Spain's Climate Law: Challenges and Opportunities for Companies

Spain's new climate law presents companies with major challenges – and opportunities. Starting in 2026, large companies must disclose their CO₂ emissions (Scope 1 and 2), and from 2028, Scope 3 as well. Additionally, binding five-year emission reduction plans are mandatory. These measures go far beyond voluntary requirements and demand adjustments in supply chains, IT systems, and business strategies. At the same time, renewable energy and green hydrogen open up new possibilities, particularly in the electricity sector and industry. Companies that act early can benefit from these developments – both through market opportunities and long-term cost savings.

Legal Requirements and Corporate Obligations

Spain's climate law brings a new era of reporting obligations that aligns with the Paris Agreement's commitment to limit global warming to 1.5°C. It goes far beyond previous voluntary measures, establishing mandatory frameworks that mirror international best practices. Through a phased introduction, companies receive time to prepare while maintaining a certain pressure to adapt. Below, we take a closer look at the reporting obligations and established reduction plans.

Mandatory CO₂ Reporting: Scope 1, 2, and 3

Starting January 1, 2026, large companies in Spain are required to disclose their emissions according to the Greenhouse Gas Protocol requirements. This internationally recognized standard provides the framework for measuring and managing greenhouse gas emissions from private and public sector operations. Scope 1 includes direct emissions generated, for example, by company-owned facilities or vehicles. Scope 2 covers indirect emissions resulting from the use of purchased energy such as electricity or heat.

From 2028, this reporting obligation will be extended to Scope 3. This represents the most comprehensive category, encompassing all indirect emissions along the entire value chain – from raw material procurement to product disposal. According to recent studies, Scope 3 emissions typically account for 70-90% of a company's total carbon footprint, making their measurement critical for meaningful climate action. Data collection in often complex supply chains is particularly challenging. This requires not only the deployment of new data processing systems but also more intensive collaboration with business partners.

Five-Year Emission Reduction Plans

In addition to reporting, companies are required to submit five-year reduction plans that demonstrate alignment with science-based targets. These plans are legally binding and must contain clear annual targets, concrete measures, and responsibilities. Furthermore, budgets for investments in energy-efficient technologies and renewable energy must be planned, with specific allocations for different decarbonization strategies.

Compliance with these plans is monitored annually through rigorous government oversight. If targets are repeatedly missed, sanctions ranging from fines to operational restrictions may be imposed. Every five years, the plans must also be adapted to new technological developments and stricter climate targets, ensuring continuous improvement and adaptation to evolving climate science.

Comparison to EU and German Standards

Spanish requirements stand out significantly from regulations in other European countries. While the CSRD is being gradually introduced in the EU and initially only affects listed companies, Spanish regulations apply immediately to all large companies, regardless of their legal form. This broader scope reflects Spain's commitment to accelerating corporate climate action across all sectors.

For German companies operating in Spain, this often means a double burden: they must comply with both Spanish and German regulations, which can lead to double reporting obligations. However, this also presents opportunities for companies to develop integrated reporting systems that exceed minimum requirements. Another difference lies in the sanction mechanisms. In Spain, direct state measures such as fines or business operation restrictions threaten non-compliance with targets, creating stronger enforcement than many other jurisdictions.

The timelines are also more aggressive: while Spain introduces Scope 3 reporting obligations as early as 2028, longer transition periods are being discussed at the EU level. Multinational companies therefore face the challenge of designing their reporting systems to simultaneously meet requirements from Spain, Germany, and the EU – without unnecessary duplicate structures.

These strict regulations and associated requirements present companies with significant operational challenges, which we will examine more closely in the next section.

Challenges for Companies: Compliance and Climate Risks

After detailing the reporting obligations, practical challenges now come into focus. The new legal requirements demand far more from companies than mere reporting – they require comprehensive, structured measures and clear strategic alignment. Research indicates that companies typically underestimate implementation costs by 30-40%, making early preparation essential.

