internal market, particularly innovative renewable energy technologies and ..... module distribution and microgeneration kits through its subsidiary Home Energy, ...
Eco-innovation in Portugal
EIO Country profiles 2010
April 2011
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Eco-Innovation Observatory The Eco-Innovation Observatory functions as a platform for the structured collection and analysis of an extensive range of eco-innovation information, gathered from across the European Union and key economic regions around the globe, providing a much-needed integrated information source on eco-innovation for companies and innovation service providers, as well as providing a solid decision-making basis for policy development. The Observatory approaches eco-innovation as a persuasive phenomenon present in all economic sectors and therefore relevant for all types of innovation, defining eco-innovation as: “Eco-innovation is any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole life-cycle”. To find out more, visit www.eco-innovation.eu
Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect the position of the European Commission.
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Eco-Innovation Observatory EIO country brief 2010: Portugal Authors:
Inês dos Santos Costa Leonardo Tavares Rosado Samuel Pedro de Oliveira Niza
Coordinator of the work package: Technopolis Group Belgium
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Part 1. Introduction: innovation and the environment in Portugal Portugal joined the European Union (EU) in 1986. For a large part of the two following decades, EU funding was invested mainly in road, utilities and housing infrastructures. These investments, together with several economic reforms (including the privatisation of key sectors such as banking and the telecommunications) prompted the country to grow above EU average for a large part of the nineties (Eurostat, 2010a). However, since 2002 the economy decelerated and 2008 was characterised by a zero growth rate: a consequence of the global economic crisis. Like other EU countries, the primary energy profile of Portugal is based on the consumption of fossil fuels (DGE, 2008a). Energy intensity of the economy ranked above the EU average in 2008, but this indicator is decreasing and, much like the carbon emissions intensity, it is expected to fall under the EU plateau soon (APA, 2010). This is partly explained by recent governmental policy drivers (DGE, 2008b) to change the national energy model towards favouring renewable energy sources. Currently, the share of electricity supplied by renewable sources is close to 44%, and it is mainly supported by wind, solar, hydro, waste, biomass and geothermal sources (APA, 2010). In the case of water quality, the introduction of EU requirements contributed to a significant improvement in less than 10 years (APA, 2010): in 2009, 98% of the available drinking water (tap), 98.6% of coastal bathing water and 88.4% of inland bathing water complied with EU demands. In the case of air pollution, air quality remained classified as “good” in accordance to EU parameters, although there are still significant problems associated to particles and ozone pollutants.According to the APA (2010) Greenhouse gases (GHG) emissions in 2008 were 30% above 1990 levels; however, since 2005 emissions have been decreasing at a medium rate of 3% per year. Still, Portugal is below EU average in terms of GHG emissions per capita. Finally, in the case of resource management, material consumption is on the rise and its use efficiency has decreased which, in turn, leads to increased waste generation. Yet, recovery operations have risen substantially over the course of the last 5 years. According to the Community Innovation Survey (CIS) of 2008 (MCTES, 2010a), Portugal has the 4th highest percentage of innovative companies (58%) in the EU27. The national report indicate that a large part (72%) of the innovation activities in Portuguese companies included the acquisition of equipment and software. However, internal R&D is also high (45%), as well as training (32%) and marketing activities (32%). Among the projects that may have contributed to such results, under the National Technological Plan (MEI, 2006) are: investments in ICT broadband, modernisation of public schools, full scale implementation of e-Government services or the promotion of renewable energy technologies. In this context, according to the Ministry of Science - MCTES (2010d), total research and development (R&D) spending increased 57% between 2005-2009, reaching 1.71% of the national GDP. The contribution of the different sectors also changed since the ninety nineties: while previously the government was the largest contributor, presently it is the companies (47%) and universities (35%) that make the largest contributions to R&D spending. According to the National Statistics Institute (INE, 2010a) and the MCTES (2010c), R&D spending on environment and energy has been steadily increasing, reaching 7% in 2008. CIS 2008 data (MCTES, 2010a) also shows that its importance as a motivational factor for introducing innovations is also increasing: on average, 42% of the companies implemented some form of environmental beneficial innovation, 31% answered that environmental regulations were an important motivation for innovation, and 42% answered that the adoption of voluntary codes of conduct in environmental practices was also a motivation to innovate. However, considering national environmental performance, it seems fair
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to conclude that to a large extent, innovation activities are directed towards pollution prevention/control rather than material or energy efficiency. There is now a broad consensus amongst national experts (DPP, 2010) that it is time for Portuguese companies to tap into their accumulated knowledge and begin to look at eco-innovations beyond the internal market, particularly innovative renewable energy technologies and services.
