Portugal

The Climate Framework Law (Lei de Bases do Clima, 2021) legally mandates climate neutrality by 2050 (with a new government target of 2045 under study), setting ambitious, GHG reduction targets (at least 55% by 2030, and 90% by 2050, compared to 2005 levels). This is reinforced by the updated National Energy and Climate Plan (NECP 2030), which sets clear, high-ambition commitments like a 51% share of renewables in gross final energy consumption by 2030. The establishment of the Climate Agency in 2025 ensures centralized implementation, planning and monitoring. The framework is detailed, publicly accessible, and supported by complementary instruments like the Roadmap for Carbon Neutrality 2050 and a developing Green Budgeting process.

Mandatory quota (Law 62/2017) aligned with the EU Directive (40% non-executive/33% all directors target by 2026). The national Corporate Governance Code was revised in 2020 to strengthen ESG-related oversight, diversity and remuneration rules. Recent 2025 legislation promotes employee participation in corporate bodies and collective bargaining, though it's largely voluntary.The mandatory implementation of the EU's Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) provide a comprehensive framework for businesses to report on and integrate ESG factors, which inherently guides and measures their contribution and alignment with the SDGs. The government also introduced the “PME Líder ESG” award to incentivize small and medium enterprises to adopt sustainability practices.

Portugal has mandatory public consultation for certain types of legislation (the Environmental Impact Assessment regime) and regular consultation processes for key policy areas and regulatory proposals. However, a fully comprehensive and mandatory Regulatory Impact Assessment for all proposed legislation at the national level, specifically mandated to cover the impact on all socially marginalised groups is not in place. While efforts exist, particularly within specific national plans (the National Plan to Combat Racism and Discrimination 2021-2025), the current framework remains inconsistent across all policy domains.

Portugal's National Statistical Institute maintains and publishes a Well-being Index which is used ad-hoc to contextualize and assess policy debates. However, this framework—or a comprehensive wealth accounting system covering all capitals (human, social, natural, financial, physical)—is not fully integrated into the mandatory national planning and policy cycle for decision-making. The current focus remains heavily on traditional GDP.

Portugal shows commitment to green finance through the implementation of EU funding (more recently, via Recovery and Resilience Plan) and tax incentives. Specific tax and financial incentives are in place, such as full or reduced taxes on electric vehicles and incentives under the Portugal 2030 programme, which prioritize green technologies. The Banco de Portugal has published an ESG sustainability “Commitment” and coordinates via a Sub-Committee on Sustainability and Sustainable Finance. It monitors climate risk exposures of the banking sector via annual reports to comply with the Climate Framework Law. It has also conducted supervisory climate stress tests in 2021 and 2022. While the regular stress tests primarily focus on macro-financial resilience, the BdP's supervisory process now explicitly directs banks to strengthen their resilience and mitigate risks associated with climate and environmental factors. Still, the country does not penalize investment in the fossil fuel economy and does not have mandatory and regular stress-testing regulations covering environmental risks.

"Portugal’s 2025 Medium‑Term Fiscal‑Structural Plan, endorsed by the EU Council, integrates sustainability via green taxation, climate-linked public investment, and debt targets. It aligns with the European Semester process. While fiscal policy features green orientation, monetary policy remains under ECB control. There is no national framework requiring climate stress tests for banks or other financial institutions.

Portugal's trade policy is not set at the national level but is determined by the European Union. Consequently, Portugal’s score for green trade practices is determined by the EU’s framework and its implementation. This framework meets the criteria for a score of 4: Sustainable Development Chapters as a standard component in all EU new Free Trade Agreements, a Green Taxonomy that provides a classification system for environmentally sustainable economic activities, an Emissions Trading System and its accompanying Carbon Border Adjustment Mechanism designed to align carbon pricing and prevent carbon leakage, acknoledgement of the principle of Common But Differentiated Responsibilities, as the EU provides technical assistance and capacity-building support to developing nations to help them meet the standards required for exporting to the EU market. On ISDS reform, the EU is developing the Investment Court System and advocates for a Multilateral Investment Court.

