Decarbonization in Spain Trends and Forecast
The future of the decarbonization market in Spain looks promising with opportunities in the oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, and manufacturing markets. The global decarbonization market is expected to grow with a CAGR of 11.8% from 2025 to 2031. The decarbonization market in Spain is also forecasted to witness strong growth over the forecast period. The major drivers for this market are the increasing investment in decarbonization technologies to reduce costs associated with carbon emissions, the growing awareness of the effects of climate change, and the stricter emissions standards across the world.
• Lucintel forecasts that, within the services category, the sustainable transportation service segment will remain the largest segment over the forecast period.
• Within the end use category, oil & gas will remain the largest segment.
Emerging Trends in the Decarbonization Market in Spain
Spain is accelerating its decarbonization efforts in response to national and European climate goals. The country aims to become carbon neutral by 2050 and reduce greenhouse gas emissions by 55 percent by 2030. To achieve this, Spain is investing in renewable energy, green hydrogen, energy storage, electric mobility, and sustainable building technologies. These initiatives are being supported by regulatory reforms, European Union funding, and private sector collaboration. As these trends unfold, they are transforming the energy system, modernizing infrastructure, and fostering innovation to create a more sustainable and competitive economy.
• Rapid Deployment of Solar and Wind Energy: Spain is leveraging its geographic advantage to expand solar and wind energy capacity. The country added over 5 GW of new solar and wind installations in 2023 alone. Solar photovoltaic has become a dominant renewable source, supported by falling costs and favorable policies. Wind farms, particularly onshore, continue to grow. These developments are essential to reduce reliance on fossil fuels and are aligned with Spain National Energy and Climate Plan, which targets 74 percent of electricity from renewables by 2030.
• Emergence of Green Hydrogen Projects: Spain is becoming a frontrunner in Europe for green hydrogen development. Several large-scale projects, such as the Hydrogen Valley in Catalonia and the H2Med corridor, aim to produce, store, and distribute hydrogen generated from renewable sources. The government has committed to producing 4 GW of electrolyzer capacity by 2030. Green hydrogen is seen as key to decarbonizing hard-to-abate sectors such as heavy industry and transport, while also positioning Spain as an exporter of clean energy within the European energy network.
• Growth in Battery Storage and Grid Flexibility: To support the integration of variable renewable energy, Spain is investing in battery storage and flexible grid technologies. In 2023, the government announced support mechanisms to develop 600 MW of energy storage systems. These projects aim to enhance grid reliability and allow better use of solar and wind power during off-peak hours. Storage solutions are increasingly seen as necessary infrastructure to enable a resilient and efficient low-carbon power system.
• Electrification of Transport and Expansion of EV Infrastructure: Spain is pushing for the electrification of the transport sector with measures such as subsidies for electric vehicles and investments in charging infrastructure. Electric vehicle registrations rose by over 50 percent in 2023. Public and private initiatives are expanding charging networks along highways and urban centers. Spain auto industry is also being reoriented to support EV manufacturing, helping both decarbonization and economic competitiveness.
• Decarbonization of Building Sector through Heat Pumps and Retrofits: Spain is focusing on the building sector, which accounts for a significant share of emissions. Government programs are incentivizing the installation of heat pumps, building insulation, and energy-efficient retrofits. In 2023, heat pump sales grew by more than 30 percent due to incentives under Spain Recovery and Resilience Plan. These efforts aim to reduce energy consumption in homes and offices while improving comfort and lowering energy costs.
Spain decarbonization journey is being shaped by advances in renewable energy, green hydrogen, energy storage, electric mobility, and sustainable building technologies. These emerging trends are transforming how energy is generated, stored, and consumed across sectors. With strong policy support and investment, Spain is not only advancing toward its climate goals but also strengthening its energy independence and economic resilience.
Recent Developments in the Decarbonization Market in Spain
Spain is accelerating its decarbonization efforts through strategic investments and policy reforms aimed at transforming its energy landscape. Recent initiatives focus on expanding renewable energy capacity, advancing green hydrogen projects, enhancing energy storage solutions, and decarbonizing industrial sectors. These developments are integral to Spain commitment to achieving 81% renewable electricity generation by 2030 and reducing greenhouse gas emissions by 32% compared to 1990 levels. The country proactive approach positions it as a leader in Europe transition to a sustainable and low-carbon economy.
• Approval of Nearly 300 Renewable Energy Projects: In a significant move to bolster renewable energy, Spain has approved the development of almost 300 renewable power projects, representing a combined investment exceeding 17 billion euros. These projects, primarily photovoltaic power plants, along with 43 wind farms and one hydropower plant, will collectively add more than 28 gigawatts of capacity. This initiative aims to increase renewable energy share of electricity generation from 50% to 81% by 2030, leveraging Spain abundant natural resources like sunny plains and windy hillsides to achieve its green energy targets.
