RENEWABLE ENERGY PROMOTION IN THE CONTEXT OF RURAL SUSTAINABLE DEVELOPMENT: THE CASE OF SPAIN

Name: Pablo Ruiz Junco PID: A96500237 Address: 9450 Gilman Dr. 92092 La Jolla, CA. P.O. Box 20266 Phone number: +1-8584054334

Faculty advisor: Mark Jacobsen Internship Organization: Global Energy Network Institute Quarter: Spring Units: 4

RENEWABLE ENERGY PROMOTION IN THE CONTEXT OF RURAL SUSTAINABLE DEVELOPMENT: THE CASE OF SPAIN

Abstract: Renewable energy technologies have the potential to create local employment and provide other non-economic benefits when deployed in rural areas. This paper examines the possible solutions that renewable energy promotion in a rural context provides for the case of Spain; that is, rapid rural depopulation, decreasing agricultural subsidies from the EU level, high unemployment, and favorable conditions for the development of renewable energy technologies. 1. Introduction The idea of sustainable development has become one of the most powerful concepts that have been shaping policy in the past decade, as we become forward-looking and understand that our actions as a global community will affect the well being of our children. There is wide consensus among the academic and political community that renewable energy technologies can potentially play an important role when it comes to sustainable development, development that meets the needs of the present without compromising the ability of future generations to meet their own needs1, as defined by the World Commission on Environment and Development (1987). It has been acknowledged that that the promotion of these renewable energy technologies can, on top of providing environmental protection and sustainable development, create local employment and promote social cohesion.2 The impacts of these policies have become increasingly attractive when considered from a regional and even local standpoint. Even though the development of these technologies is a global
1 United Nations World Commission on Environment and Development. "Our Common

Future." 1987. 2 European Parliament and the Council of the European Union. "Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market." Official Journal of the European Communities, 2001.

phenomenon, their application in a local context is powerful as they take into account the specific characteristics of areas and can provide energy solutions and job creation to both on and off-grid impoverished rural areas.3 This situation may shed some light on the current difficulties that areas of Spain are going through. The rural areas of Spain have undergone massive depopulation in the second half on the 20th century and today are the poorest among Spanish provinces. Today, unemployment is soaring in these regions and agriculture, though still big business, is receiving progressively less subsidies from the European Unions Common Agricultural Policy (CAP). In the context of rural depopulation, underdevelopment, and unemployment, renewable energy technologies may offer some promising solutions and bridge the gap between the city and the countryside. 2. Renewable energy promotion in the context of sustainable rural development: the case of Spain 2.1. Rural depopulation, current economic situation, and the CAP. The current economic situation in rural Spain cannot be understood without first examining one of the most relevant demographic phenomena in Spanish history: rural depopulation in the second half of the 20th century. Northern European countries had experienced Rural to urban migration almost a century earlier, however, Southern European economies went through similar migration patterns mostly after World War II. In the case of Spain, this process starts in the 1950s and goes hand to hand with economic development and industrialization. In the year 1950 alone, one million people migrated and abandoned their municipalities; moreover, the Spanish active
Desarrollo Rural Sostenible en la Unin Europea: Pautas Tericas Para el Anlisis Emprico." Tribuna de Economa, no. 845 (2008): 149-165.
3 Pablo del Ro, Mercedes Burguillo. "La Contribucin de las Energas Renovables al

agrarian population decreased from 48.8% to 28.2% between the years 1950 and
Pinilla, Ayuda, and provides some insight. 1970.4 The following tableSez Journal of Rural and Community Development 3 (2008) 122 4

Figure 1: depopulated provinces/districts in Western Europe.5developed considerable attraction on emigrants from other continents and less
European nations. Table 2. Depopulateda Provinces/Districts (NUTS III) in Western Europe, 19502000
Country Population (% of total) 1950 0.0 6.7 23.1 0.0 48.5 30.8 6.9 0.0 n.a. 2000 0.0 4.5 17.4 0.0 33.4 17.2 5.3 0.0 n.a. Area (% of total) 0.0 14.0 28.9 0.0 74.7 53.5 18.3 0.0 n.a. Annual rate of population change (%) -0.2 -0.3 -0.5 -0.4 -0.7 n.a.

for immigrants. Thus, some rural areas in the more developed countries exert a

Belgium France Italy Netherlands Portugal Spain Sweden Switzerland United Kingdom

Note. Adapted from data taken from International Historical Statistics: Europe 17502000, by B. R. Mitchell (2003), London: Macmillan.
a

Depopulated provinces/districts are defined as those losing populations between both dates in absolute terms.

