Portugal
From great recession to green transition
Before the ascension of the former Eastern Bloc countries in 2004, Portugal had the dubious distinction of being the poorest European member state, often lagging behind on development measures like education and longevity. But today this small coastal nation leads the way on environmental ambition, clean energy and inclusivity, thanks to a citizen-led commitment to the principles of green economy - and the chance to build back better from COVID-19.
Portugal was hit hard by the 2008 credit crunch and the Eurozone debt crisis which followed. Plunged into a deep recession, the state teetered on the edge of bankruptcy in 2011; a €78 billion EU/IMF bailout averted disaster, but at the price of harsh austerity measures and swingeing cutbacks to public services.
The rot which brought Portugal to the brink of collapse ran deep. Four decades of risky credit, private companies leeching state budgets, investment bubbles and corruption had created a toxic, top-heavy economy enriching elites from the public purse. Ultimately, the people who paid the price for this rigged brown economy were ordinary Portuguese citizens: higher taxes, lower benefits, spending on healthcare and education slashed.
Perhaps the only bright spot to emerge from the Portuguese recession was a new national commitment to genuine economic reform – a transition towards a more sustainable, stable, greener future. On exiting the bailout programme in 2014, the government launched an intensive public consultation on the green economy: a coalition of +100 businesses, NGOs, and public bodies led a four-month public engagement to develop a national strategy on climate, green growth, and natural protection.
The resulting Compromiso para o Crescimento Verde (2014) set national targets across 14 indicators to 2030, aiming for green jobs in priority sustainability sectors, resource efficiency, preservation of natural capital, improved biodiversity, and rapid growth in clean energy. New green taxes, cuts to fossil fuel subsidies, a decarbonisation plan, and a green jobs programme have all flowed from this central plan.
Portugal's response to COVID-19 is also informed by this green vision, with 35% of stimulus earmarked for environmental measures and a five year roadmap for sustainable and inclusive growth that prioritises resilience, the climate and digital transitions. Portugal is, on paper at least, taking a robust green recovery approach embedded within wider and long-term environmental commitments, although much of the plan remains provisional as of February 2021.
A particular area of success is in clean energy, with Portugal an outsized player in the EU renewables sector and well on its way to achieving ambitious 2030 target of 40% renewables. In March 2019, Portugal generated more renewable electricity than it could consume; it now hopes to become a clean energy exporter, and is upgrading its aging electricity infrastructure to achieve this.
Portugal’s current Socialist government, elected 2015, has concentrated on ameliorating the social damage caused by the recession and austerity, reviving public services while continuing to tackle sovereign debt. Green jobs and renewables remain a priority, but additional ambition in key areas like natural wealth accounting, green investment, and integrating environmental factors into social welfare programmes could help accelerate Portugal’s emergence from bailout blues – and help build stability to weather future shocks.
Policy Scores
Last updated 23 Oct 2022
Green COVID-19 Recovery
Despite entering the COVID-19 pandemic with high levels of public debt, Portugal has issued approximately USD$22 billion or 10% of GDP in stimulus during 2020, according to the IMF. Over the course of 2020, a number of economic support packages were released, including the Economic and Social Stabilisation programme, providing funds for healthcare, social protection and struggling businesses. In October 2020, having taken the strategic decision to integrate their recovery and long-term investment plans, the government announced both a USD$17 billion draft National Recovery and Resilience plan and USD$52 billion 2030 National Investment plan, leveraging funds from the EU's Recovery & Resilience Facility and 2021-2027 Multiannual Financial Framework.
Prioritising resilience, the climate and digital transitions, the recovery plan sets out 31 reforms and a 5-year roadmap for sustainable and inclusive growth, with approximately 35% of funding allocated to green measures. These include USD$1.2 billion for greening transport (including expanding railway infrastructure and decarbonising public transport), USD$1 billion for the decarbonisation of industry and USD$180 million to promote the sustainable bioeconomy (including research into forest-based materials and waste recovery). Green jobs are created from investments of nearly USD$1.2 billion in improving energy efficiency and expanding clean energy (including green hydrogen and renewables), with a further 360 million allocated to support retraining schemes for the energy transition though its unclear how many jobs these measures will generate. Nature also gets a boost from USD$800 million allocated to forest management, cultivation and fire protection which will provide climate mitigation and resilience benefits for rural forest communities. However, the government has also provided continued support to brown industry, with USD$1 billion investment in road infrastructure forming part of the recovery plan, and an unconditional bailout and loan of USD$1.4 billion provided to the national airline TAP.