• Investment in Green Hydrogen Infrastructure: Spain is making substantial investments in green hydrogen to decarbonize its industrial sector. The government has allocated €794 million in direct aid to seven large projects for the production and intensive use of renewable hydrogen in industrial activities. These projects, financed by the European Commission, aim to encourage the substitution of fossil fuel energy with hydrogen, ensuring users experience the benefits of decarbonization from the outset. The initiatives will mobilize approximately €6 billion of investment over their lifetime, contributing significantly to Spain renewable hydrogen roadmap.
• Enhancement of Energy Storage Capacity: To support the integration of renewable energy, Spain has set a new 2030 energy storage target of 22.5 GW. This ambitious goal includes battery energy storage, pumped hydropower, and solar thermal plants. The plan also aims for 76 GW of solar power and 62 GW of wind power, including 3 GW of offshore wind. By enhancing energy storage capacity, Spain seeks to ensure grid stability and reliability, facilitating a higher penetration of renewable energy sources and advancing its decarbonization objectives.
• Decarbonization of the Steel Industry: ArcelorMittal, in collaboration with the Spanish government, is advancing its decarbonization plan for steelmaking sites in Asturias and the Basque Country. The agreement includes financial support for constructing an electric arc furnace and a direct reduced iron (DRI) plant in Gijón. These facilities are crucial to the company CO2 emissions reduction goals in Europe. The Gijón DRI project will also stimulate demand for green hydrogen, enabling new projects associated with renewable hydrogen production and transmission infrastructure, thereby contributing to Spain broader decarbonization strategy.
• Support for Biomass Projects in Industrial Decarbonization: Spain is promoting the use of biomass in industrial decarbonization through financial support for relevant projects. At the end of May 2024, the Ministry of Industry and Tourism announced the provisional approval of 19 projects within the PERTE for industrial decarbonization, with a total investment of 96 million euros. Notably, six projects utilizing biomass to reduce CO2 emissions in energy-intensive industries will receive 55 million euros, accounting for 57% of the budget allocation. These initiatives underscore Spain commitment to diversifying its renewable energy portfolio and reducing industrial emissions.
Spain recent developments in the decarbonization market reflect a comprehensive approach to transitioning toward a sustainable energy future. By investing in renewable energy projects, green hydrogen infrastructure, energy storage solutions, and industrial decarbonization initiatives, Spain is making significant strides toward its 2030 climate goals. These efforts not only enhance the country energy security and economic resilience but also position Spain as a frontrunner in Europe clean energy transition.
Strategic Growth Opportunities for Decarbonization Market in Spain
Spain is positioning itself as a key player in the global decarbonization movement, aligning with the European Union’s ambitious climate targets. The country is focusing on applications like renewable energy expansion, green hydrogen production, electric mobility, energy efficiency in industry, and carbon capture technologies. These applications present significant strategic growth opportunities for companies, investors, and the broader economy. As Spain intensifies efforts to reduce emissions, these opportunities are crucial for driving sustainability and promoting green innovation across multiple sectors.
• Renewable Energy Expansion: Spain has become a leader in renewable energy, particularly solar and wind power. The country is leveraging its vast natural resources to expand its renewable energy capacity, with a target to reach 74% of electricity generation from renewables by 2030. This focus on clean energy presents growth opportunities for developers, technology providers, and infrastructure companies. With ongoing investment in energy storage and grid modernization, the renewable energy sector is set to expand, making it an essential area for companies aiming to lead in Spain’s energy transition.
• Green Hydrogen Production: Spain is investing heavily in green hydrogen as part of its decarbonization strategy, recognizing its potential to decarbonize industries such as heavy transport and steel production. The country is focusing on large-scale green hydrogen projects, aiming to become a European leader in hydrogen production by 2030. Strategic growth opportunities are available for companies involved in electrolysis technologies, hydrogen infrastructure, and supply chain development. As Spain enhances its green hydrogen capacity, this sector offers long-term growth potential, particularly for industries looking to replace fossil fuels with clean alternatives.
• Electric Mobility: Electric vehicle (EV) adoption in Spain is rapidly increasing, fueled by government incentives, investments in charging infrastructure, and a strong commitment to reducing emissions from the transport sector. Spain aims for a significant increase in EV sales by 2030 and a complete transition to electric vehicles by 2040. This creates growth opportunities for automakers, battery manufacturers, and charging infrastructure providers. As the country boosts EV adoption, businesses focusing on EV technologies, including vehicle manufacturing and charging stations, are well-positioned for long-term success in Spain’s decarbonization efforts.