A case study approach has been adopted in carrying out the analysis. This involved selecting a region exhibiting representative features of the phenomenon of depopulation in southern Europe. These include the experience of intense The graph depicts a selection ofhalf of the 20th century, resultingandcritically on depopulated depopulation in the second 9 European countries in data low population densities over large parts of the territory, with a threshold level of under defining so-called demographic deserts. provinces and10 inhabitants Ifto square kilometer, past Southern nature of depopulation inThis districts. perwe consider the and present European states (Spain, Portugal, case study aims shed light on the the rural regions of Mediterranean Europe in late-developing countries, which have and Italy), weexperienced that they exhibit similar characteristics the timing and can see certain changes and transformations that differ from and constitute the most patterns observed in northwestern Europe. As Hoggart and Paniagua (2001) have argued, the processes of rural restructuring do not follow the same spatial and severe cases temporal patterns in all in Europe.these phenomena therefore need to been a sharp of depopulation regions, and Even though there has be carefully contextualized. These divergences do not, however, mean that there are no parallels or similarities between the 6 dynamics of change in different places.

deceleration of depopulation since 2001 , the current economic crisis has triggered a
1.1 A Case Study: Extreme Depopulation in Rural Aragon

new wave of The case of the towards of the Autonomous Community of Aragonone of theAccording to migration rural areas the industrial areas and city centers. data from the National Institute of Statistics (INE), the number of domestic migrants towards highly populated municipalities (more than 100,000 inhabitants) was 69171
4 Fernandez-Cavada, Jose Luis and Cea, Felisa. "Spain: Rural development under rapid

17 autonomous regions into which the Spanish state is dividedhas been chosen to illustrate the long-run process.

depopulation." Euro. R. agr. Eco., no. 13 (1986): 415-43. 5 Pinilla, Vicente, Mara-Isabel Ayuda, and Luis Antonio and Sez. "Rural Depopulation and the Migration Turnaround In Mediterranean Western Europe: A Case Study of Aragon." Journal of Rural and Community Development, no. 3 (2008): 1-22. 6 Pinilla, Vicente, Mara-Isabel Ayuda, and Luis Antonio and Sez. "Rural Depopulation and the Migration Turnaround In Mediterranean Western Europe: A Case Study of Aragon." Journal of Rural and Community Development, no. 3 (2008): 1-22.

in 1998, 73395 in 2001, and 163594 in 2009.7 In other words, there was more domestic migration in 2009 than in 1998 and 2001 combined. This change in the migration level can be attributed to the economic meltdown of 2008 and is striking given that we are dealing with a country of around only 40 million people. Young Spaniards are once again leaving the countryside in search of (in many cases unavailable) opportunities, and this could have catastrophic consequences for both urban and rural areas. As can be observed, economic performance and demographics go hand to hand, and therefore both should be taken into account when exploring the opportunities for bringing rural Spain out of the depopulation-unemployment trap. Spain has been severely affected by the recent events that have shaken the worlds economies over the past three years, such as the global financial crisis. These events, even though global in nature, have unleashed even broader hidden problems in the Spanish domestic economy. These problems include a rigid labor market, the burst of the construction sector bubble (the motor of the economy for the past decade), and weakening of the tourism sector (due to the weakening of the main economies surrounding Spain). These events, alongside political turbulences, have led Spain into record high unemployment rates of over 20%. The challenges must be faced from a national perspective, however, some areas will more severely affected than others. It is likely for the rural poor to bear many of these consequences, and so are small and medium sized companies.

size destination municipality >100,000 inhabitants, type of provinces and sex." Residential Variation Statistics. 1998/2001/2009.
7 Source: INE (National Statistics Insitute of Spain). "Domestic immigration classified by