Portugal is covered by the EU Emissions Trading Scheme, which has been reformed (Fit for 55 package) to align with the EU's enhanced 2030 target. Portugal also has a national carbon tax in place for non-ETS sectors. Furthermore, the EU ETS II, which will extend carbon pricing to road transport and buildings, is already accounted for in Portugal's planning with the national tax bridging the gap until full implementation. Portugal also recently extended its carbon tax to non-commercial business jet flights. In 2023, about 68.7 % of GHG emissions in Portugal are exposed to a positive “Net Effective Carbon Rate,” combining explicit and implicit pricing instruments. Portugal's National Climate Law (2021) legally establishes binding carbon budgets and a governance structure to achieve emissions reduction targets. The 2030 target for the country is a 55% emissions reduction compared to 2005 levels, and the national neutrality target has been brought forward from 2050 to 2045.

"Portugal’s NECP (updated) and Basic Climate Law (2021) lay out sectoral decarbonization for energy, transport, agriculture, and forestry. The Climate Action Council oversees implementation. Institutional tools include legally binding five‑year carbon budgets, regional climate roadmap, and sector-specific plans. Recent initiatives include the Green Mobility Package and Integrated Landscape Management Operations for forestry/transport decarbonization.

Portugal's approach to the circular economy is defined by its National Circular Economy Action Plan (PAEC). This plan is aligned with the EU's Circular Economy Action Plan and is a key part of the broader "Portugal 2030" strategy. The PAEC provides a roadmap with initiatives spanning the entire product life cycle. It is supported by various national waste management plans, such as the National Waste Management Plan for Municipal Wastes (PERSU 2030) and the National Plan for Non-Municipal Waste (PERNU 2030), both of which have been updated to align with European targets for 2030 and beyond. On outcomes/targets, Portugal’s CMUR remains low by EU standards and there’s no explicit national CMUR target yet.

Portugal's green transport and mobility policy is a core part of its National Energy and Climate Plan 2030 and the "Portugal 2030" strategy.

Portugal has granted subsidies and tax incentives for electric vehicles (both private and commercial), ownership and registration tax reductions, and vendor rebates. The government’s “Green Mobility Package” (2024) introduces a set of measures aimed at transforming mobility for passengers and freight. Studies show the urban bus fleet could be fully electrified by 2034, and local operators have explicit zero-emission bus targets for 2028. Urban mobility goals include increasing walking, cycling, and public transport to cover 40 % of trips by 2030.

However, Portugal lacks nationally binding, all-mode electrification targets (especially freight and rural public transport), comprehensive infrastructure deployment commitments in less dense areas, and guaranteed funding for large-scale public transport electrification.

"Portugal achieved 81% renewable electricity in early 2025 and has set a 100% renewables goal by 2030 alongside a 51% target in final energy consumption. Implementation includes offshore wind auctions, solar expansion, green hydrogen support, storage investments, and grid modernization. Projects like the Offshore Renewable Energy Strategy reflect an ambitious and multi-faceted clean energy roadmap.

"Portugal’s Green Skills & Jobs Programme, part of the 2030 Energy and Climate Plan, provides nationally certified training for unemployed and transitioning workers. It focuses on energy efficiency, renewables, mobility, and circular economy, with a €20 million budget and a priority on vulnerable social groups. This programme is integrated into the broader framework of national employment and education policy, supporting just-transition goals.

Under the Framework Climate Law (No. 98/2021), the transition objective is explicitly to be “socially balanced”. Portugal has moved to sector-specific frameworks for a Just Transition, driven by the phase-out of coal. Three Territorial Just Transition Plans (TJTPs) are approved for affected regions (Alentejo Litoral, Médio Tejo, and Matosinhos), backed by the EU Just Transition Fund (€223.8 million). These frameworks provide concrete directions for economic diversification, job reskilling, and social support in those specific communities, moving beyond limited integration to good examples of guidance and effective, although targeted, implementation. In the 2024 NECP update / associated strategy, Portugal published a Long-Term Strategy to Combat Energy Poverty (ELPPE 2023–2050), with intermediate indicators for 2030, and created a National Energy Poverty Observatory to monitor and inform targeted measures. But the 2024 NECP, while integrating energy poverty significantly, has been critiqued for not fully systematizing the social and economic impacts of all transition measures or clearly connecting the SCF (Social Climate Fund) instruments with its plans.

