Abengoa :: Innovative technology solutions for sustainability

Innovation and Sustainable Development
New Economy Forum
Innova Spain Forum
Madrid, April 17^th, 2013

Manuel Sánchez Ortega’s speech,
Chief Executive Officer of Abengoa

Esteemed Ambassador Mr. Alan Solomont,
Esteemed President of New Economy Forum Mr. José Luis Rodríguez,
Ladies and gentlemen,
Good morning and I thank you all for attending.

If you will allow me, to reciprocate the courtesy of the ambassador of the United States in speaking to us in Spanish, I will say a few words in English.

First of all, I would like to express in the name of Abengoa our warmest condolences to the families of those that were killed at the Boston bomb attacks on April 15^th, express also our wishes for the recovery of those that were wounded, and express our support to the nation of the United States against these acts of terror.

I would like now to sincerely express my deep gratitude to Ambassador Solomont for agreeing to introduce me today. I am fully aware that, independently of the mutual affection we share, the real reason that the ambassador is here today is the long, honest and successful track record of Abengoa in the United States. A history that has been characterized by the seamless commitment to values that we share: passion for innovation, admiration for entrepreneurial spirit and respect of commitments. Thank you again, Ambassador.

I, of course, also wish to thank the sponsors of Innova Spain Forum, namely El Corte Inglés and the Ramón Areces Foundation. And I do so as part of the fondness I have for El Corte Inglés in being the first company where I worked over the summer between the second and third years of pursuing my university degree. I spent two months, July and August, selling goose down comforters. I had hoped they would put me to work selling bathing suits, or towels, or sporting goods, but no; comforters in the middle of August. As you can imagine, my heart sank, and I saw my dream of saving a few pesetas to cover my expenses as a student vanish. Well, the fact is that nothing could have been further from the truth. I discovered that there are a lot of people who get ready for the winter ahead of time, taking advantage of summer sales, and I managed to top the entire department’s sales list. That proved an unforgettable lesson in learning that opportunities sometimes come disguised in ways we least expect; in this case, wrapped in feathers.

Today I have come to speak to you here at the Innova Spain Forum bearing a message: Spain is not innovating enough.

But I would also like to deliver a message of optimism: Change is possible.

And I shall illustrate the latter in two ways. On the one hand, by referring to what is happening in other countries, especially in the United States, and, on the other, by sharing with you what more and more people find to be one of the most incredible business transformation processes of an organization through innovation: Abengoa.

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The idea is simple.

If we want Spain to be able to enjoy the level of development that is characteristic of the most advanced nations, and for this development to be sustainable in every sense of the word, the only way to do so is through knowledge and innovation. Innovation is the only possible path we can take towards achieving the sustainable productivity and competitiveness needed to have conditions for resilient prosperity to ensure the well-being of our nation in the medium and long term.

In short, innovation for sustainable development.

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And what is sustainable development?

I understand sustainable development to be development that is characterized by three fundamental aspects.

1. First of all, it is the kind of development that can be sustained over time in a stable manner, without any major alterations, alterations that are usually linked to a lack of strategy or to different types of speculation.
2. Secondly, sustainable development implies environmental conditions and the use of natural resources in such a way that they may be enjoyed and augmented by future generations.
3. And, finally, it is the kind of development in which all citizens have the opportunity to take part.

These three dimensions–economic, environmental and social–are essential to steady progress in a modern society. We could say with absolute certainty that this has been true at any point in history, and we can undoubtedly also say that this is increasingly more certain with each passing day.

We are on the verge of an estimated world population of 9 billion people. We will reach this figure by 2050, and this incessant population growth of our planet poses significant challenges and requires taking action that I would say cannot be put off.

One of such measures, and among the most important, is that we need a new energy model that is sustainable along the three aforementioned dimensions. The world needs energy, and it is always going to need it, and addressing the energy model we need is therefore a matter of the utmost importance. And this energy model can only be based on renewable energy sources because our current fossil fuel-based model has been worn out as a model due to the inherent limited nature of our resources. This is evident, this is a fact, the days of fossil sources are numbered and with each day that goes by we are getting closer to their end. Some will be more pleased by this and others less so, but nothing is going to change the point at which fossil resources run out. A song by Joan Manuel Serrat from 30 years ago, perhaps some of you may remember it, goes like this: “the truth is never sad, but it has no remedy”. Well, indeed, this is what is happening with the depletion of fossil energy sources; it has no remedy.

But furthermore, in addition to fossil-based energy sources being limited over time, they are causing climate change that we cannot afford from any standpoint. Not from an environmental perspective, not from a social perspective and not from an economic perspective. In this regard, it is fitting for us to recall the statement issued by prestigious economist Sir Nicholas Stern in January during an interview at the World Economic Forum held in Davos: “Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon that we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then.”

Published in 2006, the Stern Review pointed to a 75% chance that global temperatures would rise by between 2 and 3 degrees above the long-term average; however, the author of the report, with further data and evidence, now believes, 7 years later, that we are headed towards an increase of between 4 and 5 degrees.

The new president of the World Bank, Jim Yong Kim, in turn pointed out at the gathering in Davos that a 4-degree rise in the earth’s average temperature will result in water and food fights everywhere.

In order to prevent this from occurring, Kim stated that forceful action was needed to create a CO₂ emission rights market, immediately eliminate fossil-fuel subsidies, and “green” the world’s 100 megacities, which are responsible for 60 to 70% of global emissions.

As far as the issue of subsidies for fossil-based energy sources is concerned, worth remembering is the report by the International Monetary Fund, issued in April of this year, which points out that “direct and indirect fossil fuel subsidies provided by both rich and poor countries to keep their citizens happy are holding back the world economy, accelerating climate change and damaging the health of current and future generations”. The report also adds that these subsidies “encourage people to use excessive amounts of energy, lowers incentives for investment in renewable energy and accelerates the depletion of natural resources.” To the cost of these subsidies, which run into trillions of U.S. dollars worldwide, we must add the cost of the damage to the planet caused by climate change, the cost of diseases resulting from pollution and the environmental costs of relatively frequent accidents.

This should leave no room for doubt that the new energy model must be built upon the essential underpinnings of massive use of renewable energy and rational use of natural resources, for their limited nature compels us to place an emphasis on efficiency, reutilization and waste treatment.

Having said that, a sustainable model for economic development which takes into account these needs can only be achieved through knowledge and innovation, which constitute the primary mechanism for generating value and growth in modern societies. As stated by Robert Solow, awarded the 1987 Nobel Prize in Economic Sciences, the highest percentage of long-term growth comes from innovation, quantifying this percentage at 80%.

And what do I mean by innovation?

I am talking about innovation in the broadest sense of the term; that is, “knowledge-based changes that generate value”. This, then, involves developing technology, developing new processes and pursuing new ways to solve old problems. Changes that are centered not only on scientific and technological know-how, but also on the arts, humanities and social and economic sciences; knowledge acquired inside and outside companies through research, technological development and creativity of all kinds. Changes that generate value that is recognized by the market and which can be anticipated by the driver; and changes that take place in an environment aimed at genuine prosperity in lieu of speculation.