Figure 2: unemployment rates (%) in Spain and Andaluca.8

As can be observed in the above graph, the national unemployment rate (though structurally high even at first) has skyrocketed, starting its increase towards the end of 2007 and stabilizing around 20% in 2010. These figures are above EU averages and among the highest in the industrialized world. Even more alarming is the situation in Andaluca. Andaluca is the most populous of the Autonomous Communities (states) within Spain and has the largest agricultural sector. Moreover, Andaluca is home to many of Spains farmers and rural dwellers, thus making it a great example for our study. The unemployment rate in Andaluca is, at all times, higher than the Spanish average. At the moment, it is reaching the shocking figure of 30%, and unfortunately the rate is even higher if only women are taken into account. These facts provide some important insight: if the economic situation in Spain is alarming, even more so is the economic situation in predominantly rural states. Furthermore, they constitute a call for action, and a call for solutions that cater to the rural population and the rural
8 Source: INE (National Statistics Institute of Spain). "Unemployment rates by sex and age group ." Economically Active Population Survey. 2010.

poor. However, rural and agricultural Spain must deal with yet one more challenge: Common Agricultural Policy (CAP) reform and reduction of subsidies for agricultural production. The Common Agricultural Policy (CAP) of the European Union was designed as part of the Treaty of Rome (1957). The idea behind the policy was to ensure food supply within the European Union and did so by subsidizing local production and protecting the Unions produce from foreign competition.9 It constitutes the largest share within the EU budget; however, it has been declining in importance.
Figure 3: producer support estimates in the EU 1987-2009.10

Producer support estimates11 in the EU have dropped from above 40% to below 25% in the past three decades. This presents a significant problem for European

9 Burrell, Alison. "The CAP: Looking Back, Looking Ahead." Journal of European Integration, no. 31 (2009): 271-289. 10 OECD. "Producer and Consumer Support Estimates: Producer Support Estimate and Related Indicators by Country 2010." OECD Agriculture Statistics (database). 2010. 11 Producer Support Estimate (PSE): the annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level,

agricultural workers, who are highly dependent on these subsidies for the progress of their businesses or even for subsistence. This situation can only worsen the problem of rural depopulation or favor the creation of larger, more efficient agricultural companies. On the other hand, recent reforms of the CAP have divided its budget into two pillars; the first pillar constitutes the traditional focus of the CAP and the second (new) pillar focuses on rural development and takes into account environmental issues and the provision of public goods by the agricultural sector. The funds for the second pillar would even be targeted towards renewable energy technologies. This is good news for rural sustainable development; however, Resources allocated to the first pillar within the declining total budget allocation for the CAP for 20072013 remain about four times greater than those of the second pillar.12 Even though the CAP will keep on providing funds and subsidies to farmers in an ever-broader European Union, these may not be enough to save the Spanish countryside and new forms of business and investment will be required to make it an attractive place to work, live, and take good care of. 2.2. Renewable energy promotion. Spain has been presented with a major challenge for the following years: promoting economic activity in its rural areas. We have suggested that it is perhaps necessary for Spanish policymakers to put forward alternative forms of business that promote rural sustainable development and favor the repopulation (or stop depopulation) of rural areas. Renewable energy technologies meet the requirements for these alternative
arising from policy measures that support agriculture, regardless of their nature, objectives or impacts on farm production or income. PSE% (as a percentage): as a share of gross farm receipts (including support). 12 Burrell, Alison. "The CAP: Looking Back, Looking Ahead." Journal of European Integration, no. 31 (2009): 271-289.

forms of business to help lift the rural areas. This is even truer in the case of Spain. At the moment, Spain is the second country in the world in terms of installed wind energy capacity (behind Germany and in front of the USA); and the fifth country in the world in terms of solar energy, representing 1.3% world installed capacity.13 Renewable energy promotion, thus, is regarded as a possible solution. This section will consider the potential benefits of renewable energy deployment in a rural context and will examine certain case studies that back the arguments up with data. It has been mentioned that renewable energy has the ability to contribute to the Triple Bottom Line14 of sustainable development. Given Spains situation, it is logical for these policies to focus on the creation on employment; however, there are many more potential positive impacts associated to the promotion of renewable energies in a rural context. Burguillo and del Ro (2008)15 provide an excellent framework for assessing the contribution of renewable energies to rural sustainable development and consider numerous possible positive impacts. Among these impacts, the most relevant to our analysis are the following: quantitative and qualitative impacts on employment, both direct and indirect creation of employment shall be measured; demographic impacts, the ability to keep the area populated or attract migration; energy impacts, the ability to make rural areas energy auto-sufficient; educational impacts, as the arrival of new technology implies newly educated labor; impacts on the municipal budget, by transfers from the companies to the local governments; and endogenous development
13 Burguillo, Mercedes, and Pablo del Ro. "An empirical analysis of the impact of