Altogether, data that is available for Portugals planning presents a robust green recovery approach which is well embedded within wider and long-term environmental commitments. Recovery measures within the plan span five years, are explicitly aligned to targets within the countrys National Energy and Climate Plan, 2050 Net-Zero Strategy and Circular Economy Action Plan, and the continuity between recovery initiatives and the 2030 National Investment Plan helps ensure that they support the medium to long-term transition towards a greener, more inclusive economy. However, the provisional nature of measures in the recovery plan (which await technical assessment and approval by the EU) and lack of green conditionality put a mark of uncertainty against assessing the ambition of the recovery package at this stage.
Despite entering the COVID-19 pandemic with high levels of public debt, Portugal has issued approximately USD$22 billion or 10% of GDP in stimulus during 2020, according to the IMF. Over the course of 2020, a number of economic support packages were released, including the Economic and Social Stabilisation programme, providing funds for healthcare, social protection and struggling businesses. In October 2020, having taken the strategic decision to integrate their recovery and long-term investment plans, the government announced both a USD$17 billion draft National Recovery and Resilience plan and USD$52 billion 2030 National Investment plan, leveraging funds from the EU's Recovery & Resilience Facility and 2021-2027 Multiannual Financial Framework.
Prioritising resilience, the climate and digital transitions, the recovery plan sets out 31 reforms and a 5-year roadmap for sustainable and inclusive growth, with approximately 35% of funding allocated to green measures. These include USD$1.2 billion for greening transport (including expanding railway infrastructure and decarbonising public transport), USD$1 billion for the decarbonisation of industry and USD$180 million to promote the sustainable bioeconomy (including research into forest-based materials and waste recovery). Green jobs are created from investments of nearly USD$1.2 billion in improving energy efficiency and expanding clean energy (including green hydrogen and renewables), with a further 360 million allocated to support retraining schemes for the energy transition though its unclear how many jobs these measures will generate. Nature also gets a boost from USD$800 million allocated to forest management, cultivation and fire protection which will provide climate mitigation and resilience benefits for rural forest communities. However, the government has also provided continued support to brown industry, with USD$1 billion investment in road infrastructure forming part of the recovery plan, and an unconditional bailout and loan of USD$1.4 billion provided to the national airline TAP.
Altogether, data that is available for Portugals planning presents a robust green recovery approach which is well embedded within wider and long-term environmental commitments. Recovery measures within the plan span five years, are explicitly aligned to targets within the countrys National Energy and Climate Plan, 2050 Net-Zero Strategy and Circular Economy Action Plan, and the continuity between recovery initiatives and the 2030 National Investment Plan helps ensure that they support the medium to long-term transition towards a greener, more inclusive economy. However, the provisional nature of measures in the recovery plan (which await technical assessment and approval by the EU) and lack of green conditionality put a mark of uncertainty against assessing the ambition of the recovery package at this stage.
Governance
National green economy plan
Main framework is the Compromiso para o Crescimento Verde (2014), setting ambitious national targets across 14 indicators to 2020 and 2030. However, the most recent published update is from 2016, not all the indicators were updated, and some were not on track to achieve 2020 targets. A 2050 decarbonisation plan was launched in 2018, targeting carbon neutrality by mid-century.
Main framework is the Compromiso para o Crescimento Verde (2014), setting ambitious national targets across 14 indicators to 2020 and 2030. However, the most recent published update is from 2016, not all the indicators were updated, and some were not on track to achieve 2020 targets. A 2050 decarbonisation plan was launched in 2018, targeting carbon neutrality by mid-century.
Inclusive governance
Public consultation procedures were followed for the Compromiso para o Crescimento Verde, and a stakeholder engagement process is underway for forthcoming 2050 decarbonisation plan, consisting mainly of workshops for academics and the private sector. Ongoing public engagement procedures are not very proactive, and gender inclusive participation has been under-incentivised. For corporate governance, requirements vary for company form but Law No. 62/2017 ensures listed companies shall have women representing at least 1/3 of the total members of their management (and supervisory) bodies. Workers also have limited participation rights at board level, but there is weak enforcement.
Public consultation procedures were followed for the Compromiso para o Crescimento Verde, and a stakeholder engagement process is underway for forthcoming 2050 decarbonisation plan, consisting mainly of workshops for academics and the private sector. Ongoing public engagement procedures are not very proactive, and gender inclusive participation has been under-incentivised. For corporate governance, requirements vary for company form but Law No. 62/2017 ensures listed companies shall have women representing at least 1/3 of the total members of their management (and supervisory) bodies. Workers also have limited participation rights at board level, but there is weak enforcement.
SDG business strategy
National Strategy for SDGs does mention engaging the private sector and monitoring business implementation, but gives little detail as to how this will be achieved. SDG Alliance: Portugal is a UN stakeholder platform aiming to coordinate and incentivise private sector SDG action, but government engagement unclear.