From a business standpoint, innovation entails risks that must be controlled through assessment and ongoing monitoring; however, the greatest risk of all is to take no risk whatsoever. Innovation must be consciously adopted as an option, through strategy and planning, and should be a part of business culture. Innovation requires people, processes and tools for managing it; and it should be recognized and gauged in product and service enhancement and in capitalizing on results.

Above all other types, I shall refer mainly to technological innovation, the kind of innovation that hinges upon generating knowledge through research, transformation of this knowledge into technology, and which evolves into competitiveness, sustainable development and medium- to long-term growth. This planned chain of research, technological development, innovation and competitiveness is what sets the most developed nations apart and makes them strong.

This chain requires:

• brave entrepreneurs who know how to identify innovation as a source of growth and are willing to take on the risk of seeing it through;
• universities and research centers that understand creation and transfer of knowledge as a need which is embraced in their inherent duty to society,
• and governments that plan and make laws predictably in order to create a solid framework which is conducive to the virtuous cycle of education, investment and innovation.

Please allow me to make use of a historical perspective to explain some of these things.

The greatest source of knowledge in our society has historically been the university, and still is today. In Spain, we have not been and probably are still not fully aware of the importance of the role universities and research facilities play for development in today’s world. Their role has gradually evolved from being purely learning-centered medieval institutions to what they represent today in the most technologically advanced societies.

At the beginning of the 19^th century, the first research university in history was founded in Berlin. This model was transferred to the United States when the Johns Hopkins University opened in 1876 as the nation’s first research university.

During World War II and over the decades that followed, the United States established itself as the world’s first great power, largely as the result of a system of universities and research centers where the knowledge is produced to drive the nation’s technological, industrial and economic power.

In order for the system to have produced all of its major results, a fundamental occurrence had to have taken place beyond the transformation of a number of universities into research institutions.

American universities and research centers are part of a triangle of alliances upon whose two other vertices are found the national interests of the United States, and the country’s business organizations:

• Firstly, national interests are clearly reflected in scientific and industrial policy that is planned steadily and upheld over time by politicians of any affiliation.
• In turn, businesses, within a stable environment, are willing to undertake the risks involved in the development and commercialization of new products by making use of scientific and technological know-how.

Here we might ask ourselves, “Where does this entrepreneurial spirit shared by universities, the business community and administration come from in the United States?” I have no doubt that there may be a variety of factors that might explain this, but without a doubt there is a key factor without which it would be impossible for this convergence to naturally occur. The factor I am referring to is the educational model from the first year of schooling, an educational model which, applied over decades with no changes of course, makes it possible for generations of men and women who will carry out their professional activity in (i) industry, (ii) at universities and research centers or (iii) in politics, to have a mindset that prepares them to pursue, prioritize and reward innovation wherever it may come from.

Elementary education plays an essential role in providing the basis for everything that happens afterwards.

• Education aimed at developing innovative entrepreneurial spirit, for which it is essential to separate the concepts of error and failure at the core.
• Education which embraces the need to try to do things, working on the assumption that mistakes are inevitable and provide a great source for learning.

And mistakes are not failures. Making mistakes is the precursor to going back and trying again, correcting the mistakes we have encountered. The innovative entrepreneurial spirit of American universities, businesses and administration does not come from out of nowhere; it is sown from the first year of primary education and gives rise to one generation after another of curious and challenging minds that understand that failure exists only when no effort is made to try to do things. And these minds are generous in acknowledging success.

In Spain, the educational model turns mistakes into failures, and this destroys initiative and snuffs out spontaneity and newness, which ultimately leads to mental inflexibility out of a fear of failure. It is a system based on memory and knowledge. It is not based on skills. It is not based on learning by doing. It centers on passive training of students. What is the result of this? Please allow me to share a terrifying piece of data with you related to our educational model: in Spain, 28.4% of young adults between the ages of 18 and 24 have not completed secondary education. In Germany, this figure is 11.9%.

If we do not prepare our children from infancy to:

• develop an entrepreneurial spirit,
• develop the curiosity for innovation,
• feel the irresistible need to question everything,
• approach mistakes as an incentive to try again harder instead of being the sword of Damocles which hangs over their heads,
• or for them to have the ambition to want to make everything better, aware that the only real limit is to not make the attempt.

We simply will be powerless to change the model.

The American model has been recognized and applied for decades, to such an extent that back in 1961 President Eisenhower stated in his farewell address to the nation: “the solitary inventor has been overshadowed by task forces of scientists in laboratories and testing fields; the free university has experienced a revolution in the conduct of research; and the government contract becomes virtually a substitute for intellectual curiosity”.

The partnership among government, industry and universities, which in the era to which Eisenhower alluded was applied fundamentally to the defense industry, later gave rise to solid development in fields that include agriculture, microelectronics, medicine, computer science and telecommunications in their numerous branches that exist today.

The developments achieved this way, not only in the United States, have enabled an overall transformation towards the so-called knowledge society, a society in which science, research, technological development and innovation are the main tools for sustainable development.

Fifty-two years after this declaration by President Eisenhower, incidentally a member of the Republican Party, President Obama, a Democrat, said some very interesting things on April 2^nd, some of which I shall read to you in the next three quotes:

1. “Today I’ve invited some of the smartest people in the country to talk about the challenge that I issued in my State of the Union address: to grow our economy, to create new jobs, to reignite a rising, thriving middle class by investing in one of our core strengths, and that’s American innovation”.
2. He also stated that “ideas are what power our economy. It’s what sets us apart. It’s what America has been all about. We have been a nation of dreamers and risk-takers; people who see what nobody else sees sooner than anyone else sees it. We do innovation better than anybody else, and that makes our economy stronger. When we invest in the best ideas before anybody else does, our businesses and our workers can make the best products and deliver the best services before anybody else”.
3. And the president concluded by emphasizing that “I don’t want our children or grandchildren to look back on this day and wish we had done more to keep America at the cutting edge. I want them to look back and be proud that we took some risks, that we seized this opportunity. That’s what the American story is about. That’s who we are”.

At this point it might be a good idea to stop for a few moments and reflect on something that is both elementary and essential. Innovation requires investment with a long-term mentality, it requires taking technological risks and, without any investment, there is simply no innovation. As Serrat said, “the truth is never sad, but it has no remedy”.

One difference between nations with successful and unsuccessful innovation models is the role of private financing with respect to public investment. Thus, according to Main Science and Technology Indicators, whereas in countries like Japan, Korea or the United States the public funding burden of investment in R&D totals, respectively, 24, 28 and 37%, in Spain this figure is 61% versus just 39% from the private sector. Curiously, Germany’s percentages are exactly the opposite, that is, 39% public and 61% private.

However, then, if the main role of public administration is not to provide funding, what is it? Well, in addition to maintaining an education model which does not change every four years, its role is that of establishing a predictable framework in which private investment is willing to take on the risks and time limits inherently linked to innovation.

Seed capital, risk capital, private capital, businesses, capital markets are willing to undertake the technological and industrial risks associated with innovation, knowing that there will be mistakes, not failures, but which in the medium term always generates value. Private investors require clear rules of the game under the protection of which they may assume the technological risk of investing their money, that of their families or that of those who have saved away and bestowed their trust in them. What investors are unwilling to assume is neither the risk of the playing rules changing in the middle of the game, nor legal insecurity.