Part 2. Eco-innovation performance The analysis in this section is largely based on the EU 27 Eco-innovation scoreboard (Eco-IS). EcoIS via its composite Eco-innovation index demonstrates the eco-innovation performance of EU27 countries compared with the EU average and with the EU top performers. Eco-IS is based on 13 indicators which are aggregated into five components: eco-innovation inputs, eco-innovation activities and eco-innovation outputs as well as environmental outcomes and socio-economic outcomes
Figure 2.1 EU27 Eco-innovation scoreboard, composite index According to the eco-innovation scoreboard index, Portugal is below the EU27 average, at 17th place. It is fair to say that the country is in a transition phase, from a low-innovation country towards a highinnovation country group.
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Figure 2.2 Eco-innovation composite index components Eco-innovation inputs Overall, in 2009 government R&D appropriations and outlays represented 0.9% of the national GDP (INE, 2010a); for 2010, there is a clear intention to strengthen this number to 1.05% (MCTES, 2010b). Governments’ environmental and energy R&D appropriations and outlays in 2008 was, according to the EU eco-innovation scoreboard, above the EU-27 average (0.05% against 0.04%). At the national level, governmental expenses with environmental issues ("environmental control and quality" and "energy efficiency") reached 0.8% of the national GDP in 2008 (INE, 2010b). Government expenditure in "Energy" and "Environment" research and development areas reached 8.2% of the total governmental R&D expenses in 2008, while companies spent 10.3% of their R&D budget in the same areas (MCTES, 2010c). In the case of R&D personnel and researchers, in 2007 Portugal was below the EU average (1.45%), with a 1.12% total R&D personnel and researchers in percentage of total labour force and total employment. However, the latest projections of the Ministry of Science and Technology (MCTES, 2010d), point to an increase in subsequent years; from 35,334 R&D employees in 2007 to 52,313 employees in 2009. In terms of venture capital investments in emergent environmental and energy fields, there is little available information on this subject. The National Association for Venture Capital and Development apCri (APCRI, 2010) does make available some national statistics: in 2009 venture capital investments were €36.2m (12% of total private equity investments, market approach). The sectors that received most investments were life sciences, followed by ICT and energy and environment. In particular, cleantech venture deals reached €6.65m a trend which, according to the APCRI secretarygeneral, is expected to grow in the coming years. Eco-innovation activities
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In terms of eco-innovation activities, Portugal is well placed in the eco-innovation index, registering an above average 5th place. In terms of innovations targeting "material reduction for unitary output", CIS data (MCTES, 2010; Eurostat, 2010b) shows that roughly 38% of companies introduced such type of innovation and that 41% of companies introduced "energy reduction per unit output" innovations as well. However, the biggest improvements were achieved in the "Waste, water and materials recycling", with 58% of companies declaring that they had introduced such a type of innovation in 2008. According to the Eco-Innov scoreboard, in 2007 Portugal presented 5.8 EMAS certificates per million population - about 61 certificates in total - placing the country in 8th place among the EU27. However, according to the National Environmental Report of 2009 (APA, 2010), this number already jumped to 80 companies in 2009. The number of organisations with ISO 14001 certification also grew in 2009 to 580 companies. These results can also help explain, to some extent, why "voluntary codes of conduct in environmental practices" ranked well as a reason to innovate. Once again it is possible to say that the results achieved in this index are a reflection of a market transformation, lead by consumer demand, policy instruments and also by current economic conditions. In the case of policy instruments, the National Law on Waste Management was introduced at the end of 2006, the IPCC directive was implemented in early 2008, as well as other instruments, such as the landfill tax. Reducing material use, or improving the recycling capability of the process, are increasingly becoming competitive technologies in the face of rising raw material/energy costs. Therefore, more stringent regulations and economic environment may induce the development and/or implementation of more 'eco-innovations by Portuguese companies. Eco-innovation outputs Patent intensity at the national level grew considerably since 2001 to 2007, for a total of 1067 patents in seven years (Cruz, 2009), an evolution which is partly explained by the creation in 2001 of the national network of Intellectual Property Promotion Offices, which facilitated the patenting process. At the European Level, the 2009 report of the