Building Internal Control and Monitoring Systems

A central aspect of the new requirements is building internal systems that enable seamless data collection along the entire supply chain. This is anything but trivial: specialized teams, external consulting, and modernized IT infrastructure are essential. Companies report that establishing robust monitoring systems typically requires 12-18 months of dedicated effort and significant capital investment.

Particularly the collection of Scope 3 emissions presents companies with significant tasks. This involves not only their own processes but also detailed documentation of emission data from suppliers, logistics service providers, and other partners. The EPA estimates that comprehensive Scope 3 reporting can involve tracking emissions from hundreds or thousands of suppliers, each with varying levels of data sophistication. Correct application of Greenhouse Gas Protocol methods also requires regular training to ensure employees stay up to date.

IT systems must also be adapted to handle the complexity and volume of climate data. Automated data collection is key, but implementing new software solutions often means high investments and longer project timelines. However, this modernization is essential to meet increasing requirements and can provide competitive advantages through improved operational efficiency.

Exposure to Climate Risks

Physical climate risks are gaining particular importance in Spain, where temperatures have risen 1.3°C above pre-industrial levels. Extreme weather events such as droughts, floods, and heat waves can directly threaten production facilities. The 2022 drought alone cost Spanish agriculture over €3.5 billion, demonstrating the tangible financial impact of climate change. For companies in water-intensive industries, this may mean reconsidering their location choices and examining supply alternatives.

Regulatory risks are compounding these physical challenges: what meets requirements today might no longer be sufficient tomorrow. The European Green Deal continues to evolve, with new regulations emerging regularly. Companies must therefore continuously adapt their compliance strategies and remain flexible to prepare for future tightening, including potential carbon border adjustments and stricter sectoral requirements.

Reputational risks should not be underestimated either. Companies that miss their climate targets could be negatively highlighted in public reports, affecting stakeholder confidence. This can not only affect investor confidence but also make recruiting qualified professionals more difficult. Listed companies already feel the growing influence of ESG ratings on their valuation, with studies showing that strong ESG performance can reduce cost of capital by 20-40 basis points.

These diverse risks increase pressure on companies to adapt their internal structures and processes to remain competitive long-term while building resilience against climate-related disruptions.

Adapting to Stricter Regulation

To meet new requirements, companies must streamline their structures and firmly integrate sustainability aspects into their strategic processes. This transformation goes beyond compliance – it requires fundamental changes to business models and operational practices. Supply chain management also faces transformation: climate-friendly partners and contractual obligations for emission data disclosure become the norm, with leading companies requiring suppliers to meet specific sustainability criteria.

Budget planning becomes more complex under these conditions, as investments in climate protection measures are unavoidable. Industry analysis suggests that companies typically need to allocate 2-5% of annual revenue to climate-related investments to meet ambitious reduction targets. At the same time, Spanish climate regulations put companies under considerable time pressure. The combination of high complexity and tight deadlines makes it inevitable for many to rely on external support to implement efficiently.

The challenges are significant, but they also offer the opportunity to build long-term sustainable and future-ready structures. A clear focus on strategic planning and collaboration is crucial for turning regulatory pressure into competitive advantage.

Solutions: Decarbonization, Technology, and Compliance

Spain's climate law requirements present companies with significant challenges. However, those who act early and proceed strategically can not only minimize risks but also seize new opportunities. The path to climate neutrality offers potential – if approached purposefully and thoughtfully. Research from McKinsey indicates that companies implementing comprehensive climate strategies see 15-25% higher returns on sustainability investments compared to those taking piecemeal approaches. Below, we show how companies can meet these requirements.

Developing a Compliance Roadmap

A successful start begins with a clear roadmap that integrates both regulatory requirements and business opportunities. This should structurally map all legal requirements and plan them temporally, while identifying potential synergies and cost savings. The first step: a thorough analysis of current emission sources using internationally recognized methodologies. A robust data management system helps here, forming the foundation for further measures and enabling real-time monitoring of progress.