And no matter how much one might insist that investors should assume the risk associated with legal insecurity, what is certain is that this type of capital is not the kind that is interested in sustainable development, social welfare or progress. The type of capital that is willing to invest in environments where legal security is a concept that is malleable to blows from decree-laws is short-term speculative capital, capital which undoubtedly will demand a premium for taking on this risk. Entrepreneurial capital, long-term capital, the kind that is needed to create a stable environment where innovation may flourish is incompatible with legal arbitrariety. The question that must be asked of someone who insists on encouraging investors to invest in countries with no legal security is the following:

“Would you invest your own money, your family’s money or the money of the investors in your company that have entrusted their savings to you, in a country without legal security?”

In short, innovation requires investment, and investment requires clear rules. Trustworthy countries that do not toy with legal security attract investment that leads to innovation, progress and well-being. Nations that believe that legal security and upholding anticipated commitments is a matter of shades of meaning scare away investment and thereby kill innovation. I shall refrain from once again citing Serrat.

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Within this context, what is Spain’s situation in relation to R&D and innovation?

According to data from the Cotec Report 2012, Technology and Innovation in Spain, and the INE 2011 Statistics on R&D Activities publication, R&D investment in Spain multiplied by 2.5 between 2000 and 2008, to reach a total of 1.39% of GDP. This progression came to a standstill and there has been a slight retrogression in the last three years. Average investment in R&D in the European Union today stands at 2.4% of GDP; in Germany the figure is 2.8%, in Finland and Sweden, 3.5%, in Japan, 3.4% and in the United States, 2.5%

The economic crisis has revealed the greatest weaknesses of certain countries and regions in comparison to others. One of the main differentiating characteristics is that the most vulnerable economies are those in which the burden of the industrial sector, in the broad, modern sense of the term, in which innovation and technology play a key role, is lower. Sufficient evidence can be found by comparing Germany with Spain, or even different regions within Spain. According to the National Institute of Statistics, the unemployment rate in Andalusia totaled 37.8% in 2012, in contrast to the figure of 15.9% in the Basque Country, in other words, under half. On the other hand, the weight of industry in the overall Andalusian economy totaled just 11.3% with respect to 27.2% in the Basque Country, that is, more than double.

The only way out that is sustainable in the long term is the development of a modern industry based on knowledge, innovation and technology. This will make us more competitive in a way that is sustainable. We need to take R&D+i most seriously, not as a way to get out of the current crisis, for the effects of these policies take years to bring about change, but rather so that it may be a constant in our economic model as the key factor for growth upon which to lay the foundations for an economy that is less vulnerable to new economic crises.

Improving competitiveness solely on the basis of impoverishment, if this were the case of a successful course, will be so only in the short term because, believe me, countries with lower costs will always appear. Our aspiration in terms of a forward-looking plan cannot be centered on our always being the country with the cheapest workforce. On April 8^th, the New York Times published news to the effect that an increasing number of companies are considering opening new plants in Cambodia instead of China because

the cost of a worker at a manufacturing plant there is merely a third of the cost of a person in China.

How can we approach this path in Spain?

According to the internationally acclaimed model of Professor Hausmann, Director of the Center for International Development at Harvard University, a nation’s industry growth can only be achieved by developing its own capabilities, fundamentally through R&D, technology and knowledge, and based on products that are close to those of which prior knowledge is possessed. This involves working from existing sectors, fortifying them, making them competitive and making them grow out towards new products on the basis of the development of knowledge and technology. In general, it means avoiding leaps to sectors that require capabilities that differ greatly from those one has, because this usually leads to failure.

Spain has a variety of sectors that fulfill the requirements for building prosperous and sustainable industrial development upon them. To cite a few examples, these include the food and agriculture, railway, aerospace, automobile, textile design and renewable energy sectors. From among these, I shall refer to the renewable energy sector, apart from being the industry I am most familiar with, because of its capacity for growth, in revitalizing investments in innovation and because it represents a genuine opportunity for placing Spain in a position of world leadership.

It is universally recognized that the world will evolve in the coming decades towards a renewable energy model. In the circle that is closest to us, we need only to check the Energy Roadmap 2050 that was recently approved by the European Commission of the European Union. With major global growth thus being predictable in this sector of economic and strategic importance of the highest order, Spain enjoys the fortunate circumstances of having companies that are leaders in their respective technologies; particularly in the case of wind power and solar thermal technologies.

Spain is today the global leader and Spanish companies are ranked at the top in developing and building wind and solar thermal power plants in this important emerging market.

For the first time in history, Spanish companies are making significant contributions to the technological and industrial development of a sector of worldwide economic impact through high value-added products. This technological leadership was achieved as the product of the concurrence of the following factors:

• a sustained commitment to innovation,
• a long-term research and development program carried out in conjunction with research centers, universities and private companies,
• an industrial plan prepared by central and regional administrations that understood the differential value of the commitment,
• a wide-ranging group of entrepreneurs who made the decision to take on the challenge and the technological risk, risking their money as well.

This globally competitive industry at the technological cutting edge yields major benefits in terms of employment and industrial development, not only directly, but also prompted by other sectors and economic activities indirectly, given that most of the production chain stays in Spain.

Any investment in wind and solar thermal power in Spain generates virtually all of its economic activity in our own country. At this time, thousands of Spaniards enjoy quality jobs dedicated to designing, building and operating wind and solar thermal power plants in Spain and in many other countries, while generating economic activity in their surroundings. Spain’s leading technology has given rise to Spanish companies that are building and operating plants in the most developed countries in the world, resulting in the creation of quality employment in Spain and a significant level of exports. This is a sector characterized by a highly technological component and R&D investment which, in the case of solar thermal technologies, is three times higher than the Spanish industry average.

According to the International Energy Agency, solar thermal power will be the key player in the 21^st century thanks to its manageability. And unlike other renewables, its storage capability makes it non-intermittent. Just as hydroelectric power enables an intermittent source like rain to turn into one that can be managed, solar thermal technology does so with the sun. Production costs equivalent to those of gas combined cycles are expected to be achieved by 2020. Solar thermal energy is an undeniable reality and it has a bright future.

The global energy model will be a renewable one, with or without Spain. However, we have a unique opportunity today to maintain and achieve growth in our leadership, export technology, and create wealth and high-qualification jobs. We could also opt to, like so many times before, be mere users that pay a high price over the course of decades for products designed by others, with R&D investment being made by others, and quality jobs being created outside of Spain. With the effort of the business community and support from administration, this sector can become a sustainable driver of industrial and economic development.

This no doubt calls for reliable independent government administrations which, through their decisions, uphold clear, stable and consistent industrial policy that transcends the legislature or party to which they belong. Administrations with a strategy for developing sectors where Spain can be competitive; and this of course demands administrations that do not create uncertainty with a posteriori modification of conditions that cause serious harm to innovative companies and kill the industry.

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Please allow me to devote the last few minutes of my presentation to illustrating how companies can and should also back innovation as a source of leverage for achieving sustainable growth, increasing competitiveness and creating jobs, and I would like to do so by sharing an exciting adventure with you: the adventure of Abengoa.

At Abengoa, innovation in the broadest sense, research and development, are the cornerstones to our strategy for growth.

