading production pathway. This method yields renewable diesel for land transport and sustainable aviation fuel (SAF). Despite its maturity, HVO production in Spain faces challenges due to limitations in feedstock supply, highlighting the need for emerging technologies.

Regulatory Landscape and Future Frameworks

The arrival of the Renewable Energy Directive III (RED III) in November 2023 sets forth ambitious mandates for EU member states, including a 29% minimum share of renewable energy in transport and a requirement for advanced biofuels to constitute at least 5.5% of transport energy by 2030. This directive aims to facilitate the reduction of GHG intensity while promoting sustainable energy sources across the board.

The Role of Sustainable Fuels in Spain’s Transition

As Spain strategizes for its energy transition, the adoption of sustainable fuels will be imperative. By 2030, it is anticipated that demand for renewable diesel and SAF will rise significantly, driven by both regulatory requirements and a gradual phasing out of ICE vehicles. HVO is positioned to play a pivotal role, with potential production capacities reaching 2.1 to 2.7 million tons annually.

Challenges Ahead: What to Overcome for Successful Implementation

While Spain has a promising pathway to becoming a leader in sustainable fuel production by 2030, several challenges persist:

• Demand Uncertainty: The lack of clear regulatory targets for road transport fuels post-2030 poses a significant risk to investment and development decisions.
• Cost Competitiveness: Spain’s biofuel production is currently at a disadvantage compared to other EU nations, primarily due to lower incentivization and higher production costs.
• Financing Access: High capital investment costs for new HVO projects, coupled with market uncertainties, make it difficult to secure financing.
• Technological Development: New sustainable technologies face hurdles such as high costs and limited feedstock availability, making it essential to innovate and collaborate.

A Promising Future through Collaboration and Innovation

Spain’s potential in sustainable fuel production lies in collaboration among public and private stakeholders. By addressing regulatory challenges, enhancing incentives, guaranteeing domestic demand, and investing in emerging technologies, the nation can effectively transition toward a sustainable energy future. Sustainable fuels are essential not just for meeting current demands but for fostering a robust transport sector aligned with Europe’s environmental goals.