European Patent Office registered a 25.9% increase in European patent applications from Portugal, although the country still ranks below the EU27 average (EPO, 2009). According to OECD data (2010), in 2007 Portugal ranked considerably low, with 0.312 eco-patents per million habitants vs the 1.89 eco-patents per million habitants of the EU27. However, it noticeable that the annual patenting activities in "eco" fields grew considerably between 2005 and 2007, and it is possible that this growth tendency may reflect in recent numbers and actually improve them. In fact, the European Patent Office report on clean energy patenting (EPO, 2010) reveals that Portugal ranks high in hydro/marine energy patents and, when normalising the data in "percentage share of CET patents relatively to overall patents (1988-2007)" the country's performance is one of the highest (3.45%). Eco-innovation outcomes Eco-innovation outcomes are perceived as efficiency gains relatively to materials, water, energy and GHG emissions. As discussed in Part 1, Portugal's performance in these areas is still somewhat laggard in relation to the EU average, resulting in a modest ranking (16th place) in the EU27. Material productivity is below EU average (0.95 €/ton) and it has not increased significantly over the last decade. Niza and Ferrão (2006) considered this evolution as a characteristic of transitional economies: the materials consumed by the country were mainly for infrastructural improvement purposes (construction), therefore the economic returns per material input are not high. Only recently the country seems to be shifting towards a knowledge-based economy oriented to high-end products (technologies) and services, and therefore less material dependent.
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According to the data provided by the scoreboard index, water consumption in Portugal reached 2.264 m3/ capita/year in 2001, meaning that the country was one of the top consumers of water, at the time. Moreover, water productivity was also one of the lowest in the EU (7.21 €/m3). According to the Portuguese Environment Agency (APA, 2010) this is a consequence of two factors: 1) most of the water (80%) is used in the agricultural sector, which is becoming less important in economic terms over the years, and; 2) because of losses in the supply network; a problem which is being tackled (10% reduction in water losses between 2005-2008). The entry into force of key EU Directives, combined with the impending 2010 National Water Plan (INAG, 2010) will provide an update on the water use and consumption profile of the country, and establish new efficiency plans for this sector. In terms of energy productivity, and according to the eco-innovation scoreboard, Portugal ranked third among EU countries, with 8.39 €/toe (tonnes of oil equivalent). However, according to APA (2010) energy intensity is still above EU average, (182 toe/€1m vs 167 toe/€1m) although there is a convergence towards the latter figure. This is a consequence of the national production structure that still relies on energy-intensive activities, low to medium technological intensity and knowledge in relation to the EU, and a low energy efficiency in other sectors, particularly in the case of transport. Finally, when analysing the numbers for GHG intensity of the economy, Portugal scores below the EU average, with 395 tonnes CO2 eq./€1m GDPppc (APA, 2010). There is a trend for a decoupling between GDP and negative environmental impacts, particularly the GHG indicator. This is mainly related to the already mentioned changes in the national energy model. Socio-economic outcomes The number of people employed in ecoindustries decreased between 2007 and 2008, although in relation to total employment, the rate remained constant at 0.8% (DPP, 2010). Eco-industrial turnover for Portugal was below EU average in 2004 (1.58% vs 2.29%). However, since 2006, there has been a positive change in direction (DPP, 2010): the effort put into energy policy began to translate into a significant increase in commercial flows, and eco-industries turnover represented 3% of the national GDP in 2007/2008. This is also the case of eco-innovation exports as only 0.21% of Portuguese exports, in 2004, were due to eco-innovation technologies (below the EU average of 0.23%). However, in 2008 (DPP, 2010) this rate increased to 1.04% as a consequence of a considerable increase of exports since 2005, especially in "air pollution control" and "renewable energies", particularly solar thermal and wind technologies. In conclusion, Portugal's performance in socioeconomic outcomes of eco-innovation are certainly improving. With an on-going increase in the interest of students in natural science and energy courses (DPP, 2010), and the upcoming national strategic plans for water, waste and energy, it is plausible to say that
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Portugal is able to continue the development of internal policies and tools, which will certainly be reflected in its overall position in future eco-Innovation scoreboards.