We focus our growth on new technologies that contribute to sustainability and which include, for example:

• generating electrical power from renewable sources,
• producing biofuels from agricultural biomass and municipal solid waste,
• producing drinking water through desalination or reutilization,
• using hydrogen as an energy vector,
• recycling industrial waste,
• and creating environmentally-friendly infrastructure.

We are engaged in promoting new solutions for the energy and environment sectors on the basis of programs for technological development and innovation, and for this reason we invest around 100 million euros each year in R&D in order to develop and grow high-potential technologies. We do all of this with a special emphasis on attracting, training and retaining the very best people and through Abengoa’s unwavering commitment to sustainable development.

Our R&D activity implies close collaboration with a large number of universities and research centers in a variety of countries, mainly Spain and the United States.

Our R&D+i system includes management and assessment tools that help us to minimize risks and maximize the value of our research, development and innovation projects. For each project, we evaluate the different phases involved in project evolution on an ongoing basis:

• starting with the identification of opportunities or needs,
• preliminary research,
• conceptual design,
• pilot plant-scale experimentation,
• demonstration plant-scale verification and,
• finally, commercial deployment.

During each stage we encounter mistakes, not failures; we assess whether we should continue or not; we discuss the lessons learned; and we make adjustments with a view to continuing on to the next stage. It is a continuous process involving technological, economic and commercial perspectives.

At all times we have technology innovation projects that are already in operation, projects involving the implementation during the commercial phase of new proven technologies, and projects dedicated to developing the new technologies that will support our solutions in the medium and long term.

We have a team of 726 people devoted to technological innovation, and we have processed 221 patents over the past 4 years, which I think is the best indicator that we are headed in the right direction.

Two examples of this trajectory from R&D to new products can be found in our superheated steam solar power towers and our plants which turn biomass into biofuels.

In the first case, we have progressed from saturated steam power towers like the PS-10 we operate in Seville, which was the first commercial solar power tower in the world, to a 50 MW superheated steam power tower we began building in 2012 in South Africa. The technology employed by this new plant achieves:

• a 40% increase in generation cycle efficiency
• and a reduction in water consumption of over 80%
• the two improvements lead us to a cost reduction of 25%, bringing us closer to reaching parity with other fossil-based energy sources.

Furthermore, the new power towers we are designing and testing now, characterized by higher power output capacity and higher temperatures, which will be available commercially in the next two years, will once again lower production costs, lending further credence to the aim of this technology being competitive with combined-cycle plants in the 6- to 7-year horizon.

In the case of second-generation biofuels, we have developed out of the laboratory an efficient process of enzymatic hydrolysis that has already been tested in pilot plants in Nebraska and demonstration plants in Salamanca. From 2009 to 2011, the enzyme cost per liter of ethanol was divided by three and we expect to divide it once again by three by the end of 2014. The commercial plant in Hugoton (Kansas) will enter into operation over the course of 2013:

• producing 100 million liters of ethanol per year from corn stalks,
• yielding 300 liters of ethanol per ton of corn stalk,
• and at an estimated cost for this first plant of only between 5% and 20% over the cost of producing gasoline, assuming an oil cost of between 100 and 80 dollars per barrel.

There is no doubt whatsoever that in a very short amount of time the lignocellulosic bioethanol produced in future plants will be fully competitive. And here I wish to acknowledge the support from the U.S. Department of Energy in developing this first plant.

One derivative of this technology is the conversion of municipal solid waste into biofuels, a project we are most enthusiastic about and one which is already operating at demonstration plant-scale in Salamanca. The challenge facing our society with respect to managing solid urban waste is a hair-raising one, for every day there are more and more of us who generate an increasing number of wastes. In Spain alone, we produce around 25 million tons of waste each year, and turning this waste into biofuels would be equivalent to replacing 18% of the gasoline consumed today derived from oil, which, if we bear in mind that we pay other countries approximately 40 billion euros in importing hydrocarbons, could represent approximately 7 billion euros less in our unstable trade balance. And, in addition to this economic benefit, there is the environmental and social benefit of creating jobs in Spain.

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I shall now conclude by citing the five key components for driving innovation, competitiveness and sustainable development to provide an executive summary:

1. First of all, an education system which prepares citizens to further innovation, citizens who will perform their duties in private companies, at the University, or in Public Administration.
2. Secondly, close collaboration among businesses, universities and public administration.
3. Thirdly, the availability of funding, mainly taken on by the private sector, for new developments ranging from the laboratory to demonstration plants.
4. Fourthly, clear, long-lasting innovation policies and industrial development plans for promoting the economy sectors in which to be able to exercise leadership.
5. And fifthly, legal security.

I have nothing further to add except that I would once again like to thank the organizers of today’s gathering, Ambassador Alan Solomont and all of you for your attention.

Patricia Malo de Molina, Abengoa’s Chief Communication Officer

The annual meeting of the World Economic Forum took place beginning on January 23 in Davos, Switzerland. For five days, this annual gathering brings together a select group of business and political leaders, economists, intellects and journalists to engage in debate on the most pressing problems facing our society. Occupying a prominent position among the issues addressed was, of course, environmental protection.

In its 43^rd year, the World Economic Forum held in Davos focused primarily on the economic crisis we are enduring. Nevertheless, amidst great financial uncertainty, scientists and intellectual leaders sought to take the opportunity to speak out on one of the biggest problems facing us today: climate change. Talks delivered by experts aimed at stressing the fact that our planet knows nothing of delays or of more or less propitious economic situations. Impassive to the socioeconomic changes revolving around it, global warming marches on.

At the crux of the conference, Nicholas Stern, a member of Abengoa’s International Advisory Board, warned that his calculations on the effects of climate change pointed to in his renowned study commissioned by the British government in 2006 were too optimistic. Stern did not hesitate to affirm that he underestimated the effects and regrets not having been more “blunt” about the threat posed to the economy by rising temperatures.

The Stern Review, as the study is known, estimated that global temperature would rise by between two and three degrees above the historical average. Stern asserts now, however, that the forecast is closer to four or five degrees. The expert therefore emphasized the importance of decreasing the production of fossil fuels, substituting them for other renewable energy sources that are more beneficial to the environment.

Stern’s comments came as Jim Yong Kim, the new president of the World Bank, also underscored the risks of rising global temperatures. The leader did not hide his concern about the future to which we are headed unless we take immediate action: “There will be water and food fights everywhere”. Kim also reaffirmed his pledge to make tackling climate change a top priority of his five-year term.

We need only to take a look at recent events in order to understand the impacts of climate change. Last summer, the United States suffered the worst drought in the last 50 years, affecting 70 % of the nation’s corn crops. Just two months later, eight countries in the Americas, including the United States, endured the consequences of Hurricane Sandy, which left more than 250 people dead. More than 600 people perished in the Philippines as the result of Typhoon Bopha, and tornadoes in Buenos Aires caused 25 fatalities and heavy property damage on April 4, 2012. These are just some of the examples which support the prevailing opinion among scientists regarding the direct relationship between the increasing occurrence of these types of natural disasters and climate change.