renewable energy deployment on local sustainability." Renewable and Sustainable Energy Reviews (ELSEVIER), 2009: 13141325. 14 The triple bottom line is a framework for analyzing policy success, it has three dimensions: economic, ecological, and social. 15 Burguillo, Mercedes, and Pablo. del Ro. "La Contribucin de las Energas Renovables al Desarrollo Rural Sostenible en la Unin Europea: Pautas Tericas Para el Anlisis Emprico." Tribuna de Economa, no. 845 (2008): 149-165.

impacts, by taking advantage of the local characteristics and carrying out bottom-up policies. Taking all these impacts into account, different empirical studies show the impact that renewable energies may have on social welfare, creation of employment, and development wherever the are deployed.16 Furthermore, even though there are available studies, vast academic literature does not exist on the subject and less so on the case of Spain. This puts forward a question: will renewable energy promotion be able to spur rural sustainable development in the case of Spain? Again, even given the scarcity of Spain-oriented empirical studies, Burguillo and del Ro (2009)17 have provided us with three case studies in the Spanish countryside that compare the effects of three different types of renewable energy technologies: wind energy, PV solar, and biomass energy; each of them developed in a different Spanish municipality. Their findings can be summarized in the following table and provide excellent real life examples of how renewable energy can be used to favor rural sustainable development and employment creation in the case of Spain:

16 Burguillo, Mercedes, and Pablo. del Ro. "La Contribucin de las Energas Renovables al Desarrollo Rural Sostenible en la Unin Europea: Pautas Tericas Para el Anlisis Emprico." Tribuna de Economa, no. 845 (2008): P163. 17 Burguillo, Mercedes, and Pablo del Ro. "An empirical analysis of the impact of renewable energy deployment on local sustainability." Renewable and Sustainable Energy Reviews (ELSEVIER), 2009: 13141325.

Figure 4: local sustainability impacts of three different renewable energy projects in Spain.18
1322 P. del Ro, M. Burguillo / Renewable and Sustainable Energy Reviews 13 (2009) 13141325 Table 5 Summary of the comparison of the local sustainability impacts of different RES projects Local-impact indicator Investment (Ms) Installed capacity Primary energy production (ktoe)a Direct employment generated Direct employment generated per ktoe of primary energy generated Direct employment generated per Ms of investment Primary energy production per Ms of investment i. Impact on employment ii. Demographical impacts iii. Energy impacts iv. Educational impacts v. Impacts on the productive diversication of the area vi. Integration in the local economy (use of local resources) vii. Social cohesion and human development viii. Income distribution and impact on poverty ix. Other economic benets (unrelated to employment) x. Involvement of local actors and perception of the benets of the project xi. Impact on tourism xii. Creation of a local industry xiii. Impact on the municipal budget xiv. Environmental impact Wind electricity 188 Ms 208 MW 33 12 0.36 0.063 0.17 + +/0 0 +/0 ++ +/0 +/0 +/0 + +/0 0 0 + Biodiesel 15 Ms 50000 annual tonnes 70 23 0.32 1.53 4.66 ++ ++ 0 0 + ++ + + 0 + 0 0 0 /0 Solar PV 9 Ms 1 MWp 0.13 1 7,69 0,11 0,13 ++?? 0 0 0 0 0 0 0 0 0 0 0 0 /0

Note: (++) highly positive inuence on the variable considered; (+) positive inuence; (+/0) very small positive impact; (0) no impact; (/0) very small negative impact; () very negative inuence. a See text for details on the calculation of primary energy production.