National Strategy for SDGs does mention engaging the private sector and monitoring business implementation, but gives little detail as to how this will be achieved. SDG Alliance: Portugal is a UN stakeholder platform aiming to coordinate and incentivise private sector SDG action, but government engagement unclear.
Wealth accounting
Comprehensive financial accounts developed by the national statistical agency do not currently measure environmental variables in national wealth, and no public plans to implement these. Some work at EU level to develop pilot eco-system accounts. More national engagement is needed.
Comprehensive financial accounts developed by the national statistical agency do not currently measure environmental variables in national wealth, and no public plans to implement these. Some work at EU level to develop pilot eco-system accounts. More national engagement is needed.
Finance
Green finance plan
Green tax reforms undertaken from 2014, structured around environmental protection, reducing energy dependency, creating jobs and reducing externalities, have included incentives for electric vehicles, a charge on plastic bags, and a limited carbon tax. These taxes are mainly revenue-neutral; income from them is used to reduce personal and corporation taxes.
Green tax reforms undertaken from 2014, structured around environmental protection, reducing energy dependency, creating jobs and reducing externalities, have included incentives for electric vehicles, a charge on plastic bags, and a limited carbon tax. These taxes are mainly revenue-neutral; income from them is used to reduce personal and corporation taxes.
Green fiscal & monetary policy
A national strategy in place for green public procurement according to sustainability and environmental criteria, aiming to increase the role of environmental impact assessments in determining public expenditure. 2020 target is for 60% of public spending on goods & services to be determined by criteria including environmental metrics. Green monetary policy commitments are unclear.
A national strategy in place for green public procurement according to sustainability and environmental criteria, aiming to increase the role of environmental impact assessments in determining public expenditure. 2020 target is for 60% of public spending on goods & services to be determined by criteria including environmental metrics. Green monetary policy commitments are unclear.
Safe & accountable banks
The Supervisory Review and Evaluation Process is conducted yearly by the Banco de Portugal according to EBA guidelines, but covers only financial risks to capital and liquidity, corporate governance, and financial risk management. No social or environmental risk factors considered.
The Supervisory Review and Evaluation Process is conducted yearly by the Banco de Portugal according to EBA guidelines, but covers only financial risks to capital and liquidity, corporate governance, and financial risk management. No social or environmental risk factors considered.
Pricing carbon
Portugal is part of the EU Emission Trading Scheme (ETS), although the scheme has so far failed to uphold a consistently strong carbon price. A supplementary national carbon tax of 5 per tCO2e was introduced in 2015, applying to non-ETS sectors and covering around 26% of Portugals emissions. Government announced plans in 2018 to establish a price floor to strengthen the ETS, following the successful UK model.
Portugal is part of the EU Emission Trading Scheme (ETS), although the scheme has so far failed to uphold a consistently strong carbon price. A supplementary national carbon tax of 5 per tCO2e was introduced in 2015, applying to non-ETS sectors and covering around 26% of Portugals emissions. Government announced plans in 2018 to establish a price floor to strengthen the ETS, following the successful UK model.
Sectors
Green sectoral policy plan
Compromiso para o Crescimento Verde identifies ambitious sectoral targets for materials, waste, water and other sectors but offers little by way of coordinated implementation. 2014 Green Growth Coalition brought together around 100 organisations from the business, science and finance sectors, along with public bodies, NGOs and foundations, to devise national green strategy. However, the coalition was only temporary; no replacement currently exists, and no public plans yet announced to create one.
Compromiso para o Crescimento Verde identifies ambitious sectoral targets for materials, waste, water and other sectors but offers little by way of coordinated implementation. 2014 Green Growth Coalition brought together around 100 organisations from the business, science and finance sectors, along with public bodies, NGOs and foundations, to devise national green strategy. However, the coalition was only temporary; no replacement currently exists, and no public plans yet announced to create one.
Small business support
Detailed legal framework for the social economy established in 2013, supporting third sector or non-profit social organisations, but this codification excludes all profit-making entities, even those with a social mission or restrictions on dividends. Thus, social enterprises have no separate legal status and government support is restricted to charities only.
Detailed legal framework for the social economy established in 2013, supporting third sector or non-profit social organisations, but this codification excludes all profit-making entities, even those with a social mission or restrictions on dividends. Thus, social enterprises have no separate legal status and government support is restricted to charities only.
Carbon budgeting
The Roadmap for Carbon Neutrality (RNC2050) lays out a pathway to achieving the governments pledge for carbon neutrality by 2050 in line with the Paris Agreement. Adopted in July 2019 by Resolution of Ministers Council n. 107/2019, RNC2050 provides non-binding guidance on technically feasible, economically viable and socially acceptable development scenarios towards 2050 net zero, across four areas of intervention (energy, transport, wastes and land use) and 3 cross-cutting issues (social involvement, socio-economic scenarios and circular economy).