As expressed by Jim Yong Kim in Davos, halting climate change is everyone’s duty: public and private bodies and even citizens alike. But Kim took the opportunity to go a step further by encouraging private companies to invest in renewable energies, a sector that is directly involved in sustainable development and the struggle against global warming and its adverse effects. The president of the World Bank proposed, furthermore, a series of initiatives that include, among others, the creation of a carbon market and the elimination of subsidies for fossil fuels. Without a doubt, such proposals may constitute the first unfaltering step in putting a stop to global warming and the progressive deterioration of the environment.

José Domínguez Abascal, technical general secretary of Abengoa

One of the most frequently repeated affirmations in Spanish political and business forums over the last few years is the assertion that we need to change our productive model and back innovation if we want Spain to fully join the ranks of the world’s most advanced economies as a surefooted member. However, it must be understood that innovation is not a magical or miraculous phenomenon that arises spontaneously out of human imagination as the result of merely invoking it. Innovation is the product of rigor and systematic effort. It is the result of strategically programmed activity which involves the pursuit and appreciation of the value of goods and services that have never been exploited by others before. This inevitably entails certain risks that need to be controlled as far as possible, but these risks must be taken, for they are necessary. The greatest risk of all is taking no risk whatsoever.

Nothing will generate value in a more stable fashion than knowledge and innovation. However, applying knowledge through innovation requires prior generation of the former; that is to say, it requires research and technological development. R&D and innovation are elements which must necessarily go hand in hand in pursuit of the same objectives. We need innovation to generate value, but innovation is impossible unless we develop the knowledge to support it.

Developments achieved in this manner have not only enabled us to systematically generate and apply knowledge in our time, but have also given rise to an overall transformation towards the so-called society of knowledge.

This new way of doing things requires business owners who are willing to take risks and engage in long-term efforts; business leaders and entrepreneurs that are committed to knowledge as a source of wealth and who do not hope for easy profits from a speculative economy. We have an obligation to combat speculation-based economy because its existence is not only socially and economically unsustainable, but also because it is detrimental from the onset, for, by creating the sensation of instant results, it leads us to abandon more sustainable activities and sectors offering greater long-term value.

We as corporations need to allocate significant resources to R&D, under the understanding that this is not just another commercial or industrial practice, but rather entails higher degrees of difficulty and risk, coupled with a need for a sustained commitment over time and a higher tolerance for error.

Generating knowledge that can be applied through innovation requires an intense relationship among three key players: governments, knowledge creation centers, and businesses. Recent history abounds with examples which show that in order for a country to be a technological leader through its companies, there must be intensive R&D activity within the companies themselves, a range of universities and research laboratories in which to train experts and carry out the basic and applied research that makes technological advancement possible, and governments which promote and plan development.

Here I would like to mention the theory of Professor Hausmann of the Kennedy School of Government at Harvard University. His theory states that a country’s wealth is determined by the quantity and quality of the capabilities it possesses. Having access to a multitude of capabilities leads to being able to make and export a large number of products, including products that require numerous and complex capabilities, and which therefore bear significant added value. However, as Professor Hausmann points out, this is a vicious circle; if one does not have any products and is poor, then it is difficult to develop capabilities, and without capabilities, it is hard for one to stop being poor. What is the key to being able to make progress and gradually break this cycle? Tapping into products close at hand. Seeking growth in that in which we are strong, expanding our capabilities in this area and expanding our range of products.

The spectrum of products consumed around the world is like a forest of trees with interwoven branches. The businesses of a nation are like colonies of monkeys that live among them. We need to grow and colonize the forest by jumping to the nearest branches. Always staying in the same spot does us very little good  because we deplete the place where we are and perish little by little; however, neither can we attempt to colonize just any place in the forest by sending out isolated individuals that will meet their demise at the first sign of trouble.

Spain is a country that possesses important capabilities in a number of sectors which can give rise to tremendous growth through R&D and innovation. Growth in products and growth in product quality.

This requires clearly defined, stable national strategy from government administrations for developing the sectors where we can be competitive. A solid strategy that is sustained over time and which transcends those holding political power at a given time. It requires R&D+i programs that are generous, but even more importantly, it requires that they be courageous in establishing priorities, which means having to say no more often than saying yes.

A good example can be found in the renewable energy sector, particularly in the case of thermal solar power, where Abengoa is playing a role as an international leader as a product of having developed, through major R&D effort, the capabilities needed to develop this technology. This position of leadership can only be upheld through continuous support of R&D, which, following the example above, is aimed at empowering us to colonize the forest. It is essential in this case to back pilot and demonstration facilities that will help us take the leap from the laboratory to the first industrial application.

The policy of incentives for renewables in Spain was positive along these lines to the extent that it brought about innovative infrastructures, yet harmful to the development of the technology itself when the lack of flexibility and agility led to regulation and technological development falling out of sync, giving rise to repeated solutions whose greatest aim should have been to lead the way to other more advanced solutions. Today, the latest interventions by the Spanish government have put the renewable energy industry at very real risk, which could put an end to the sector in Spain and threaten any position of global leadership achieved by the nation’s corporations, and all of which is the result of a short-term and short-sighted vision.

Patricia Malo de Molina, director of communications at Abengoa

The World Wildlife Fund (WWF), the world’s leading conservation organization, recently published a new report titled “Putting the EU on Track for 100% Renewable Energy”. The report shows how Europe could reduce current energy use by 38 % and generate 40 % of its energy from renewable sources by 2030 to thereby achieve a fully renewable energy system by 2050.

This report comes as the European Union calls for member states to implement policies to promote CO2 emission cuts. According to estimates by the WWF and other non-governmental organizations, including Friends of the Earth (FoE), executing these types of measures could lead to an emissions reduction in Europe of up to 40 %. Furthermore, the reduction in energy use could save 250 billion euros each year as the result of a drop in consumption levels, as well as lower energy production costs and fewer energy imports.

Accomplishing these objectives, of course, requires proactive policies to drive forward the use of renewables. Thus, in addition to the naturally resulting environment benefits, such measures would help put an end to the energy instability brought on by high dependency on fossil-based energy sources that mainly come from politically and economically unstable countries, which is the reason for the ever-present risk of a supply shortage.

Likewise, essential in making these favorable forecasts come true is a stable approach to energy reform, agreed to by consensus, intended to enable us to determine predictable results and firmly back technological innovation (R&D+i).

For this reason, the Committee of the Regions (CoR), the EU’s official advisory assembly, challenged the Commission to expand its perspectives in the realm of renewable energy sources beyond 2020, given that only a long-term strategy can provide assurance in meeting the target of a 100% renewable-reliant Europe by 2050. On January 31^st, the CoR presented its report titled “Renewable Energy: A Major Player in the European Energy Market”, which encourages European institutions to adopt common policy in regard to renewable energy sources. The report calls for a full review of EU strategy with respect to energy, particularly in terms of post-2020 environmental challenges, suggesting a common strategy to regularize subsidies and regional resources for all Member States.

According to Witold Stępień (EPP/PL), Polish political leader and spokesman for the report: “the document includes a broad perspective and presents needs and expectations of the inhabitants of all European regions and at the same time is in line with the strategy of the Lodzkie Region, which considers renewable energy as a crucial element of its development strategy.”

