Ferrovial - Annual Report 2012

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Environment

Climate strategy

Ferrovial's activities are closely associated with some of the main man-made sources of carbon emissions. Globally, passenger transport generates around 25% of total emissions and has also been the fastest growing source of emissions over the last two decades. Should the current trend remain unchecked, it is estimated that the various modes of transport (land, air and sea) will emit 9.2 gigatons of CO2 by 2030. Cities and buildings consume nearly 70% of energy and generate more than 30% of global greenhouse gases. Progressive "global urbanization" appears unstoppable. It is calculated that by 2050 70% of the world's population will live in cities, which will undoubtedly aggravate the problem of carbon emissions, pollution and insufficient energy resources for the megacities of the future.

As a developer, operator and administrator of transport and city infrastructure, Ferrovial is aware of its responsibilities and the importance of its public commitments with regards to climate change. But we also understand that the major challenges society will have to address over the next few decades require innovative and complex solutions. Ferrovial has the capacity to put such solutions into practice, generating new services and infrastructure for the governments and clients that it works with.

The regulatory environment

International agreements signed under the Conference of the Parties (COPs) have only partially reduced uncertainty regarding the post-Kyoto era. At the Doha meeting in December 2012 a partial agreement was struck by the EU and Australia (among others) to extend protocol commitments to 2020. However, with countries such as Japan, Russia and Canada distancing themselves from the agreement, the combined emissions of the signatory countries amount to less than 15% of total global emissions. The practical effects of the agreements therefore fall short of the recommendations laid out by the scientific community to rein in man-made emissions.

Ferrovial's position is that a binding and global agreement is urgently required. Such an agreement needs to establish a roadmap for the forthcoming years, with sufficiently ambitious targets to support long-term investment and the development of low-emission technologies, services and infrastructure. However, the Doha agreements fail to provide the required certainty. Beyond a formal commitment to work on a basic agreement that should be signed in Paris in 2015, it seems unlikely that a more specific plan will be established in the near or medium term.

On the positive side, the Green Fund remains on track and should channel an annual 100 billion dollars starting in 2020. The fund will be used to pay for low-emission technologies in developing countries, as well as adaptation mechanisms in countries more vulnerable to climate change. While no formal funding agreements are in place, several countries have already established sufficient commitments to launch the Fast Start Finance system, which will remain active over the coming years. Such credit facilities support and accelerate development of so-called "climate industries", some of which are particularly appealing to Ferrovial's interests (e.g. water cycle management and low-emissions infrastructure).

Meanwhile, there has been increasing regulatory activity on a regional basis governing energy and climate change. Several mechanisms are currently emerging or have already been established in some countries where Ferrovial either operates or is beginning to operate. Particularly striking in this regard are recent statements from the US President calling for more ambitious regulations in the country, where Ferrovial has a strong position in the infrastructure industry and will seek to capitalize on any opportunities that emerge in terms of efficient cities and environmental services.

In this situation, it is obvious that energy regulation is one of the chief ways that countries can shift toward low-emission economies. We therefore believe that the Energy Efficiency Directive (Directive 2012/27/EU, approved in October 2012) must be implemented in the European Union. Ambitious implementation of this regulatory framework could significantly help reduce European energy dependency and limit greenhouse gas emissions, as well as activating the energy efficiency market, which has major economic, technological and job creation potential. Therefore, we at Ferrovial will be following the transposition of this directive by Member States very carefully, looking to identify future opportunities that the regulations might create.

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This is an electronic version of the 2012 Annual Report prepared by Ferrovial, S.A. for its stakeholders, which aims to be complete and accurate. The contents of this version can be checked by referring to the print version. A copy of the print version in PDF format is available to download on this web page