The Iberian Industry and Energy Transition Initiative

Driving sustainable growth and development in Spain and Portugal

Energy Transition and Industrialization: An opportunity of a lifetime

In the same way geographies with historical access to cheap fossil fuels have an economic advantage today, access to affordable and secure renewable energy represents a significant advantage into the future, with a differentiating factor: this time, the industry needs to be much closer to its energy source. As governments, companies, and individuals are committing to net-zero emissions by 2050, the energy transition is at the forefront of this movement, driving unprecedent change for the world’s economies.

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For Spain and Portugal on the Iberian Peninsula, the energy transition is particularly important for ensuring sustainability and competitiveness into the future. The region is particularly vulnerable to the effects of climate change and has experienced greater deindustrialization of its economies vis-à-vis Europe in general.

Along with the urgent need to decarbonize to mitigate the effects of climate change, the energy transition could represent a significant opportunity for the region. Spain’s and Portugal’s unique geographical advantages, including ample opportunities for cost-effective renewable-energy production and abundant raw materials, and their mature industrial base suggest that the region is well placed to capture the green growth that the energy transition could bring.

Accelerating the energy transition would require concerted action across sectors as well as significant mobilization of capital, but if Spain and Portugal can achieve this through targeted unlocks, they could play a leading role in the energy transition and help enable Europe’s net-zero goals while fostering green industrial growth. In our related initiative articles, we explore Spain’s and Portugal’s natural advantages and the challenges they need to overcome to seize this moment.

The Industry and Energy Transition Initiative: Our vision

Spain and Portugal’s ambitious decarbonization targets to achieve net-zero emissions by 2050 will require participation from all sectors and industries. McKinsey set up the Iberian Industry and Energy Transition initiative to act as a leading think tank and a demand and investment accelerator on the Iberian Peninsula and to orchestrate a broad range of stakeholders. The main goal of the initiative is to help Spain and Portugal capture the opportunity to develop new industries and scale existing ones while realizing their decarbonization goals. As such, the initiative serves a dual purpose:

What are the Missions?

We want to shape our stakeholders’ conversations, focusing on current challenges from day one. That is why we launched the Missions, dedicated and collaborative consortiums of industry players brought together to address key sector challenges, shape industries’ outlooks, and drive change by working toward a common objective of developing Spain’s and Portugal’s industries, improving their global competitiveness, and accelerating the region’s energy transition. The opportunity lies within the existing industries (through a gain in competitive edge) and with the formation of new ones (new energy vectors and value chains).

Our Missions’ goal is to identify challenges and unlocks and take action to accelerate the energy transition. This includes the following:

Increasing transparency into the starting point, and providing fact-based perspectives on how to accelerate the energy transition and capture the associated value
Accelerating capital investment to feed growth and development, potentially pursuing pilot projects and joint investments
Building prominent knowledge through direct collaborations with partners, refining existing models and perspectives with a focus on Spain and Portugal
Solving for perceived barriers to decarbonization, gathering support from decision makers, and spurring positive pressure to act now
Increasing collaboration across relevant stakeholders

Electrification and renewables

Scale the energy transition in Spain through electrification and further deployment of renewable-power generation

Biomethane

Scale up production capacity to accelerate the decarbonization of the Spanish industry and increase energy self-sufficiency,...

Sustainable fuels

Enable and scale sustainable-fuels production and demand to decarbonize the transport sector in Spain

Green hydrogen and derivatives

Develop production capacity in a key emerging vector to decarbonize hard-to-abate industrial and transport sectors

Industry competitiveness and decarbonization

Capitalize existing endowments to increase Spain’s industry competitiveness

Electric vehicle (EV) and battery ecosystem

Develop a robust EV and battery ecosystem to establish Iberia as a leader in the EV transition

Carbon management

Decarbonize the industry and develop CO₂ storage and a new industry based on CO₂ utilization and certification...

IETI Index

To clearly understand progress in both Spain and Portugal and determine whether we are on track, we have created the IETI Index, which consists of 14 key indicators and qualitative insights to monitor progress and accelerate the energy transition and reindustrialization.

The Index is based on four key dimensions for the energy transition (sustainability, reliability, affordability, and competitiveness) and four for industrialization (production, investments, employment, and exports).