• Energy Efficiency in Industry: Energy efficiency is a critical component of Spain’s decarbonization strategy, particularly in its industrial sector. With manufacturing and industry being significant sources of emissions, Spain is focusing on improving energy efficiency through technologies such as automation, process optimization, and waste heat recovery. Opportunities exist for companies providing energy-efficient solutions, such as advanced equipment, digitalization tools, and energy management systems. By driving energy savings across sectors like manufacturing, construction, and chemicals, Spain is improving its industrial competitiveness while reducing overall emissions, creating growth opportunities in energy-efficient technologies.
• Carbon Capture and Storage (CCS) Technologies: Spain is expanding its investment in carbon capture and storage (CCS) technologies, with a particular focus on reducing emissions from its cement, steel, and power sectors. CCS plays a vital role in meeting Spain’s climate targets by capturing and storing CO2 emissions from high-emission industries. Strategic growth opportunities exist for companies involved in the development and deployment of CCS technologies, as well as those working on the infrastructure needed to transport and store captured carbon. As Spain scales up CCS initiatives, this sector will play a key role in reducing industrial emissions.
The decarbonization market in Spain is evolving rapidly, with strategic growth opportunities across renewable energy, green hydrogen, electric mobility, energy efficiency, and CCS technologies. These applications are driving Spain’s transition to a low-carbon economy, offering growth potential for companies in various sectors. As Spain continues to align its policies with EU climate goals, these opportunities will attract investment, foster innovation, and support long-term sustainability, ultimately reshaping the country’s economic landscape and positioning it as a leader in the global green transition.
Decarbonization Market in Spain Driver and Challenges
The decarbonization market in Spain is influenced by a variety of factors including technological advancements, economic pressures, and regulatory frameworks. The country’s commitment to reducing carbon emissions and shifting to renewable energy is driving the development of clean technologies and energy solutions. However, there are also challenges such as high initial investment costs, infrastructure gaps, and political uncertainties. These drivers and challenges are reshaping Spain’s energy landscape as it strives to meet its climate targets and transition to a sustainable, low-carbon economy.
The factors responsible for driving the decarbonization market in Spain include:
• Government Regulations and Policy Support: Spain has introduced strong government regulations and incentives to promote decarbonization. The Spanish government has committed to achieving net-zero emissions by 2050, with intermediate targets set for 2030. This commitment has resulted in the introduction of policies and financial incentives to support renewable energy development, energy efficiency, and electric vehicle adoption. These initiatives have driven investments in green technologies and fostered a more sustainable energy ecosystem. The alignment of public policies with decarbonization goals has been a key driver for accelerating the country’s energy transition.
• Renewable Energy Potential: Spain is one of the leading countries in Europe for renewable energy, especially solar and wind power. The country’s geographic location provides abundant opportunities for generating clean energy, and technological advancements have significantly reduced the cost of renewable energy production. The growing demand for clean energy, combined with Spain’s vast natural resources, makes renewable energy one of the most significant drivers of decarbonization. This trend is expected to continue as Spain focuses on expanding its renewable energy capacity and phasing out fossil fuel-based power generation.
• Technological Innovations in Clean Energy: Technological advancements in energy storage, smart grids, and hydrogen production are playing a critical role in Spain’s decarbonization strategy. Energy storage technologies are enabling better integration of renewable energy sources by addressing intermittency issues. Additionally, the development of green hydrogen as a clean fuel alternative for industry and transportation presents a significant opportunity for decarbonization. Spain’s investment in these emerging technologies helps to accelerate its shift to a low-carbon economy and increases energy security.
• Public and Private Investment: Both public and private sectors in Spain are heavily investing in decarbonization technologies. The European Union’s Green Deal and the Recovery and Resilience Facility have provided substantial funding to support Spain’s decarbonization efforts. Private companies are also increasingly recognizing the potential of clean energy investments, resulting in the growth of green bonds and renewable energy projects. These investments are helping to develop critical infrastructure, such as renewable energy plants, carbon capture facilities, and electric vehicle charging networks, which are vital for achieving Spain’s climate goals.
• Decarbonization of Transport Sector: The transport sector is one of Spain’s largest contributors to CO2 emissions, and its decarbonization is a critical aspect of the country’s climate strategy. The adoption of electric vehicles (EVs) and the expansion of EV infrastructure are central to Spain’s efforts to reduce emissions in this sector. Government incentives and the increasing availability of EVs are encouraging consumers and businesses to make the shift to electric mobility. This transition not only reduces carbon emissions but also promotes the growth of sustainable transport technologies, contributing to the overall decarbonization efforts.
Challenges in the decarbonization market in Spain are:
• High Initial Investment Costs: One of the key challenges in Spain’s decarbonization market is the high initial investment required for clean energy projects. Although renewable energy and energy efficiency technologies have become more cost-effective over time, significant capital is still needed to develop large-scale projects such as solar farms, wind turbines, and energy storage systems. This high upfront cost can deter private investors and slow down the pace of decarbonization, particularly for small and medium-sized enterprises that lack access to financing.