As the paper discovers, each form of renewable energy has its own specific characteristics, and they must adapt to the specific features of the area and the population. In the case of wind energy, it is an attractive investment because of the income transfers from the company or provider to the local government (buying or renting the land), which can lead to indirect employment effects. Moreover, the direct and permanent employment created was 12 jobs, as well as 150 jobs in a 10-month
4.3.4.4. Income generation. to the construction of the period associated Income generation for the area has been wind farm. As for biodiesel, it constitutes
students from secondary schools, 1/4 were a perfect example of endogenous development, by takingstudents from universities and the other into account the 1/4 were from rms. 36 This is assumed by the National Renewable Plan (PER) for a wind farm with 2350 h/year. According to the PER, the 8155 MW of installed capacity in 2004 led to 15,066 GWh of electricity generation and 1295 ktoe of primary energy production. 37 We identify the primary energy production that would stem from 50,000 annual tonnes of biodiesel production capacity. The PER identies that the 6 biodiesel projects in 2004 had a combined production capacity of 81000 annual tonnes and led to 115,000 toe of primary energy production. This involves a ratio of 1,38 toe per tonne of production. Thus an installed capacity of 50,000 metric tonnes of biodiesel would lead to 70 ktoe of primary energy production. In the case of solar PV (1 MWp of installed capacity), the PER foresees that 363 MWp of installed capacity will be installed in 20052010 leading to a primary energy production of 48 ktoe. Therefore, 0.13 ktoe of primary energy are produced per MWp of installed capacity. Of course, these are approximate gures and should be taken with caution. 38 It can be observed that the solar PV installation is smaller than the other two plants but, within its category (solar PV), it is relatively large (2nd in Spain, 19th in Europe and 26th in the world). In other words, solar PV installations tend to be of a smaller size compared to the other RES categories.

functioning of the installation. The installation is visited every 2 months by technicians (mostly from outside the local area) in charge of revisions and corrective and preventive maintenance. This is thus an insignicant source of employment. Other potential sources of employment (and income) are also highly insignicant. One is the jobs created during the construction of the site (land preparation and construction of the main building). These jobs (around 10) were of short duration, although some of them were from the area. Another is the jobs created in the manufacturing of the PV panels. The rst devices were manufactured by a German RWE subsidiary. They were replaced by panels manufactured by the Spanish companies BP Solar and Isofoton. These are manufactured far from the project location (in Madrid and Malaga, respectively). Finally, the project does not seem to have generated signicant income for the area (neither directly nor indirectly, for example, by the visitors to the site) to have led to job creation. To sum up, the employment impacts are both quantitative and qualitatively extremely modest in the rural area. This is an unfortunate state of affairs, since the employment in this deep rural area is almost completely concentrated in the primary sector.

minor and table place only through the information provided to the visitors of the plant.35 No increase in the educational levels of the local population as a result of the project is identied. 5. Discussion: comparing the local impacts of renewable energy projects

characteristics of the local economy (it is basically a continuation of an existing economic activity). It creates 23 new direct full-time jobs and it is estimated that indirect jobs couldand educational impacts. Givenon top of this, we must take into account the reach up to 200; the 4.3.4.5. Demographic, energy
particular characteristics of the project (relatively small size, no link with the socioeconomic structure of the area), there are no saved jobs in Since the electricity generated is fed intothat would have otherwise been lost (in the demographic impacts. the agricultural sector the general electricity grid and no special price for the neighbours is offered, there are no energy impacts. Finally, education impacts are

almost non-existent. The project is not integrated in the productive structure of the local community, i.e., it does not create neither backward nor forward productive linkages. It is quite separated from the local production system (i.e., a production island) and, thus, has not led to a productive diversication in the area. No compensations to the local community or local farmers have taken place. The land is owned by the electric utility, which is also the project developer and, in contrast to the wind project case, there have not been income transfers (additional to tax payments) to the local municipality. The project has not affected income distribution and has not improved social cohesion or human development (i.e., number 7 in Table 1).

