Spain has finally released the details of its much-anticipated Recovery and Resilience Plan. While the details are still hazy, we predict what La Comunidad Valenciana will gain from it…
An impressive €140bn fiscal injection destined for Spain, one of the countries hardest hit by the pandemic, will have to be spent carefully in order to mitigate the devastating pandemic effect. To be eligible for this assistance, half of which is in the form of a grant and the other half as a loan, the Spanish government had to present an investment and transformation plan to its European partners, which included significant labour and pension reforms.
While everything is still being negotiated, the government came out with Recovery and Resilience Plan, a sum of 110 large investment projects that will change the country’s economy and social fabric, as well as attempt to close the gap between Spain and the rest of Europe. This plan outlined several distinct policy areas that should have a significant impact on La Comunidad Valenciana as well.
GREEN AND DIGITALISED ECONOMY
The majority of investment, as per Recovery and Resilience plan, will go toward green investments and the digital economy.
La Comunidad Valenciana stands to benefit significantly from this fund. As announced by President Pedro Sanchez, transforming Spain into an ‘Entrepreneurial Nation’ is a critical component of this plan. And Valencia is quickly becoming another important digital hub in the country, trailing only Madrid and Barcelona but far outpacing the competition. The provincial government has been working on this for some time, and it is expected to continue to grow along this trajectory.
To move to a fully digital environment, a portion of the funds will be awarded to small businesses, public administration and key sectors such as tourism. Local sources tell the Valencian “we expect a good portion of the funds to be directed to La Comunidad, which is heavily reliant on tourism as one of its main sources of income”.
Almost €13bn will be spent on education, including the creation of 65,000 jobs in the education system and the opening of an additional 140,000 school classrooms. Some €3,3bn of that money will be used to advance science and technology. Valencia is known for its innovative science and technology projects, so it is expected that a significant portion of the funding will be spent in this city.
RURAL AND URBAN AGENDA
The internet will be brought to rural areas at a cost of €4,3bn, thanks to the new 5G mobile network. It’s great news for Valencia, one of the provinces hardest hit by depopulation. The program’s main goal is to draw people away from the city and into the countryside, where Valencia has plenty of options.
The government estimates that with €6,8bn allocated to this component of the plan, half a million houses will be renovated to improve energy efficiency. It is planned that in some cases, the state will cover the entire cost. It is hard to estimate at this stage how this money will be distributed, but it is also obvious that there are so many properties in La Comunidad, where it can be put to use.
NEW GENERATION MOBILITY
The plan’s most significant single project is the establishment of the first Spanish electric-car battery plant. Although it is not yet clear where the money will go, it is almost certain that it will go to Catalunya and a consortium led by SEAT and Iberdrola. The Generalitat has proposed an alternative plan that includes a consortium led by Ford in Almussafes to try to bring this investment to Valencia, but, while the government remains hopeful, there seems to be only a slim chance that this will happen.
If it does, however, it is such a large investment that it has the potential to transform the entire provincial economy. This component of the plan is valued at €13,2bn, but not all of the funds will be used for the factory. A total of €800m will be made available as a subsidy for the purchase of electric vehicles. The main award is not the amount of the initial investment, but the fact that the first giga-battery factory will be very busy for a long time in a country that plans to transition completely to electric cars within ten years.
Spain will auction off concessions to build 6,000MW of renewable energy capacity as part of this plan, with an additional €1,5bn set aside for hydrogen projects, (this amount will probably go to the chemical complex in Tarragona) . In addition, 150,000 fast-charging stations will be built to support electric vehicles. This is a huge opportunity for La Comunidad Valenciana, because the majority of the power will come from solar, and Valencia, along with Andalucia, has been identified as an area with the highest possible returns. We are already seeing a significant shift in interest for vacant land from major international corporations using European funds. With the additional funds, many more projects are expected.
It doesn’t end there. Europe intends for the entire continent to be carbon neutral by 2050, relying solely on renewable energy. This cannot be accomplished solely through solar power, as solar cannot power ships, trains, planes, or large industries. The use of hydrogen power and so-called fuel cells will pave the way in a major revolution. However, electricity must be used to generate this type of energy. As a result, solar installation is equivalent to laying the groundwork for future hydrogen production, which Europe intends to accelerate after 2030.
Aside from the Recovery and Resilience Plan, La Comunidad Valenciana will play an important role as one of the best areas in Europe for manufacturing clean energy. This way, Valencian Community has a good chance of becoming an energy powerhouse for the Old continent in the next 20 to 30 years.
One of the most important aspects of the plan, and a deal-breaker for the EU, will be the implementation of serious reforms, some of which contradict the Socialist Party’s pre-election promises. The entire pension, labour, and health systems will need to be revamped, and the package’s approval is linked to the fulfilment of this condition, so it is expected that this will be done.
And it must be completed quickly. The funds are expected to arrive in 2023 and be spent over the next four years. If all goes to plan, a rapid transformation of the country and economy is already being compared to Franklin D Roosevetl’s New Deal that fought its way out of the Great Depression with infrastructure projects such as the Hoover Dam.