Automated processes are key to managing the complexity of multi-scope emissions reporting. They enable continuous monitoring of Scope 1 and Scope 2 emissions with minimal manual intervention. From 2028, Scope 3 emission reporting will also be mandatory, requiring sophisticated data integration across supply chains. Close collaboration with suppliers is essential for this, often involving contractual requirements for emissions data sharing and joint reduction initiatives.

Another central point is integrating climate risks into business strategy through comprehensive risk assessment frameworks. Companies must keep both physical risks like extreme weather and regulatory changes in view, developing scenario-based planning that accounts for different climate futures. Annual updates of risk assessments are essential, incorporating the latest climate science and regulatory developments.

Renewable Energy and Green Hydrogen: Seizing Opportunities

Besides optimizing reporting processes, renewable energy and green hydrogen offer enormous decarbonization opportunities that align with Spain's national energy strategy. Spain is particularly well-positioned here: by 2030, 81% of the electricity mix should come from renewable sources – an ideal foundation for new business models and investments. This represents one of the most ambitious renewable energy targets in Europe, supported by €69 billion in planned investments.

Solar energy is a promising approach, with Spain's solar irradiation levels among the highest in Europe. Simplified approval procedures accelerate projects, while Power Purchase Agreements (PPAs) create long-term electricity price security. Corporate PPA volumes in Spain reached 2.3 GW in 2023, demonstrating strong market momentum. This allows companies to significantly reduce their Scope 2 emissions while achieving cost predictability over 10-20 year contract periods.

Green hydrogen also plays a central role in Spain's decarbonization strategy. With the goal of 12 GW electrolyzer capacity by 2030 – representing 20% of the EU's total target – new opportunities open up, especially for energy-intensive industries like steel, chemicals, or cement to reduce emissions. The Spanish government has allocated €1.555 billion specifically for green hydrogen development, creating a supportive ecosystem for early adopters.

Entry into these technologies works best through pilot projects that demonstrate feasibility and economic viability. They offer an ideal opportunity to gain initial experience and test economic viability before full-scale deployment. Additionally, government funding programs can facilitate implementation, with grants covering up to 40% of project costs in some cases.

Support from Fiegenbaum Solutions

The complexity of requirements makes it sensible for many companies to rely on external expertise that combines regulatory knowledge with practical implementation experience. Fiegenbaum Solutions offers targeted support with customized ESG strategies and data-driven analyses, helping companies navigate the intersection of compliance and business opportunity.

A focus lies on developing ESG strategies that not only aim for compliance but also create competitive advantages through operational efficiency and market positioning. Regulatory requirements are linked with individual business goals – from strategic planning to operational implementation – ensuring that sustainability investments deliver measurable returns.

With Lifecycle Assessments (LCA), emission hotspots can be identified and prioritized using ISO 14040/14044 standards. Particularly for Scope 3 emissions, this analysis is a valuable tool for making informed decisions about where to focus reduction efforts for maximum impact and cost-effectiveness.

Consulting on regulatory requirements helps companies maintain overview of constantly changing regulations across multiple jurisdictions. Whether CSRD compliance or EU Taxonomy: Fiegenbaum Solutions considers all relevant requirements and prepares companies for future tightening, including emerging regulations like the Corporate Sustainability Due Diligence Directive.

Through impact modeling, different scenarios can be evaluated to develop the best decarbonization strategies using advanced analytics and climate science. This data-driven approach minimizes investment risks and maximizes climate benefits, helping companies optimize their sustainability ROI while meeting regulatory requirements.

Fiegenbaum Solutions offers flexible consulting models – from project-based approaches to long-term partnerships that evolve with changing requirements. Startups and impact-oriented companies particularly benefit from special conditions tailored to their needs. This makes the path to climate neutrality not only feasible but also economically attractive.

Opportunities in Spain's Energy Transition

Spain's ambitious climate goals open exciting market opportunities for German companies, supported by unprecedented investment flows and policy support. With an impressive 56% renewable energy share in the electricity mix in 2024 and the goal of 81% by 2030, a dynamic market for new technologies and business models is developing. Grid investments alone rose by 18% in the third quarter, corresponding to a volume of 603 million euros. These developments are directly related to emission reduction measures and create substantial opportunities for technology providers and service companies.

