We are living through a moment of major political, social, and economic transformations. The energy transition is a factor that cuts across all economies. While China and the United States are implementing plans to offer alternatives to fossil fuels, the European Union is debating which path to take in a polarized world. Spain plays a highly significant role in the EU’s strategic autonomy and in promoting energy security through sustainable solutions. It is expected that one of the Government’s final regulatory milestones before the summer break will be the approval of the Royal Decree to boost the decarbonization of the transport sector and promote renewable fuels, which partially transposes Directive (EU) 2023/2413, better known as RED III.
“While China and the United States are implementing plans to offer alternatives to fossil fuels, the European Union is debating which path to take in a polarized world”
After overcoming the State Council’s opinion, it is expected to be forwarded to the Council of Ministers in the coming weeks. Although the regulatory proposal has passed relatively unnoticed by public opinion, its impact will be much greater than one might think when considering the precedent of other countries such as Germany, where it has acted as a catalyst for the economy tied to decarbonization and to industry. The transposition of RED III thus transcends mere compliance with a European directive: it represents an opportunity to reinforce Spain’s strategic autonomy, promote reindustrialization, and strengthen energy security in an increasingly unpredictable international context.
During the last few years, our country has concentrated a large part of its efforts on boosting supply. The National Integrated Energy and Climate Plan (PNIEC) or the so-called hydrogen valleys have helped position Spain as one of the countries with the greatest potential to produce renewable fuels and to be a reference in Southern Europe. However, every industrial policy needs two fundamental elements: creating the most favorable economic conditions for production and a robust market that generates demand (and confidence) among consumers.
What changes with the new Renewable Fuels Decree
Until now, regulation has advanced decisively in creating favorable conditions for production. The transposition of RED III will determine whether Spain is capable of building a competitive, ambitious market capable of leading the decarbonization of transport that is difficult to electrify in the European Union. Compared with the current model, which is mainly focused on general obligations to incorporate biofuels, the new framework is much more sophisticated. It regulates and for the first time introduces obligations aimed at renewable fuels of non-biological origin (RFNBO), develops sustainability and emissions-reduction criteria, establishes new certification and traceability mechanisms, and integrates European regulations that determine when a fuel can be considered truly renewable.
“The transposition of RED III represents an opportunity to reinforce Spain’s strategic autonomy, boost reindustrialization and strengthen energy security”
All of this follows an evident logic. Cutting-edge technologies such as green hydrogen, e-methanol, or synthetic fuels for aviation (SAF and e-SAF) require capital-intensive investments and long maturation periods. No investor would today decide to build a plant that will begin operating in four or five years if they do not know what the regulated demand will be when it comes on line and if there is no regulatory framework that creates market certainty. In sectors of this nature, regulatory stability is a real economic asset.
Will there be demand for green hydrogen and synthetic fuels?
Precisely for this reason, most of the debate sparked during the project’s processing does not revolve around climate objectives (which enjoy broad international consensus), but around the concrete design of the regulatory instruments needed to make them possible.
One of the clearest examples is the specific sub-objective for renewable fuels of non-biological origin (RFNBO) in road transport. The project for the first time introduces a specific obligation for these fuels, which constitutes a significant advance over the previous framework. However, at the same time it maintains flexibility mechanisms that allow part of that sub-objective to be met through advanced biofuels and biogas during a broad transitional period. From a regulatory perspective, this flexibility facilitates the market’s gradual adaptation and avoids tensions in the initial phases of technological deployment.
“The greater part of the debate sparked during the project’s processing revolves around the concrete design of the regulatory instruments”
However, it also raises a question: if an obligation can be replaced for several years by other already-established technologies, to what extent does it create a strong demand signal to justify new industrial investments in RFNBO? It is not a matter of challenging technological neutrality or pitting different renewable solutions against each other. All of them will be necessary to achieve decarbonization objectives. The question is another: certain emerging technologies need a more robust regulatory signal during their early development years to reach the scale necessary to compete on equal terms.
A similar debate appears in maritime transport. The project initially limits the scope of decarbonization objectives to cabotage traffic. The decision responds to a gradual rollout and seeks to preserve the sector’s competitiveness. However, it also substantially reduces the potential volume of demand for maritime renewable fuels.
This issue is especially relevant for fuels such as e-methanol, whose growing demand in maritime transport makes the development of storage, supply, and bunkering infrastructures at ports essential. In this context, the ability to deploy these infrastructures early will be decisive in leading new logistics chains. Otherwise, other European or Asian ports could position themselves earlier as logistics hubs for these new fuels, complicating Spain’s leadership.
National production and industrial policy
Another aspect that has sparked considerable reflection is the absence in the transposition project of Article 22 bis of RED III, concerning boosting RFNBO in the industry. The text develops in great detail the regime applicable to transport, but leaves out a domain where these same fuels will play a decisive role in decarbonization. This separation raises questions of regulatory coherence. The production of renewable hydrogen and its derivatives does not distinguish between industrial customers and those in transport. Both are part of the same value chain and share infrastructures, production processes and investment needs. Designing disconnected regulatory frameworks may hinder precisely those economies of scale that Spain’s energy strategy aims to develop.
Attention is also due to how the origin of the fuels that will help meet national targets is treated. The project maintains a fully aligned approach with the principles of the European internal market and allows obligations to be met with renewable fuels produced in other Member States.
From an industrial policy perspective, the question arises of how national objectives can also act as a catalyst for underdeveloped regions and trigger reinvestment. The energy transition is not only about reducing emissions; it also represents an opportunity to generate investment, skilled employment, innovation, and industry.
“The energy transition is not solely about reducing emissions; it also represents an opportunity to generate investment, skilled employment, innovation and industry”
The strengthening of the National Sustainability Certification System constitutes one of the most relevant elements of the project. Beyond meeting new European requirements, this system plays a strategic role by ensuring that renewable fuels entering the European market indeed meet the same sustainability criteria, regardless of where they are produced. In this way, certification acts not only as an environmental assurance instrument but also as a mechanism to avoid competitive distortions arising from cheaper fuels whose sustainability cannot be credibly demonstrated. At the same time, it reinforces our strategic autonomy, fostering the development of new industrial chains and reducing dependence on supply chains whose traceability cannot be guaranteed with the same reliability.
In this context, another element gains particular relevance: the sanction regime. The project refers to Law 34/1998, which regulates the legal framework for activities related to liquid and gaseous hydrocarbons in Spain, but leaves a wide margin to determine the exact amount of penalties. Economically speaking, the effectiveness of any system of obligations depends on the penalty cost exceeding the cost of compliance; hence a strengthened regime is necessary. Otherwise, the penalty stops functioning as an incentive and becomes simply another cost of doing business.
Regulatory predictability does not depend solely on knowing the obligations, but also on understanding clearly the consequences of non-compliance. The greater this legal certainty, the lower the regulatory risk perceived by investors. All these issues answer the same fundamental question: should Spain merely transpose a European directive or seize this opportunity to consolidate an industrial policy around renewable fuels?