Portugal implements several green finance and MSME support programmes, especially via the national development bank (Banco Português de Fomento) and credit lines focused on decarbonisation and sustainability, like the “Line of Credit for Decarbonisation and Circular Economy”. The Recovery and Resilience Plan and the Portugal 2030 framework (2021-2027) heavily target the twin green and digital transitions, including substantial support for MSMEs. The Portugal Social Innovation 2030 initiative continues to provide innovative financial instruments (like social impact bonds) and a capacity building programme. Portugal maintains a detailed legal framework for the Social Economy established by Law 30/2013 (Framework Law), which encompasses various entities like cooperatives, mutual societies, foundations, and associations. This framework provides a form of legal recognition for social enterprise entities, particularly the Instituições Particulares de Solidariedade Social (IPSS - Private Social Solidarity Institutions). But this legal recognition does not include a separate legal status.

"Portugal’s 2030 National Strategy includes robust social policies supporting workers and communities affected by the green transition. The “A More Social Portugal” pillar promotes worker reskilling, SME adaptation, and firm transformation. The National Strategy to Fight Poverty includes over 270 measures. EU‑backed Portugal Social Innovation channels funds into inclusive and climate-aligned social projects, supported by digital tools and integrated into national planning frameworks.

Portugal demonstrates a clear strategy for marine conservation, exemplified by the Azores Marine Protected Area and a new MPA around Gorringe Ridge, collectively achieving an estimated 27% marine protection, closely aligning with the Global Biodiversity Framework 30x30 target. However, the National Biodiversity Strategy and Action Plan (NBSAP), essential for full integration and progress assessment, has not yet been revised . Terrestrial protection (23% coverage) requires greater ambition and clearer implementation details for all GBF targets.

Portugal has some research activity in ecosystem services valuation and natural capital studies but there is no evidence of natural capital accounts integrated into national policy. The Portuguese Environmental Fund may commission data, but it does not produce systematic accounting. A framework for nature conservation exists (Institute for Nature Conservation and Forests) but it is regulatory.

Portugal's sustainable agriculture and food systems policy is primarily guided by its Common Agricultural Policy (CAP) Strategic Plan, known as PEPAG 2023-2027. The PEPAG is the central pillar of Portugal's food system policy. It sets long-term targets such as dedicating significant funding to eco-schemes that promote climate-resilient farming, biodiversity, and soil health. It aims to increase the area of land under organic farming to 19% by 2030. Portugal's policy actively promotes a shift away from environmentally harmful inputs. Through the PEPAG, it links financial support to the adoption of sustainable production methods, such as reduced tillage, agroforestry, and efficient water management. Portugal has also a National Strategy for Combating Food Waste (ENCDA). However, Portugal does not yet have a comprehensive food systems strategy that ties together ecological footprint targets, subsidy reform, strong regulatory standards beyond CAP baseline, and binding targets for healthy diets.

Portugal demonstrates clear evidence of prioritising green finance via the Environmental Fund, which channels revenues from environmental taxes (like the ETS) into environmental action. The Polluter Pays Principle (PPP) is enshrined in law. However, efforts are heavily focused on climate/energy (e.g., electric mobility, carbon market, eliminating fossil subsidies). Reforms of environmentally harmful subsidies for nature/biodiversity-specific sectors (agriculture, land use) are partial, and new legislation is in place that contradicts nature restoration efforts, indicating implementation challenges and a lack of fully aligned nature-positive fiscal policies.

Portugal maintains its high ambition through the full-scale implementation of its RRP 2021–2026 (€22.2 billion), with 41.2% of the budget dedicated to the green transition (above the EU's 37% minimum). Significant investments are underway in energy efficiency (buildings), industry decarbonisation, and sustainable mobility (rail/metro). The RRP is structured around green conditionality (milestones and targets) and is explicitly aligned with long-term national climate laws and strategies. However, there is criticism regarding continued support for some 'brown' infrastructure (road investment) and the partial nature of 'just transition' outcomes (e.g., challenges for SMEs and energy-vulnerable consumers accessing funds).