Turning the Tide: How Galicia Is Powering Europe’s Green Industrial Comeback

1. CONTEXT

Industry currently represents 16.5% of Galicia’s GDP, a significant contribution the Government of Galicia (‘Xunta de Galicia’) wants to increase to 20%This ambitious target reflects a clear strategic commitment to strengthening the industrial sector as a cornerstone of economic growth and territorial development, and strategy focuses on two complementary approaches: i) attracting new investments to the region; ii) consolidating the existing industrial fabric.

Galicia's positioning within the European energy transition framework is strengthened by exceptional natural endowments and strategic infrastructure. The region already generates 84.6% of its electricity from renewable sources, demonstrating a remarkable advance in decarbonisation that provides a competitive advantage for energy-intensive industries seeking sustainable operations.

2. BASES OF GALICIA’S INDUSTRIAL STRATEGY

The strategic vision of the Government of Galicia for its industrial sector is anchored in a development model rooted in decarbonisation and an increasingly electrified economy. This approach aims to capitalise on the region’s rich endowment of natural resources and promote the creation of complete value chains within its territory.

2.1. Legislative framework

Law 2/2024, of 7 November, on the promotion of the social and economic benefits of projects that utilise Galicia’s natural resources

 Objective: the use of natural resources (water, wind, and mineral wealth) must deliver a tangible return to the territory in the form of economic development and wealth generation. This impact should benefit both local communities and the broader population (e.g., through lower energy costs), while also directly supporting the regional industrial base.

 It responds to increased public scrutiny of certain projects (such as mining and wind energy) and seeks to ensure that citizens experience clear benefits—reduced energy bills, job creation, and the generation of local wealth linked to industrial investment.

 Wind repowering: it promotes the modernisation of existing wind farms with more efficient and less visually intrusive technology. A Galician technical study indicates that repowering installations over 20 years old could double electricity output while reducing the number of turbines by 68% to 75%, thereby minimising land use. This potential could meet significant industrial energy demands, particularly in areas such as A Coruña and Sagra

 Direct energy-to-industry link: new generation projects (wind and hydro) are required to supply at least 50% of their output directly to Galician industry through long-term Power Purchase Agreements (PPAs) at stable and competitive prices. Energy cost is recognised as a critical factor for industrial competitiveness- especially in energy-intensive sectors. In many cases, PPAs are essential to the viability of large-scale industrial facilities, such as Alcoa, which depends on access to affordable energy.

 The law also introduces mechanisms for assessing the social and economic impact of projects that are not subject to environmental impact assessments or whose authorisation lies outside the regional government’s authority.

Galicia’s 2030 Energy Agenda (AXEGA) also provides the roadmap for the energy transition and the achievement of climate neutrality by 2050.

2.2. A collaborative development model

 Public-private cooperation: there is a mutually beneficial relationship between the public and private sectors. Recognising the limitations of public resources, it underscores the essential role of private capital in accelerating the achievement of strategic objectives.

 Establishment of Recursos de Galicia: this new public-private entity (with majority ownership by the regional government) is intended to drive forward strategic projects in Galicia. It works in close coordination with the region’s industrial sectors.

3. STRATEGIC INDUSTRIAL PROJECTS

Galicia has developed an innovative instrument to facilitate and accelerate industrial investments through the designation of Strategic Industrial Projects (SIPs). This mechanism provides a comprehensive framework that combines administrative simplification with concrete incentives for qualifying projects.

3.1. Eligibility criteria

Projects may be declared Strategic Industrial Projects when they demonstrate significant territorial impact and meet three specific baseline requirements:

i. Projects must generate a minimum of 25 jobs under permanent, full-time contracts. Notably, this calculation includes indirect employment created in auxiliary activities related to the industrial project, provided that their future creation is duly justified.

ii. Projects must involve an investment exceeding €2 million in fixed assets, excluding real estate.

iii. Applicants must demonstrate ownership of the land where the project will be implemented or provide evidence of agreements with the landowners, except when the project will be located on industrial land promoted by the Galician Institute of Housing and Land or by public companies in which it participates, in accordance with sectoral regulations.

Beyond these baseline criteria, projects may also be declared Strategic Industrial Projects -with the exception of wind energy projects- when, despite not meeting the standard requirements, they are deemed to have qualified interest and impact on the development or implementation of Galician industrial policy and ecosystem. These projects must demonstrate, by their scale or characteristics, a territorial, economic, and social impact that transcends the local sphere. In evaluating these aspects, several factors are considered:

 The project's alignment and coherence with instruments through which Galician industrial policy is developed.

 The positive impact its implementation would have on a specific sector of Galicia's industrial fabric.

 Contributions to enhancing industrial competitiveness.

 The promotion of internationalisation and investment attraction to the regional business ecosystem, as well as the need to prevent business delocalisation.

 Considerations arising from the promotion of small and medium-sized enterprises.

 Contributions to social cohesion, territorial balance, and the creation and maintenance of quality employment.

 The project's eligibility for European funding.

3.2. Benefits and administrative advantages

Upon approval as a Strategic Industrial Project, companies gain access to several tangible benefits designed to accelerate project implementation. These include priority treatment in administrative procedures, significant deadline reductions throughout the approval process, and the declaration of public utility and social interest for expropriation purposes when necessary. This streamlined approach transforms what could be a prolonged bureaucratic process into an agile pathway for industrial development.

4. PROJECTS OF COMMON INTEREST

A particularly significant development will be the inclusion of the Coruña-Zamora hydrogen pipeline as a Project of Common Interest. Connecting Galicia to the main grid will enable the creation of a major energy hub in the northwest of the Iberian Peninsula, reinforcing Spain’s role as a strategic centre for renewable hydrogen. Additionally, it will facilitate the integration of green hydrogen production in our region with the future hydrogen corridors planned for the peninsula.

5. LARGE ELECTRICITY-INTENSIVE INDUSTRIES

Large electricity-intensive industries constitute a vital component of Galicia's economy, providing high-quality employment and contributing significantly to regional GDP. However, these industries face a critical challenge: the persistently high price of electricity in European markets threatens their competitiveness against global competitors operating in regions with lower energy costs.

Europe's fundamental strengths lie in quality, sustainability and labour rights-values that cannot and should not be compromised. The challenge, therefore, is to maintain these standards whilst ensuring that industries remain competitive during what must be a gradual transition to a fully decarbonised economy.