Monthly Archives: October 2013

MORE EFFICIENCY, MORE PROFITS

Energy is essential in our daily lives; it helps us to produce food, to transport people and goods, to be interconnected thanks to the power of communication all over the world… Over the future decades more people will have access to energy and will enjoy better living conditions. Nevertheless, we cannot forget the pressure put on our world’s resources such as energy, fresh water and food. Therefore companies need to reduce their energy consumption and increase their energy efficiency. It means using less energy to provide the same service, so as to be sustainable in the long run and decrease the greenhouse effect.

Save energy, save money: At the enterprise level, techniques for improving energy efficiency are constantly

energy-pyramid

developing. Little changes can reduce significantly the consumption of energy. For example energy-saving lighting replacement, installing a programmable thermostat (which

saves around 10% per year on heating and cooling costs) or using sunlight, choosing windows treatment allows companies to use natural light while reducing heat loss. The benefits exceed the costs, therefore companies should not worry about the impact that investing on new energy efficiency products and infrastructures will have on their accounts, as the investment will be repaid and create profits. Furthermore, companies such as Ameresco’s, are willing to objectively develop the best energy management project for each customer in order to guarantee successful investments. The Spanish government, through new decrees such as the obligation to have energy efficiency certificates for buildings, is pushing companies to adopt more efficient technologies and processes.

 

Renewable  vs traditional: Spain is a leader in sustainable energy; renewable energy contributes moreNukes_vs_Reneables than half of Spain’s electricity mix. Hydropower and wind are the most important sources, while photovoltaic and solar thermal are being developed. The AEE (Asociación Empresarial Eólica) calculated that 160 MW of wind energy produced in Canarias reduced 36 million euros the tariff deficit of 2012.It is clear that renewable energy is a sustainable solution, nevertheless in the short run it is really expensive, the actual energy deficit is 28000 million euros, and less efficient than traditional sources of electricity such as nuclear energy. We do not have to forget that Spain depends on international markets as it cannot self-produce all the energy demanded. This is the principal reason for the Spanish energy deficit, and the government does not have solutions to solve the problem rather than increasing the price of it. The Energy commission’s president of the CEOE, Antononio Garamendi, announced that the electrical system in Spain is too expensive. President of Iberdrola, Ignacio Galán, approved and declared that if Spain stopped producing solar energy the electricity bill would drop by 10%. Do we have the money to continue spending on developing renewable energy sources?

 

No to the energy reform: The energy reform carried out last September is based on more taxes to reduce the tariff deficit. This is not the solution to reach a sustainable energy industry and the competitiveness of companies will decline, since extra taxes have been placed in nuclear and hydraulics. Moreover, a tax called “centimo verde” or green penny has been introduced to power plants that use gas, coal and fuel oil. Furthermore, subsidies have been decreasing since the 2008 crisis and companies have to face much more costs than before. The energy reform should be more structured and focus on the long term. Therefore, it is crucial to implement changes that incentive companies to reduce their energy inefficiencies, making competitiveness the highlight of the solution.

 

Better buildings:  Instead of raising taxes or trying to invent a fashionable name for the new tax, the government should implement programs as the USA does. Since 2011 “Better Buildings Challenge” has been in place in order to save energy consumption on construction by reducing the energy intensity. Over the first year, they have saved up to 2.5%, if the trend continues the objective of reducing 20% of their actual expenditure would be achieved in 2020. However, the objective as a company is not just based on reducing energy and saving money, it is also to show leadership by sharing your knowledge and transmit your strategies. As a result companies’ successful approaches are being used in stores, libraries, hotels and all kind of buildings across the USA. This program should be placed in Spain, as it is an incentive for companies to reduce the energy consumption intensity, making companies more efficient.