• Infrastructure Gaps: While Spain has made significant progress in expanding its renewable energy capacity, the infrastructure required to support the full transition to a decarbonized economy is still underdeveloped. This includes insufficient electricity grid capacity, lack of charging stations for electric vehicles, and the need for more advanced energy storage solutions. Without sufficient infrastructure in place, Spain may face difficulties in integrating renewable energy into the grid and ensuring reliable energy distribution. This gap in infrastructure remains a critical challenge for the country’s decarbonization efforts.
• Political and Regulatory Uncertainties: Although Spain has ambitious decarbonization targets, political and regulatory uncertainties pose a challenge to the market. Changes in government leadership and policies could impact the long-term direction of the country’s decarbonization strategy. Additionally, the regulatory landscape surrounding renewable energy and carbon emissions is constantly evolving, which can create challenges for companies navigating the market. A stable and consistent regulatory environment is essential to ensure that decarbonization goals are met and that investments in clean energy are protected.
The decarbonization market in Spain is shaped by a combination of strong drivers such as government support, renewable energy potential, and technological innovations, alongside challenges like high investment costs, infrastructure gaps, and political uncertainties. While the country has made significant progress, overcoming these challenges will be critical to accelerating its transition to a low-carbon economy. The continued alignment of policies, investments, and technological advancements will determine the pace at which Spain can achieve its decarbonization targets and position itself as a leader in sustainable energy solutions.
List of Decarbonization Market in Spain Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies, decarbonization companies cater to increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the decarbonization companies profiled in this report include:
• Company 1
• Company 2
• Company 3
• Company 4
• Company 5
• Company 6
• Company 7
• Company 8
• Company 9
• Company 10
Decarbonization Market in Spain by Segment
The study includes a forecast for the decarbonization market in Spain by services, technology, deployment, and end use.
Decarbonization Market in Spain by Services [Analysis by Value from 2019 to 2031]:
• Carbon Accounting & Reporting Services
• Sustainable Transportation Services
• Waste Reduction & Circular Economy Services
Decarbonization Market in Spain by Technology [Analysis by Value from 2019 to 2031]:
• Renewable Energy Technologies
• Energy Efficiency Solutions
• Electric Vehicles
• Carbon Removal Technologies
• Carbon Capture and Storage
Decarbonization Market in Spain by Deployment [Analysis by Value from 2019 to 2031]:
• On-premises
• Cloud
Decarbonization Market in Spain by End Use [Analysis by Value from 2019 to 2031]:
• Oil & Gas
• Energy & Utility
• Agriculture
• Government
• Automotive & Transportation
• Aerospace & Defense
• Manufacturing
• Others
Features of the Decarbonization Market in Spain
Market Size Estimates: Decarbonization in Spain market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends and forecasts by various segments.
Segmentation Analysis: Decarbonization in Spain market size by services, technology, deployment, and end use in terms of value ($B).
Growth Opportunities: Analysis of growth opportunities in different services, technology, deployment, and end use for the decarbonization in Spain.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the decarbonization in Spain.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.
If you are looking to expand your business in this or adjacent markets, then contact us. We have done hundreds of strategic consulting projects in market entry, opportunity screening, due diligence, supply chain analysis, M & A, and more.
FAQ
Q1. What are the major drivers influencing the growth of the decarbonization marketin Spain?
Answer: The major drivers for this market are increasing investment in decarbonization technologies to reduce costs associated with carbon emissions, growing awareness of the effects of climate change, and stricter emissions standards across the world.
Q2. What are the major segments for decarbonization market in Spain?
Answer: The future of the decarbonization market in Spain looks promising with opportunities in the oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, and manufacturing markets.
Q3. Which decarbonization market segment in Spain will be the largest in future?
Answer: Lucintel forecasts that sustainable transportation service segment will remain the largest segment over the forecast period.
Q4. Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.
This report answers following 10 key questions:
Q.1. What are some of the most promising, high-growth opportunities for the decarbonization market in Spain by services (carbon accounting & reporting services, sustainable transportation services, and waste reduction & circular economy services), technology (renewable energy technologies, energy efficiency solutions, electric vehicles, carbon removal technologies, and carbon capture and storage), deployment (on-premises and cloud), and end use (oil & gas, energy & utility, agriculture, government, automotive & transportation, aerospace & defense, manufacturing, and others)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.4. What are the business risks and competitive threats in this market?
Q.5. What are the emerging trends in this market and the reasons behind them?
Q.6. What are some of the changing demands of customers in the market?
Q.7. What are the new developments in the market? Which companies are leading these developments?
Q.8. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.9. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.10. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?