In order to illustrate the potential inuence of different types of RES projects on the socioeconomic dimension of local sustainability, the three RES projects can be compared between each other, taking into account the criteria of Section 2. Table 5 summarises these impacts, which are further discussed in the rest of this section. This comparison is contingent upon the specic features of the projects and the local areas where they are located and may not be representative of the respective RES categories. In order to compare the three cases, the primary energy produced in kilotons of oil equivalent (ktoe) should rst be calculated. If we assume an average ratio of 0.15 ktoe of primary energy production per each MW installed,36 then the primary energy produced in the wind farm would be around 33 ktoe. Similar calculations are undertaken for the other two projects, leading to 70 ktoe in the biodiesel project and 0.13 ktoe in the solar PV case.37 The other ratios are calculated considering these results.38
35

In 2004 the installation received around 1900 visitors, of which half where

renewable energy deployment on local sustainability." Renewable and Sustainable Energy Reviews (ELSEVIER), 2009: 13141325.
18 Burguillo, Mercedes, and Pablo del Ro. "An empirical analysis of the impact of

context of a declining agricultural sector).19 Furthermore, the case of solar power is unfortunately not as successful; the results in terms of employment are small in comparison to the other cases as only one direct job is created. Finally, in terms of demographics, the paper concludes, None of the three projects have led to a migratory flow towards the local communities, but they may have contributed to keep some people in the local territory.20 We therefore derive from these findings that the promotion of renewable energy technologies in Spain, can lead to desirable employment (and non-employment) effects. However, there are yet some alternative approaches to renewable energy deployments that might be considered for the Spanish case. The examples that we have considered in this paper already take on renewable energies in a rural context, however, it is possible to take an even more micro approach and consider the deployment of renewable energies at the community or farm level. Along these lines, N. El Bassam (2001)21 has studied the design of what is known as an Integrated Renewable Energy Farm (IREF). The concept of the IREF is a decentralized farm that incorporates all food production for the community and produces its own energy by means of renewable energy sources (the energy mix will depend on the climatic and soil conditions of the area where it is implemented). This approach, even though more suitable for smaller villages in depopulated regions of developing countries, might be appropriate for certain off-grid regions and villages
19 Another issue that must be taken into account in the biofuels case is the possible

upward impact that the development of bioenergy may have on food prices, thus reducing the purchasing power of rural communities. However, this requires an in- depth analysis that escapes the scope of this paper. 20 Burguillo, Mercedes, and Pablo del Ro. "An empirical analysis of the impact of renewable energy deployment on local sustainability." Renewable and Sustainable Energy Reviews (ELSEVIER), 2009: 13141325. 21 Bassam, N. El. "Renewable Energy for Rural Communities." Renewable Energy, no. 24 (2001): 401-408.

within Spain. Another approach to renewable energy for rural communities is that of Bangladesh. In Bangladesh, the Grameen Banks system of micro-loans has been extended and applied to larger groups with some collateral and has given birth to Grameen Shatki, a lending institution focused on financing renewable energy technologies for poor communities.22 This mechanism, apart from providing green energy to rural areas, if targeted towards the poor, can provide income redistribution through the gains derived from energy sale and production. Again, these measures take a micro standpoint and have been designed for developing countries. However, measures like these, combined with other medium and large-scale investment can provide green energy and development to the Spanish countryside and provide green lifestyles to the very poorest and most isolated. 3. Conclusion We have examined the current economic situation in Spain and have understood the implications that it has for the pre-existing problem of rural depopulation; Moreover, we have examined a number of potential benefits that the development of renewable energies may have on the rural areas economies and demographic situations. Renewable energy promotion in these areas, as observed, has the ability to create employment and provide other societal and economic benefits (such as educational improvements and income transfers), as well as cleaning up the energy bundle of these areas. Furthermore, the promotion of these energies can be regarded from a micro or community standpoint thus tackling the problem from the very bottom or grassroots. These possibilities, combined with other more large-scale renewable
through renewable energy technologies in Bangladesh, Environmental Science & Policy, 2001: 1-12.
22 Paul Bryce, Mark Diesendorf Wahidul K. Biswas, Model for empowering rural poor

energy investments, can create a green revolution in Spains rural energy production and spur investment and job creation in the meantime. Moreover, these investments and employment opportunities will contribute to decrease rural depopulation by convincing some not to migrate or even attracting migration. These solutions, as must be pointed out, do not constitute a magical formula that will make all Spains economic problems vanish. However, these measures are a great step in the challenge of separating economic goods from environmental bads, and in providing opportunities to areas that are in need of a spark.

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