New Business Opportunities

Spain's ambitious goals create numerous opportunities in various sectors, supported by the country's National Energy and Climate Plan (NECP) which allocates €241 billion for the energy transition. A key area is green hydrogen, which plays a central role in the country's decarbonization strategy. By 2030, 12 GW electrolyzer capacity should be achieved, opening application potential in industry, substitution of gray hydrogen, and production of ammonia and methanol. The transport and port sector particularly offers great potential for hydrogen-based solutions, with major ports like Barcelona and Valencia developing hydrogen hubs.

Solar energy has also established itself as a significant sector, benefiting from Spain's exceptional solar resources averaging 1,500-1,900 kWh/m² annually. With a 17% share of the electricity mix in 2024, it's already the country's third-largest electricity source. Here, opportunities open for German companies through direct investments in solar projects or developing specialized technologies and services, including advanced inverters, tracking systems, and energy storage solutions.

Another growth area is sustainable fuels, driven by both regulatory requirements and market demand. The ReFuelEU Aviation regulation introduces SAF quotas starting at 2% in 2025 and reaching 70% by 2050, creating stable markets for biofuels in air, sea, and land transport. Spain's strategic position as a gateway to Latin America makes it an ideal hub for sustainable fuel production and distribution.

The circular economy is also actively promoted through comprehensive policy frameworks. A special action plan supports sectors like textiles and plastics with funding up to 300 million euros from a total budget of 2.169 billion euros. However, it would be better to avoid plastics entirely and focus on truly sustainable alternatives that eliminate waste at the source.

Funding and Incentives

Besides technological opportunities, the political framework offers attractive financing opportunities through multiple funding streams. German companies can benefit from extensive funding programs at both national and EU levels. The European Investment Bank (EIB) and ICO have already provided 11.6 billion euros for circular economy projects in Spain between 2019 and 2023, demonstrating strong institutional support for sustainable investments.

The Recovery, Transformation and Resilience Plan allocates €69.5 billion specifically for green transition projects, with streamlined approval processes for qualifying investments. Cross-border cooperation is also promoted through initiatives like the H2Med hydrogen corridor, connecting Spain with France and eventually Germany. Germany and Spain are working on joint hydrogen corridors that facilitate access to Spanish production capacities, creating integrated European hydrogen markets.

Economic Benefits of Decarbonization Technologies

The transition to renewable energy will increase European gross domestic product by 145 billion euros by 2040, according to the International Renewable Energy Agency (IRENA). Spain positions itself as a pioneer for "green molecules" and could create up to 181,000 jobs in green hydrogen and biofuel sectors, representing a significant economic transformation opportunity.

Green hydrogen is also developing into an important export product, with Spain targeting 4 million tons of annual production by 2030. German companies can benefit both in electrolyzer manufacturing and applications like fuel cells or industrial processes. Interesting: In Spain, cost parity with gray hydrogen is expected as early as 2027 – two years earlier than the EU average – due to exceptional renewable energy resources and supportive policy frameworks.

Grid infrastructure modernization also plays a central role, with €6.9 billion allocated for grid investments through 2026. Solutions like smart grids, energy storage, and digital control systems offer German technology providers significant opportunities. Technologies that create international connections and efficiently utilize renewable energy surpluses are particularly in demand, including advanced grid management systems and cross-border transmission infrastructure.

Conclusion: Turning Risks into Opportunities

Spain's new climate law marks a turning point for German companies, representing both a regulatory challenge and a strategic opportunity. From 2026, CO₂ reporting becomes mandatory, and five-year reduction plans become binding – what was previously voluntary becomes obligatory. These new regulations open clear strategic advantages for companies that act early and purposefully build their compliance systems, positioning themselves as leaders in the sustainable economy.