Conclusion: Overall, it is clear that renewable energy is a sustainable solution in the long term. However the Spanish energy system is not efficient, governments from the past have over-spend by investing in renewable energies, running deficits, accumulating debt. The current government to solve this problem is applying more taxes on energy producers and decreased subsidies. Hence companies do not have enough money to invest in innovation or implement new technologies. Therefore, the government should implement programs that promote leadership, efficiency and competitiveness following those from the United States. Spanish companies need to enter international markets, and the increased taxation is preventing them from doing so.

http://www.abc.es/economia/20131021/abci-espana-tiene-potencia-electrica-201310211202.html

http://www.expansion.com/agencia/europa_press/2013/10/16/20131016193209.html

http://www.gabi-software.com/spain/solutions/resource-energy-efficiency/?gclid=CMLkyv38qroCFVHMtAodrlQANQ

http://www.laopinion.es/economia/2013/10/20/burocracia-lastra-energia-eolica-archipielago/504913.html

http://www.iea.org/topics/energyefficiency/

http://www4.eere.energy.gov/challenge/

http://www.idae.es

Artículo: “Competitividad, energía y cambio climático”, CEOE

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SPAIN IS THE ANSWER

 

Even though globalization allows companies to enter new markets, which is a great opportunity, it also creates a new non-market environment, challenging firms. The implication of the government is highly important in this global village. The State plays the role of regulator in a market that does not seem to have frontiers, paradoxically at the same time; the government has to make its nation attractive in order to attract investors. Business strategy is based in four geopolitical forces; demography, geography, technology and culture.  Therefore, the State has to work in these 4 pillars to convince enterprises to settle down, so as to allow a future growth. Moreover the government, due to the financial crisis, has to come up with solutions to provide funding to national companies, which no longer receive loans from banks.

 

1. Giving solutions to SMEs funding.

 Spanish companies have a high dependence on bank loans in a time that credit does not flow, leading to the closure of many companies. 80% of Spanish companies are financed by bank loans whereas just 30% in the United State (coming from the Spanish journal the ABC).

 Therefore, the Spanish government, trying to change this situation, launched on Monday the 6th of October the “Alternative (fixed) Bond Market” (MARF) in the Spanish economy, which is a privately found bond market. It is an alternative financing structure addressed to small and medium-sized companies (SMEs) that are in bad situations since they are finding difficulties to obtain finance from banks. This regulation provides additional funding to companies, allowing them to issue bonds in the market. In order to issue those bonds, companies do not need to submit the documents that they were previously asked to provide by the Commercial Register, which facilitates emissions. Nevertheless, MARF will only deal with healthy and solvent companies. The rating agency Axesor predicts that this market will deal with one billion euros, being profitable, between 6% and 9% during MARF’s first year.

 

2. Government institution granting money to Spanish Companies

 

ICO-logoThe Spanish Government Credit Institution (Instituto de crédito official, ICO) aims to act as a public bank. It provides loans to fund investment 

operations or liquidity needs to Spanish companies working in any particular sector, inside or outside the country. ICO has granted in July over 2,334 million Euros claiming at its record over the past 3 years. This number outlines the recovery of the Spanish economy. Moreover, exports have increased over the last year partially due to this increased in credit.

 

3. How to be attractive for FDI – foreign direct investment?

 Labour regulation has loosened in order to attract foreign direct investment to our economy. The labour market reform implemented last February increase the labour market’s flexibility, enabling firms to hire easily their staff. Thanks to the new policy, companies can employ professionals in the short-run with temporary contracts making the company more competitive. Foreign companies are attracted by this new labour market, where the government regulation has diminished. BAYER, a German multinational is a good example to illustrate this point; it is going to invest 6 million Euros in Lagreo (Asturias), so as to extend the capacity of its installation by 25%. This factory produces Acetylsalicylic acid, the active ingredient found in aspirins, and at the end of this year the Spanish factory will assume a large part of the world production. Bayer will create new jobs and contribute to our recovery.

4. Investing in Spain, a geostrategic plan

 Spain is a world economic power and the 7th receiver of FDI, according to the “World Investment Report 2011”. Spain’s attractiveness for foreign investment lies in its domestic market and in its ability to operate with other markets. Implanting a firm in Spain is a geostrategic plan; as Spain belongs to the European Union and is the gateway to North Africa and Latin America, countries with which Spain conserves strong relationships due to its economy, history and culture.

 At the same time, Spain has a modern economy, where the service sector represents the 68.94% of its economic activity (INE data). Human capital is highly qualified and Spain features innovative infrastructures, which allow companies to increase competitiveness. All this factors appeal companies to relocate their production to Spain.

 

                   Overall, Spain is a country in which investment is safe and firms can make profits. The Spanish government helps entrepreneurs to develop their ideas, allowing Spain to play a major role in the actual globalized economy. Spain is attractive for FDI due to its geographic position, its new policies and labour market reforms, its innovative infrastructure, its human capital as well as its “(Spanish) way of life”.