Part 3. Leading eco-innovation areas Renewable Energies Portugal has made dramatic changes in its energy policy over the last five years. The country’s installed renewable energy capacity more than tripled between 2004 and 2009, from 1,220 MW to 4,307 MW, and renewables now represent roughly 36% of electricity consumed (Worldwatch Institute, 2010). According to the International Energy Agency (IEA), Portugal became a net power exporter last year, delivering a small amount of electricity to Spain. Inspired by these good results, Portugal set more ambitious targets in its National Energy Strategy, ENE2020 (MEID, 2010). As underlined by the Business Development Agency (AICEP), the renewable energy production market reached a total revenue of €680m in 2008 representing a growth of almost 33% compared to 2007. With the support of a public programme, a high volume of investments are also being made by individuals in their homes, installing micro-generation solar panels that heat household waters and sales of the excess of energy created to the state electric company. The abundant sunlight has also inspired the construction of many photovoltaic plants in the country (AICEP, 2010a). e-Government The efficiency of the public administration is due to the positive impact of the “Technological Plan” and some of its key components, such as Simplex and Ligar Portugal, which have improved the quality of services offered to citizens and to companies (AICEP 2010b) According to the last survey of the online availability of the basic public services in Europe, published by the European Commission in November 2009, Portugal had from October 2004 to November 2009 one of the highest improvements in the ranking of full availability online of the basic public services. In online sophistication the improvements were of the same order of magnitude, leading also to be ranked first in this indicator, with both indicators scoring 100%. Fiscal services online are particularly advanced, with more than 80% of all individuals income tax declarations having been filled in and submitted through the internet in 2009. According to the European Commission report on the i2010 initiative for 2008, Portugal has a leading position in eGovernment services rendered to enterprises, with high values in all the four indicators considered in the report, higher than the EU average (UMIC, 2010). These results have positive impacts on the use of resources, in particular, the Technological Plan for Administrative Simplification (SIMPLEX) has enabled central administration procedures to be simplified through more than 450 measures for dematerialisation, administrative simplification and the reduction of bureaucracy. The second generation of "Citizen Shops" (one stop shops for various public services) has been launched and work has started on a network fostering simplification at the local authority level. The OECD has appraised it very positively as a good international practice. . Energy Efficiency In 2008, the Portuguese government implemented The National Energy Efficiency Action Plan (PNAEE) comprising a set of measures aiming at an increase in energy efficiency equivalent to about
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10% of the final energy consumption, hence implementing the EU Energy Services Directive. It covered four specific sectors: transport, residential and services, industry and State, and three cross cutting action areas: behaviours, taxes, incentives and financing. In 2010, the Government created the National Energy Strategy (ENE2020) where the promotion of energy efficiency is planned in priority 3, a continuation of PNAEE, by targeting a 20% reduction in overall energy consumption by 2020, through both behavioural and fiscal measures, as well as through innovative projects, namely electric vehicles and smart grids, renewable-based decentralised production, and the optimisation of public lighting models and energy management of public, residential and services buildings. According to the Energy Agency (ADENE), the implementation of the 12 PNAEE programmes accomplished a reduction in 2009 of about 205,805 toe which represented 11.5% of the goal established for 2015, and a doubling of the increase in the 2008 energy sector economy. Good practice examples Example 1: Martifer Solar
Description: Martifer Solar focus on the production of PV panels, in its fully automated and robotised facility of 50 MW installed capacity, Engineering, Procurement and Construction development, module distribution of ground based or rooftop systems solutions, and finally on the residential and commercial level through microgeneration kits. After three years Martifer Solar is consolidating its international presence with the aim of becoming a reference player in the international photovoltaic market. The business area recorded operating revenues of €130.5min 2009, and employed an average of 290 people. It is present in eight countries. Throughout 2009 the company consolidated its activity in some of the markets where it began activities in 2008, namely Portugal, Spain, Italy, Belgium and USA, and entered in new markets (considered emerging markets in the PV Solar) such as France and Czech Republic. In Portugal, Martifer Solar is present in the residential and commercial segment (