Following the petitions of these organizations, whose sole common interest is concern for the environment and the sustainability of the energy system, it is now time for European institutions to respond. The EU unarguably has a unique opportunity to become a point of reference in the fight against climate change, with the potential at the same time to ensure energy security and independence for all member states. Therefore, as the title of this article suggests, we are convinced that renewable energy, far from posing a problem, plays a crucial role in solving the energy puzzle.

Patricia Malo de Molina, director of communications at Abengoa

Solar energy drives our planet. All known sources of energy, both renewable and non-renewable, are produced directly or indirectly by the radiation the Sun casts down upon the Earth.

If we consider global energy consumption in the long term, we no doubt need to pursue sustainable global development. Climate change, the depletion of fossil fuels and the growing demand for electricity necessitate founding the future energy model on solar and wind power. Working in tandem, given that solar energy is produced during the day and wind power is generated primarily at night, they will enable us to meet a significant portion of base demand. The two energy sources make a perfect combination for laying the foundations for a new energy model in the short to medium term.

Solar radiation provides sustenance to all of the forms of energy found on Earth. In the case of wind power, its relationship with the sun lies in the movement of air masses which go from areas of high atmospheric pressure toward adjacent lower-pressure areas. These winds are generated by the non-uniform heating of the earth’s surface caused by solar radiation. In fact, between 1 and 2 percent of the energy from the sun turns into wind.

Wind power technology has seen tremendous development in recent years. Today’s total installed capacity amounts to 100 gigawatts worldwide, most likely due to the fact that it is an unlimited and well distributed source whose cost is becoming increasingly competitive. This cost competitiveness has enabled it to reach a degree of maturity of envy to solar technology; however, a cautious approach should be taken when comparing the two in this area. We must evaluate them according to the maximum technological potential they can achieve. Indeed, in the last few years solar energy has yielded much higher growth than wind power, although the starting point was highly different. It will therefore be difficult for the solar market to attain the level of installed capacity which wind power already enjoys by 2020. In any case, over the longer term, solar energy will most likely break the barrier. The reasons for this are the following:

1.- The technical features of solar power lend it the versatility to be able to meet the major share of electrical demand. The thermal storage capability of concentrating solar power technology enables the generator to adjust production to system demand. Another important advantage of solar power, moreover, is that it is easily managed by virtue of constant adjustment to a time slot.

2.- Solar radiation is a resource that is available all over the world at rates that exceed wind power by far. In fact, the “Global Energy Scenario. Energy Revolution” study conducted by Greenpeace in collaboration with the EREC demonstrates that the potential of solar energy is about fifteen times higher than that of wind energy.

Potential of the different renewable technologies.

3- The availability forecasting we can perform for one source with respect to the other is another importance factor in this assessment. Solar energy is considerably more predictable than wind power, which gives it added value for electric utilities in helping to build a more robust and secure power grid, thereby decreasing the probability of malfunction.

4.- And we cannot dismiss the fact that solar energy can be combined with other technologies. For example, CSP technology generates electricity using the same method employed in today’s thermal stations (conventional cycle involving a steam turbine coupled to an alternator), although there exists the possibility of hybridization with  boilers fired by gas, biomass, biofuels or any other type of renewable or non-renewable fuel. This versatility lowers the cost of energy and ensures production for the electrical system.

5.- Furthermore, the immaturity of solar technology foretells a long path of growth, along which production costs will certainly drop considerably, an end point that proves more problematic for wind energy due to the degree of maturity the technology has already attained.

It is important to emphasize that it will be difficult for us to enjoy all of these benefits if governments do not back the development of solar energy with at least the same interest they showed at the time in wind energy. This support will be vital, at least until sufficient critical market mass has been created to facilitate cost reduction, and the price of fossil fuels includes the cost associated with negative externalities, such as emissions. This seems to be the only way to make a genuine transition from a fossil-based energy model to a renewable model in the shortest amount of time possible.

Mario Molina, Nobel Prize in Chemistry, lecturer at the University of California, San Diego, and member of Abengoa’s International Advisory Board.

Climate change represents one of the most important challenges for society in this century. In order for mankind to limit its interference with the Earth’s climate, drastic cutbacks in activities such as burning of fossil fuel and deforestation are called for, which is equivalent to conducting a second industrial revolution. To achieve the same, clear, objective and timely communication with the general public and decision makers on the causes, consequences and solutions to climate change is essential, to allow society to take the necessary actions to address it.

Although there are uncertainties in our understanding of the science of climate change, the scientific bases of the problem are well established. From the Industrial Revolution to the present day the average temperature of the Earth’s surface has increased by around 0.8º C and the consensus among experts is that this increase was most likely caused by human activities, and that the risk of causing changes in the climate system with potentially catastrophic consequences rises rapidly if the average temperature of the Earth’s surface is increased by more than 2 or 3º C. However, in some countries – mainly in the United States – a very well organized and funded media campaign aimed at discrediting the science of climate change, driven primarily by the interests of some companies in the coal and oil sectors, has been deployed in recent years. The campaign has been remarkably successful, molding the beliefs and greatly increasing the number of persons who question the validity of the science of climate change. The mechanism has been to convince the media to affirm that there are two equally valid versions on the problem, one describing the clear consensus of the scientific community experts, and the other affirming that said consensus is non-existent.

Another factor that impacts greatly on public opinion is the politicization of the issue. One of the strongest effects on public concern in the United States has been the Republican Party’s stance, which in recent years has been to deny the validity of the science of climate change, causing the public to interpret the news frequently on the basis of their party preference. Given the economic interests reflected in this polarization, the barriers to act on climate change have been based largely on the distribution of social power in the political and economic domains.

Another factor that has contributed to the problem is the lack of clarity of the scientific information the experts on climate change have disclosed. The public in general has limited understanding of climate science, which gives rise to confusion; in addition, rather than trusting in the opinion of experts on the subject, science is often replaced by ideological considerations. Therefore, communication efforts to generate interest and broaden understanding of climate change in the citizenship must be linked to a strategy that integrates the scientific, political and economic aspects, and must be consistent with the different social and cultural environments.

The results of surveys conducted in the United States indicate that in 2006 about 29 % of the population questioned the existence of climate change, and that in 2010 the figure had risen to 41 %, a clear indication of the success of the campaign to discredit the science of climate change. In 2012, the figure fell to 33 %, due probably to public opinion having been impacted by the fact that extreme weather events, such as heat waves, floods and droughts, have become more frequent in recent years, directly affecting a significant fraction of the citizenry.

A key question is whether these extreme events are actually connected in some way to climate change caused by human activities. If this is the case, it is likely that public opinion will influence decision makers in the near future, so as to achieve an international agreement that effectively begins to resolve the problem. Moreover, up until a few years ago the scientific community in general stated there was no evidence to answer the question at hand affirmatively. However, a series of studies that indicate that such a connection exists have been published very recently. The confusion is due to a large extent to the manner in which the question is put: if we examine specific extreme events, there is no evidence whatsoever to indicate they have been caused by climate change. However, evidence that the intensity of some of the events in question is increasing is accumulating. For example, in June last year, James Hansen from the Goddard Institute for Space Studies at NASA and his research group published the results of their studies on extreme heat waves, concluding on the basis of satellite measurements that the probability of such events occurring in the northern hemisphere has increased dozens of times over the past 50 years, which in turn is due to the increase in greenhouse gases caused by human activities.

