Energy efficiency and taxation: an approach from environmental protection in Spain

Abstract

This paper addresses the role of energy efficiency and taxation as essential instruments for environmental protection in Spain, starting from the constitutional mandate to protect the environment and the growing importance of green taxation. It provides an overview of the European regulatory evolution, from the first energy efficiency directive to the most recent Directive (EU) 2023/1791, which introduces the principle of "Energy Efficiency First" and requires its prioritization in public policies before October 2025. The study explains how taxation can incentivize sustainable behaviors and analyzes all the existing measures in Spain, especially the state and regional deductions in the Personal Income Tax (IRPF) for energy rehabilitation of homes, as well as the dispersion and limited nature of municipal bonuses (IBI, ICIO, IVTM) and other possible measures. It also proposes potential improvements to the established measures or new mechanisms to promote Energy Efficiency. The paper concludes by advocating for a thorough review of the national environmental taxation system, which would allow for the structuring of effective incentives, expand its coverage, and ensure social justice in the energy transition, emphasizing the need for its design to be universal and goal-oriented to meet climate and social commitments.