Portugal 2019 | ENERGY | VIP INTERVIEW

TBY talks to João Pedro Matos Fernandes, Minister for the Environment and Energy Transition, on recent policy successes, clean energy, and decarbonizing the transport sector.

In a few sentences, what are the main highlights and achievements of your mandate at this point?

We started our mandate based on three integrated policy areas which are fundamental in order to guarantee prosperity in the long run: decarbonizing our economy, valuing the territory and its habitats and striving for a more circular use of our resources. As of now, all these strategies are being deployed on the field: the National Program for Territory Ordinance (PNPOT), the National Plan for Circular Economy (PAEC) and the National Roadmap for Carbon Neutral Portugal 2050 (RNC2050). And to make it happen we have our Environmental Fund, which has been crucial to finance the integration of these principles among municipalities, companies, and citizens.

How do you see the role of the private sector in addressing sustainability challenges and advancing the Portugal's agenda to become “a truly clean energy" country?

One of the things that we have seen during this mandate is a raising awareness by companies that change is coming, sooner than they expected. Now, some have chosen to bury their heads in the sand and simply continue to go for incremental solutions, or insisting that there are regulatory barriers that hinder their competitiveness. I am not saying that they are wrong, but the fact is climate change or resource scarcity will not end by law-decree. If you have a business, you must prepare. I am glad to see more and more industries in Portugal that are placing decarbonization and circular economy front and center in their business models. Look at textiles, for example, or the metalwork's sector, or ceramics. They are investing in R&D and thinking about new business models that reduce costs and guarantee materials for their future. All the while striving to emit less and preserve local jobs. For me, that is sustainability. And, at last but not least, high-tech startups are redirecting their solutions towards fulfilling the Sustainable Development Goals. One clear example was the great success of the Govtech competition, by the Ministry of Administrative Modernization.

What are the main advantages of investing in Portugal's green energy sector and what steps are being taken to attract FDI?

Portugal has a trifecta of highly valued assets: sea, sun, and wind. And I would risk a forth, which is skill. When we think of green energy sector, we tend to focus on the big projects – windmill, solar, water – and, it's a fact that we have an extremely high-value industry both in hardware (e.g. metalworks) and software (e.g. electronic systems). It's not by chance that we attract companies like Siemens, which may come to benefit of experienced PT companies like A. Silva Matos and others. However, the green energy sector is also made of smaller projects. Of bio-economy, for example, in which we have an enormous potential for development, both on the “blue" side (sea, river) but also on the “green" side (forest, agriculture), combining the cascading of value extraction from natural biomass with energy production. And in that context we certainly have a solid and growing pool of companies and competences, from north to south of the country: CIIMAR, in Leixões, BLC3, in Oliveira do Hospital, Católica School, in Porto, and companies like SilicoLife and A4F.

What are your primary ambitions and goals for the Ministry for the Environment and Energy Transition for 2019?

In 2019 we will continue moving forward with our main orientations, mainly in decarbonizing the public transport sector. The most evident effort will certainly be in continuing the expansion of the subway lines of Oporto and Lisbon. But there is another area, in particular, that we want to focus on, and that is financing. To have the right mix of public and private financial support is crucial in guaranteeing a safe and just low carbon and circular transition of our economy; and there is a lot to tackle. It is impossible to expect that public funding alone can support this. On the other hand, we have a financial system which is still very much focused on short term and linear forms of value. That, in general, runs away from innovation and environment-based solutions and deems it “risky." But we know how placing your chips in “linear, solid" investments holds up in the long run – and banks are beginning to realize that the risk of ending up with stranded assets is, in fact, far greater. The Commission is working on a taxonomy for sustainable finance; the European Investment Bank is pulling all stops to support projects on circular and bioeconomy; the next Cohesion Fund will demand an allocation between 65% to 85% of support to smart, sustainable (low-carbon and circular) projects. We have 12 years to come to a full stop on the climate breakdown of our natural system, and this means we have 12 minutes to act. I am confident on Portugal's resilience and ingenious drive to tackle these challenges.