The economic prospects significantly outweigh compliance costs, with early movers capturing disproportionate value. Spain plans to achieve an impressive 81% renewable energy share in the electricity mix by 2030, supported by €241 billion in planned investments. This transformation creates billion-euro markets that German companies can optimally utilize with well-thought-out decarbonization strategies. Whether green hydrogen – supported by the planned 12 GW electrolyzer capacity by 2030 – or sustainable fuels and circular economy solutions: the opportunities are diverse, tangible, and backed by strong policy support.

The foundation of these opportunities lies in clear regulatory frameworks that provide certainty for long-term investments. Companies that now invest in internal control and monitoring systems not only secure competitive advantages but can also increase their operational performance through improved efficiency and risk management. The integration of climate considerations into core business strategy enables companies to identify new revenue streams while reducing operational risks.

This is where Fiegenbaum Solutions comes in: with individually tailored compliance roadmaps, lifecycle analyses, and climate risk assessments, the company supports German firms in strategically mastering this transformation. Expertise in ESG strategies and CSRD compliance helps not only fulfill Spanish requirements but also develop future-proof business models that thrive in the low-carbon economy.

The decisive factor? A proactive approach that views regulation as a catalyst for innovation rather than a burden. Those who understand Spain's climate law as an opportunity for innovation and growth can benefit long-term from emerging markets while building resilience against climate risks. Now is the moment to act – before what is voluntary today becomes mandatory and competitive advantages become harder to achieve.

FAQs

What challenges exist in capturing Scope 3 emissions, and how can companies overcome them?

Capturing Scope 3 emissions is a complex task for companies as it encompasses all indirect emissions along the entire value chain, often representing 70-90% of total corporate emissions. Data procurement and verification become particularly tricky since they often come from external partners like suppliers who may lack sophisticated tracking systems. The calculation itself brings additional challenges as Scope 3 covers numerous categories – from business travel to purchased goods to transportation – each requiring different methodological approaches.

How can this challenge be addressed? Companies should rely on standardized methods like the Greenhouse Gas Protocol standard to create a clear foundation for their calculations and ensure consistency across reporting periods. Simultaneously, it's important to build close partnerships with suppliers to secure access to reliable data, often through contractual requirements and capacity building programs. Using digital tools and automated data collection platforms can help make data collection and analysis more efficient while reducing manual errors. A pragmatic approach is also to structure the work in phases: first, essential emission sources should be identified and prioritized to facilitate step-by-step implementation that focuses resources on the highest-impact areas.

How can German companies benefit from Spain's investments in renewable energy and green hydrogen?

German companies face an exciting opportunity as Spain's ambitious plans in renewable energy and green hydrogen offer diverse collaboration possibilities supported by €69.5 billion in green transition funding. They can participate in important infrastructure projects with Spanish partners or contribute their technological expertise in areas where Germany has established leadership, such as advanced manufacturing and engineering services.

A particularly exciting aspect is Spain's goal to achieve 12 GW green hydrogen production capacity by 2030, representing 20% of the EU's total target. This opens doors for German companies active in developing, manufacturing, and supplying hydrogen technologies, from electrolyzers to fuel cells and industrial applications. Simultaneously, the expansion of solar and wind energy in Spain offers abundant potential for companies specialized in renewable energy solutions, including grid integration, energy storage, and smart energy management systems. These collaborations not only enable access to new markets but also strengthen German companies' role as driving forces in the energy transition while building strategic partnerships for European energy security.

What advantages do companies have that respond early to Spain's climate law?

Companies that integrate Spain's climate law early into their strategies have the opportunity to secure decisive advantages in multiple dimensions. By purposefully investing in sustainable technologies and higher energy efficiency, they can not only reduce costs long-term but also strengthen their market position as sustainability leaders. Early adopters typically achieve 15-25% better returns on climate investments compared to late movers, according to recent research.

Furthermore, increasing demand for climate-friendly products and services opens new business fields, with sustainable products commanding premium pricing in many sectors. Those who act early can optimally prepare for upcoming regulatory requirements and assume a pioneering role in the transforming European energy market. Additionally, early compliance provides competitive advantages in public procurement, where sustainability criteria are increasingly weighted, and in attracting top talent who prioritize working for environmentally responsible employers.