Basque Country development chief hopes tax breaks will power energy investment

Q: Energy is a key sector for the Basque Country. Spain’s renewable energy sector attracted a huge amount of investment some years ago then clawed back some of the incentives that were on offer in the sector. Where does the Basque Country sit within that, and was Spain too reliant on incentives to attract renewable companies?

A: Renewable energy is a big industrial sector [in the Basque Country]: we have big, important technological companies that are suppliers around the world. But at the same time, we don’t have a lot of generation related to renewable energy. So we have a lack of generation and a big industrial sector – it’s quite a complicated area. If the Spanish government starts again with renewable energy, I think we have potential.

There have been four or five years with no renewable [energy projects] and no subsidies, and I think that [the government has] understood that we cannot continue like this: we need more generation of renewable [energy]. It’s important for [the development of] wind energy and from the photovoltaic point of view. So the government has started to subsidise companies again so that we have more renewable generation.

From the Basque Country point of view, we have to establish where we need energy generation, because we have to establish places for generation, and offshore energy is quite a good opportunity for us. We have to work on these opportunities, knowing that there are some problems with regulations from the Spanish point of view so we will have to work together with [the national government]. 

Q: How much leeway do you have at the regional level to offer incentives or to adjust the business environment to try to incentivise companies in the renewable energy sector?

A: We have some instruments related to the industry sector as a whole. I think the most important thing is the tax system. In the Basque Country, we have our own tax system – so we collect our own taxes and decide where to invest our incentives or our programmes. From that point of view, we have our own programme related to the development of our industrial sector. It is going to be a key issue for our president, and we have decided that we want the manufacturing sector in industry to make up 25% of our economy. 

Currently we are at 24% but it is not so easy to arrive at 25% and we have to base it on two important things. One is technology; we have to subsidise technology and work with companies very closely and as a government be a [reference point] for our companies, and at the same time work internationally. So with industry, technology and international issues we think that we can make important developments for our country and maintain our economy, and at the same time balance the social needs of the country.

Q: Spain seems to be recovering quite well from the economic problems it had post crisis and there has been an increase in FDI going into Spain more generally. Is the Basque Country seeing these dynamics played out there?

A: Yes. Nowadays, apart from Madrid and Barcelona, which are very big cities, the third best place for [economic growth] and attracting investment is the Basque Country. We have been doing pretty well but we have to maintain this position. With our tax incentives and all the incentive programmes related to industry, I think we can be more attractive to new industries wishing to establish themselves in the Basque Country. So all things considered, we have opportunities.