The Roadmap for Carbon Neutrality (RNC2050) lays out a pathway to achieving the governments pledge for carbon neutrality by 2050 in line with the Paris Agreement. Adopted in July 2019 by Resolution of Ministers Council n. 107/2019, RNC2050 provides non-binding guidance on technically feasible, economically viable and socially acceptable development scenarios towards 2050 net zero, across four areas of intervention (energy, transport, wastes and land use) and 3 cross-cutting issues (social involvement, socio-economic scenarios and circular economy).
Clean energy policy
Ambitious national energy plan targeting 40% renewables by 2030, with interim target of 31% by 2020. The target being final energy consumption rather than electricity mix indicates a much higher level of ambition for transport, buildings and other energy usage. Progress towards targets is ahead of schedule, with targets under review for possible increase in ambition under the energy & climate integrated plan.
Ambitious national energy plan targeting 40% renewables by 2030, with interim target of 31% by 2020. The target being final energy consumption rather than electricity mix indicates a much higher level of ambition for transport, buildings and other energy usage. Progress towards targets is ahead of schedule, with targets under review for possible increase in ambition under the energy & climate integrated plan.
People
Green jobs
Still no national strategy for green jobs, despite Compromiso para o Crescimento Verde target of 140 000 people in green employment by 2030 and environment ministry aims to create 2 million new green jobs. Overlapping and uncoordinated plans have complicated the policy process.
Still no national strategy for green jobs, despite Compromiso para o Crescimento Verde target of 140 000 people in green employment by 2030 and environment ministry aims to create 2 million new green jobs. Overlapping and uncoordinated plans have complicated the policy process.
Pro-poor policy
A general recognition from the government of the link between environmental health and poverty reduction at a strategic level, but no concrete integration found at the policy or programme level.
A general recognition from the government of the link between environmental health and poverty reduction at a strategic level, but no concrete integration found at the policy or programme level.
Participatory policymaking
Online public consultation platform available, and impact assessment processes used during policy planning especially around gender sensitivities with public consultation events, progress tracking, and web platforms. However, overall level of public participation is not high, details on future consultations are vague, and mixed evidence of sensitivity to factors other than gender.
Online public consultation platform available, and impact assessment processes used during policy planning especially around gender sensitivities with public consultation events, progress tracking, and web platforms. However, overall level of public participation is not high, details on future consultations are vague, and mixed evidence of sensitivity to factors other than gender.
Innovative social protection
No pilots found; social welfare models remain largely traditional in nature. A few community ownership projects do exist, for example cooperatives for community-level renewables, but these are citizen and/or civil society initiatives and lack official promotion or support from government.
No pilots found; social welfare models remain largely traditional in nature. A few community ownership projects do exist, for example cooperatives for community-level renewables, but these are citizen and/or civil society initiatives and lack official promotion or support from government.
Nature
Ocean & land conservation
National SDG 14 strategy in place, but implementation mixed and in some cases contradictory with other national policies (e.g. offshore fossil fuel exploration vs. renewable energy). SDG 15 is not considered a priority for action and no specific strategy exists, although some mapping exercises and fragmented measures embedded across other sectors (forestry, agriculture).
National SDG 14 strategy in place, but implementation mixed and in some cases contradictory with other national policies (e.g. offshore fossil fuel exploration vs. renewable energy). SDG 15 is not considered a priority for action and no specific strategy exists, although some mapping exercises and fragmented measures embedded across other sectors (forestry, agriculture).
Natural capital accounts
No official work on natural capital accounts at the national level, although some research underway from private sector and civil society. Some EU-level projects operating within Portugal, including the EU Biodiversity Strategy to 2020, include ecosystem service assessments and environmental stock mapping.
No official work on natural capital accounts at the national level, although some research underway from private sector and civil society. Some EU-level projects operating within Portugal, including the EU Biodiversity Strategy to 2020, include ecosystem service assessments and environmental stock mapping.
Natural capital committee
Mention of an Ecosystem Accounts system pilot in the report on Crescimento Verdi report, and plans to implement the Economics of Ecosystems and Biodiversity (TEEB) initiative, but no governance structures are in place or considered.
Mention of an Ecosystem Accounts system pilot in the report on Crescimento Verdi report, and plans to implement the Economics of Ecosystems and Biodiversity (TEEB) initiative, but no governance structures are in place or considered.
Nature-based fiscal reform
No systemic thinking around nature-oriented fiscal reform or natural capital, although there is some existing environmental taxation, and limited financial compensation for municipalities with designated areas of biodiversity.
No systemic thinking around nature-oriented fiscal reform or natural capital, although there is some existing environmental taxation, and limited financial compensation for municipalities with designated areas of biodiversity.