Similarly, in the latest issue of the scientific journal American Meteorological Society, experts from the US National Oceanic and Atmospheric Administration (NOAA) published an article that examines six specific extreme events, including the drought suffered in 2011 by southern United States and northern Mexico. They conclude that due to climate change the probability of extreme heat and drought conditions in that year was 20 times greater than in 1960. However, the same group concludes that the floods of 2011 in Thailand, which caused large-scale damage, are not connected to climate change, but rather to factors such as changes in riverbeds and river levels, the conversion of agricultural land to industrial use and the operating policies for dams. This indicates that the causes of extreme events must be carefully analyzed in order to ascertain their attribution.

Another example of a very recent extreme event is hurricane Sandy, which had devastating consequences for the east coast of the United States. Once again, the experts do not attempt to prove that said event would not have happened in the absence of climate change; the task, on the other hand, is to argue how variations in climate influenced its characteristics. For years now, the scientist Kerry Emanuel of the Massachusetts Institute of Technology has been investigating the relationship between ocean temperatures and the intensity of storms and hurricanes, concluding that the higher the temperature the greater the intensity of the meteorological event will be. This suggests to many experts that the increase in the surface temperature of the oceans and the changes already observed in the patterns of ocean currents probably had a major effect on the strength, scale and direction of this hurricane. Additionally, based on basic physical concepts, experts say that such extreme events will occur with greater intensity in the future.

Conclusion

Studies based on very comprehensive climate models suggest that in the event of society not taking any action to address the problem of climate change, there is a significant risk that the rise in the average temperature of the Earth’s surface will range from 4 to 6º C by the end of the century, which in turn could generate very dramatic and practically irreversible disruptions such as, for example, the disappearance of the Amazon rainforest or total Arctic melt, with which the Earth’s climate would be very different to that which we have at present and to that which our planet has enjoyed for millions of years.

That risk can be minimized through very significant reduction over forthcoming decades of greenhouse gas emissions, mainly carbon dioxide, caused by burning of fossil fuels. Economists like Sir Nicholas Stern believe the cost of taking the necessary steps to realize said reductions would be about 1% or 2 % of the Gross World Product, while the cost of not reacting quickly would be much higher, due mainly to droughts, floods and destruction caused by heavy storms.

Lastly, it is important to mention that in addition to the aforementioned scientific, economic and technological issues, we must not forget that we have an ethical responsibility to leave future generations a planet where its inhabitants can enjoy a quality of life on a par with, or better than, that of the present day.

Patricia Malo de Molina, Abengoa’s Chief Communication Officer

There is agreement among the scientific community on solar power being the energy of the future. Given its tremendous advantages over other energy sources, the share of solar power in our nations’ energy mix is expected to increase progressively, through either solar thermal technology¹ for supplying energy to a large number of homes or industries, or by means of photovoltaic technology², intended for disperse consumption cores with fewer requirements in terms of power output. Nevertheless, there are three principal aspects whose development will determine the degree of solar power’s future success: technological progress, manageability, and regulation.

Solar technology still has a long way to go. Whereas conventional energy enjoys extensive experience gained over decades of operation, resulting in a significantly lower production cost, solar technology is still at an early stage of development, and its costs will diminish over time at all business levels: manufacturing, financing, research and development.

The field of research is precisely where the true potential of the sector lies. In photovoltaics, for example, tremendous progress is being made. On the one hand, increasingly more efficient modules are being developed, achieving substantial savings in terms of surface area, materials, structures, operation and maintenance. New thin film techniques³, on the other hand, have led to a reduction in the use of semiconductor materials⁴, which are responsible for producing the photovoltaic effect, for thicknesses up to one hundred times lower. And in solar thermal technology, remarkable achievements have been seen in recent years with the increased efficiency of tower technology, parabolic trough dishes and Stirling dishes. If, over the course of the next decade, solar technology evolves according to the experts’ forecasts (which is highly probable), the production costs of solar power will be lower than those of fossil energies by 2020.

Another aspect to be taken into account is manageability, consisting of a power plant’s capacity to deliver the power output demanded by the grid at any time. To achieve this, solar stations must be equipped with storage units in order to meet the electricity demand accordingly, even at times when solar radiation is weak or nonexistent. The most widely used technology is salt storage, which features a simple working scheme based on the utilization of two salt tanks for storing heat. During the load cycle, the salts exchange heat with the fluid that comes from the solar field and are stored in a hot tank. During the discharge cycle, the system works the other way around, by heating the heat-bearing fluid, which will generate steam to drive a turbine and thereby generate electricity.

Source: Abengoa Solar

Finally, regulation is an extremely important factor. In order to achieve suitable technological development in solar energy, the market needs to mature, and for this to happen governments need to engage in a determined effort to back this source of energy. Many economists have pointed out that the most appropriate incentive-based model involves establishing a tariff system in which renewable energy is paid for at the right price, enabling the sector to develop (the system presently under implementation in European countries) in order to subsequently take the leap towards a system of mandatory renewable quotas (American model). Tariffs enable incentives to be given to the creation of a market with enough critical mass, favoring lower costs, and quotas ensure medium-term subsistence of the sector, thereby making higher cost effectiveness possible. Once the technology is sufficiently mature, this will allow solar power to compete with the other energy sources in the medium and long term.

Another way to boost renewable energies is by creating an international market for emissions rights, such as the one in place in Europe and other countries; a financial instrument that enables monitoring of greenhouse gas emissions through economic incentives that penalize emitting products and services. The creation of this emission market would penalize the use of fossil energies due to their high environmental cost, enabling solar power (a clean source of energy) to also compete pricewise with petroleum derivatives.

Governments must continue to assertively promote the development of solar power. Encouragement of this source of energy by public administration in combination with the entrepreneurial spirit nourished through private initiative will lead to success in the necessary transition from today’s oil-based economy towards a new carbon-based economy. This will ensure a future of abundant, clean and inexpensive energy for everyone.

Patricia Malo de Molina, Abengoa’s Chief Communication Officer

The 18^th session of the United Nations Climate Change Summit was held in the city of Doha, Qatar at the end of November last year. Setting the assessment of the results obtained aside, if any idea became clear following the conference, it is, as attested to by Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, the need for “a dramatic transformation in energy production and use”.

To this end, one of the key approaches has emerged as a way to address the issue of how to sustainably manage an estimated 40% rise in world population in the decades to come. This means that there will be 9.3 billion people on the planet by the year 2050. And this figure leads us to a far more worrisome question: what to do with the 3,000 Mt of Municipal Solid Waste (MSW) expected to be generated annually by a population of this size.

For years now, numerous studies have been exploring the possibility of turning the organic material from MSW, which accounts for 60% of all waste, into biofuel. After many attempts, we are getting ever closer to witnessing what seemed an impossible dream become reality. This year, in fact, Abengoa, in collaboration with the Seville City Council, will be inaugurating a demonstration plant that will enable bioethanol to be produced using the organic fraction of MSWs, and commercial plant construction is scheduled to commence starting in 2014.

