How Spain is leveraging industrial clusters to lead Europe's energy transition 

Global energy investment was expected to surpass $3 trillion for the first time in 2024, with $2 trillion directed towards clean technologies and infrastructure. However, to meet the 1.5ºC goal, annual investment must scale to over $6.5 trillion per year by 2030 and around $7-8 trillion per year by 2035.

Despite encouraging momentum in recent years, driven by a supportive public sector, this massive gap highlights the urgent need to mobilize both public and private capital and foster immediate, market-wide collaboration to accelerate the scaling of clean energy solutions.

Spain stands at the forefront of Europe’s energy transition. The country has set an ambitious target of generating 81% of its energy from renewable sources by 2030, supported by substantial investments outlined in its National Integrated Energy and Climate Plan.

With its strategic geographical position and abundant renewable resources and capabilities, Spain is uniquely positioned to lead Europe’s cleantech revolution. The country already accounts for 20% of green hydrogen projects that have been announced in the EU, making it a hub for cleantech innovation. Yet, the pathway to scaling clean energy systems and decarbonizing heavy industry remains challenging. To achieve its ambitions, Spain requires new financing mechanisms, robust and predictable policy frameworks, and a public-private coordinated approach that fosters international partnerships to overcome structural and market challenges.

Despite their potential, innovative cleantech projects in Spain face some of the key general challenges in their journey to bankability:

High CAPEX requirements: Early-stage and first-of-a-kind projects demand substantial upfront investment for construction, permits and scaling production. Long payback periods make these projects less attractive to traditional venture capital and private equity funds.

Market uncertainty: Regulatory reliance and unpredictable cash flows deter private investment as the lack of stable frameworks undermines investor confidence.

Technological risk: Many cleantech solutions, such as long-duration energy storage and hydrogen production, remain unproven at scale, amplifying perceived risk for financiers. There is also a shortage of guarantees to satisfactorily mitigate this technology risk.

Regulatory and policy uncertainties: Changes in subsidy schemes or environmental standards, slow permitting that may impact the feasibility of projects and a lack of public support schemes to overcome the “green premium”.

Industrial clusters or energy hubs present a unique opportunity to advance Spain’s transition through a collective ecosystem approach. These clusters create integrated energy and industry systems that facilitate scalability, optimize risk and resource allocation across the value chain. They aggregate demand, scaling solutions like hydrogen, carbon capture and renewable energy storage. The cluster model encourages innovative funding strategies to mobilize capital at scale.

Four fundamental components are required to transition industrial clusters: balanced emphasis on driving economic, social and environmental value; inclusive consideration of all technologies and processes that support CO2e emissions reduction; cross-sectoral collaboration within and across industry, public sector, financiers, labour and community stakeholders; and coordinated, agile strategies between partnership, policy, financing and technology enablement and deployment.

The World Economic Forum's Transitioning Industrial Clusters Annual Report highlights the experiences and perspectives of 30 signatory industrial clusters within the initiative. Despite facing diverse geographical, infrastructure, policy and sectoral challenges, these clusters have developed comprehensive strategies to achieve net zero while maximizing their economic and employment potential.

Spain’s experience in financing and scaling its industrial clusters offers valuable lessons for other regions. For instance, the Basque Government, through Spri Group, in collaboration with leading energy companies like Iberdrola and Petronor, and the support of the 16 industrial clusters, is spearheading an industrial "super cluster". This cluster aims to accelerate the path to net-zero emissions in the Basque Country, fostering energy supply decarbonization and energy efficiency in the industrial sectors and creating market opportunities based on the scale-up of new technologies and innovative services.

Similarly, the Andalusian Green Hydrogen Valley positions Spain as a European energy powerhouse with export capacity, significantly boosting industrial and economic activity while contributing to Europe’s security of supply and energy independence.

Such initiatives highlight the power of clusters in driving systemic change. There are also relevant experiences in the same line in other countries, such as in France with its “50 Industrials Sites” or Portugal with its “hydrogen valleys”.

The new Spanish Industry Act is a historical opportunity to move forward, but achieving Spain’s energy transition goals will require decisive action across five fronts:

1. Promoting demand signals and incentives: Define industrial climate policies that provide clear demand signals to boost the transformation at the scale and predictability required. Including demand incentives and support to private initiatives for early demand on low carbon products.

2. Strengthening public-private partnerships: Effective collaboration between governments and the private sector (financiers, corporates, start-ups) is crucial to creating stable, transparent regulatory frameworks and secure long-term investments. Programmes like the EU Innovation Fund and public procurement agreements demonstrate how strategic alignment between policy and financing can drive large-scale deployment of clean technologies.

3. Enhancing financial viability, simplifying processes and faster permitting: Deploying innovative financing mechanisms is important to bridge funding gaps and incentivize early-stage cleantech projects. Instruments such as blended finance, green bonds and risk-sharing facilities such as public guarantees or contracts for difference can attract private capital by de-risking investments and improving returns, especially in those hard-to-abate sectors. It is also critical to have simplified processes and faster permitting, such as a one-stop-shop for cleantech projects.

4. Regional and global leadership: Spain’s strategic location and renewable resources capabilities position it to influence global cleantech standards and catalyze a new era of clean industrialization. By expanding its cleantech clusters and fostering international partnerships,the country can play a key role in shaping Europe’s energy and industrial future.

5. Leveraging on EU Emissions Trading System (ETS) funding mechanism: Use a large part of the growing ETS revenues expected over the coming years to encourage investment in cleantech manufacturing. The Spanish government should invest 25% of these revenues, which could be a powerful mechanism to extend the impacts and benefits during this decade.

A clean industrial revolution and cleantech hubs should be a national priority – they represent a global model for industrial transformation. With the right financial structures, policy frameworks and collaborative ecosystems in place, Spain can unlock its potential as a leader in the industrial transformation, fostering economic growth and environmental resilience.

Achieving this requires a coordinated effort across the entire value chain, with governments and businesses aligning their goals and learning new ways of working together.

To learn more, read the World Economic Forum’s new report Accelerating the Energy Transition: Unpacking the Business and Economic Cases.