The advantages of combining urban waste management and fuel production are incalculable. We would essentially be tackling two problems in one fell swoop. On the one hand, this joint strategy would help alleviate the landfills surrounding our cities, while also mitigating the contamination effect of the controlled thermal combustion process presently applied to wastes that gives rise to the emission of pollutant gases into the atmosphere. Converting waste into biofuel would also enable a considerable reduction in the emission of carbon dioxide (CO₂), thereby contributing to lowering the environmental impact known as the “greenhouse effect”.

This technological solution would also lead to greater energy independence from fossil fuels such as oil, which, in addition to its pollution effects, entails for a country like Spain an annual cost of 50,000 M€ (more than 5% of the nation’s GDP) in oil imports alone, for a total figure of 790,000 M in the group of industrialized countries that make up the Organization for Economic Cooperation and Development (OECD).

Other benefits linked to this technological solution obviously include regional and national economic growth, creating thousands of green jobs in addition to the 500,000 positions which Greenpeace and the European Renewable Energy Council (EREC) estimate that could be achieved by 2020 if the European Union continues to back renewable energies.

The organic fraction of MSWs can be turned into ethanol through transformation via enzymatic hydrolysis of the cellulose contained in the waste into fermentable sugars and subsequent fermentation. The ethanol obtained from this process is recovered through distillation and dehydrated to achieve the quality needed as a fuel. The key to the success of the process lies in the use of second-generation enzymes that have the capacity to turn cellulose and hemicellulose into sugars such as glucose and xilose. In this area, Abengoa is among the handful of companies that have developed a complete package that includes both technological process development and 2G enzyme development.

Other companies are developing new comprehensive strategies for producing ethanol from MSW based on a variety of technologies, including acidic hydrolysis and gasification processes. However, the key to the enzymatic hydrolysis process proposed by Abengoa is found in the use of second-generation enzymes as the result of their capacity to lend greater efficiency to the process.

If we translate this into figures, with this technology we could turn 300,000 t of MSW into more than 20 ML of bioethanol. We’re talking about an endless, environmentally-friendly energy supply source with social benefits of incalculable value. We are therefore convinced that any effort to develop these types of energy sources means a tremendous step toward securing a more sustainable future.

José Borrell Fontelles

Former Minister of Public Works, Transportation and the Environment

Former President of the European Parliament

Former President of the European University Institute in Florence

Member of the Abengoa’s International Advisory Board

Twenty years ago, I had the honor of participating as the Minister for the Environment (and other things) at the so-called Earth Summit in Rio de Janeiro. In attendance at that major United Nations Conference were more than 100 chiefs of state or heads of government and 1,500 Non-Governmental Organizations (NGOs). With great solemnity and enthusiasm, an action plan for the 21st century was launched, as well as Agenda 21, based on three conventions: climate change, biodiversity conservation and anti-diversification.

Ten years later, the enthusiasm had waned at the new gathering held in Johannesburg. The priority at the time was anti-terrorism, just as today’s focus is on the economic crisis. Jacques Chirac coined a phrase during the summit that would go down in history: “our house is burning down and we’re looking the other way”. And ten years later, once again in Rio, we continue to look the other way even while this summer’s record high temperatures may serve to remind us of the seriousness of the problem.

To say the least, like the Cancun Climate Change Conference, Rio+20 was not  a success. From among the leaders of the major developed countries, only François Hollande decided to take an active part. Rajoy, in turn, issued an institutional statement supporting renewable energies. The burning issues of concern today which everyone is trying to resolve involve the economic crisis, and global governance with respect to climate change has succumbed to the financial crisis and the resistance of developed countries to take on the financial commitments being demanded of them by those of the South.

There have been some dramatic changes in position. The “Green Revolution” launched by Obama in 2009 has yielded to the remarkable development of shale gas that has turned the United States into the world’s leading gas producer. Spain, a country that had pledged a commitment to genuine leadership in renewable energies, is unfortunately paralyzing the nation’s development with the entailing cost of losing one third of the jobs created in this sector.

There are also countries that are staying the course as part of a long-term strategy, combining economic development and “green” energy. Such is the case of Germany and its steady effort to progress along a road which, while certainly no bed of roses, will enable the country to reap the benefits of a more competitive economy, in spite of current turmoil.

Twenty years of backing environmental technologies, the same number of years that have elapsed since the first summit in Rio, have made Germany one of the key players in the field of renewable energies. Since the Johannesburg Summit in 2002, the number of jobs in Germany’s renewable energy sector has more than tripled, totaling nearly 400,000, and prospects are favorable, with 7% growth anticipated up until 2020.

Like the OECD says, Germany is setting the course that should be followed. This country is engaged in carrying out an energy transition that is unparalleled in the world, with the aim of achieving an 80% contribution from renewable electricity by 2050. This effort will undoubtedly have a cost, but this cost is what will lead to the technological supremacy of the future. What’s the secret? A predictable and credible framework for support policies offering security to investors. This is exactly the opposite of what is being done in Spain, a country whose energy dependency (85%) far exceeds the European average and which runs the risk of paralyzing the development of autochthonous energy sources and failing to uphold European commitments undertaken with respect to CO2 emissions.

It is evident that, with some exceptions such as the case of Germany, the economic crisis has forced a lowering of the guard in the struggle to halt climate change, despite the fact that CO2 emissions climbed last year by almost 6%: an utterly negative record. And, at the same time, unusual climatic phenomena proliferate, with tornadoes in the U.S., droughts threatening to unleash another food crisis, catastrophic floods like those in Thailand, heat waves which in the U.S. have broken all-time high temperatures on record.

Following the unsuccessful Rio+20 event, we must not forget two aspects of the problem: In the first place, the global nature of climate change, whose solutions must be negotiated and agreed upon at the global level. There is always the temptation to wait for others to make the effort, especially when taking into account the formidable disparities among countries in terms of emissions per capita, which is how the computation must be performed, ranging from 23 kg/year in Burundi, to 53,000 kg/year in Qatar.

And, secondly, we must bear in mind that the necessary measures require significant investment efforts to substitute fossil fuels for other energy sources that are still more costly because they are at the beginning of the technological learning curve, and due to the fact that fossil fuels do not incorporate the cost of the negative externalities they cause. This is why we may be tempted to delay the development of renewables in hopes of better times for the economy; but we no longer have much time to wait. Europe has undertaken a commitment to cut its emissions by 20% with respect to 1990 levels by 2020. However, the aim of developed countries should be more ambitious; our emission levels should be one-fourth of what they are today in 2050. And that cannot be achieved without an unwavering commitment to the future, a commitment which necessarily means accelerating renewable energy investments, instead of slowing them down.

In light of this situation, the fact that major emerging countries like China and India are gradually becoming aware of the severity of the problem is considered to be highly positive; the International Energy Agency nevertheless warns that we will not meet the objective of keeping the temperature rise to two degrees unless there is a radical change in energy policy over the next six years. In fact, the consequences of the warming of the atmosphere likely to occur if this threshold is surpassed are unknown; it may become an irreversible phenomenon.

Now is therefore the moment of truth in the struggle to combat climate change, just as it is time to take the Euro problem seriously after these years of crisis. Following their game of poker with the financial markets, our governments should not gamble, as they are doing now, with the other major crisis of our time. They will not have the chance to debate the matter in Rio in another 20 years.