Portugal

Portugal shares Europe’s social, economic and environmental challenges. The population has been declining and ageing. Imbalances in population distribution and the varying age structures across different regions (rural versus cities or inland versus coastal) explain the differing magnitudes of population loss.

Portugal is committed to sustainability and combating climate change through its recovery and resilience plan (RRP) and investments, having devoted 38% of the RRP budget to climate objectives. The economy is service-based, with the services sector comprising 66.1% of gross domestic product (GDP).

The private sector is mainly based in small and medium-sized enterprises; microfirms account for close to 40% of business employment. Corporations accounted for 60% of National expenditure on environmental protection (NEEP) in 2021, with an annual growth of 24.0%. Comparing with GDP, Portuguese NEEP corresponded to 1.8% of GDP in 2021, below EU27 average (2.2% of GDP). In 2022, NEEP increased less than GDP (+3.8% compared to +12.7%), with corporations remaining the main contributing institutional sector and accounting again for 60% of the total NEEP. Environmental Goods and Services Sector (EGSS) has been increasing its contribution with environmental GVA growing by an average of 4.8% per year between 2014-2021.  Compared to EU27 average, Portugal has similar ratios for GVA and environmental employment.

Focusing only on environmental performance, the national consumption footprint remains below the EU-27 average, despite increasing between 2014 and 2021 (+ 17.2%). Significant challenges persist in achieving sustainable consumption and production patterns. The private sector has been developing and implementing several initiatives in circular economy, such as digital platforms related to waste (myWaste) and to glass and plastic packaging eco-design and recycling (Vidro+ Platform and Pacto Português para os Plásticos); a classification system for the evaluation of organisations (eCircular); and industrial symbioses under the sustainable bioeconomy of the RRP that aim to ensure the valorisation of biowaste for developing and deploying new and innovative materials and processes from three sectors: textiles and clothing, footwear and natural resin.

Demography, territory, income and access to services can show and be factors in inequalities. Inequality in income distribution decreased from 33.7% in 2022 to 31.9% in 2023, placing Portugal among the Member States with higher Gini coefficients. In 2021, Portugal’s continental territory had a significant level of access to services in education and health; however, the average amount spent per student in higher education between 2017 and 2019 was just 57.7% of the EU-27 average. Challenges remain in this area, including correcting regional and local asymmetries.

The food system

Portugal has adopted initiatives to promote healthier eating habits, such as its national strategy. Interest in alternative food networks, such as local farmers’ markets and organic stores, has increased, linked to the demand for fresher, more sustainable and locally sourced food. There is a greater awareness of product origins, proximity and environmental sustainability. Local authority projects aim to create urban gardens for citizens to grow their own food. There is growing effort to preserve and enhance traditional gastronomy and high-quality local products, strengthening local economies and guaranteeing diversity and authenticity through agricultural product quality schemes.

Concerns about food waste, the use of plastic and the ecological footprint of certain products are shaping new trends. The National Commission for Combating Food Waste (CNCDA) has been implementing a national strategy to align the food system with public health, sustainability and social justice objectives.

Technological innovations are playing a crucial role in transforming the food system, in both production and consumption. With the increasing pressures related to climate change, smart agriculture is gaining prominence due to its ability to increase the resilience of farms, while reducing greenhouse gas emissions. Examples include the use of drought-resistant crops and the development of plant varieties better adapted to changing climatic conditions, thus securing stable food production. The efficient management of water resources is a growing concern: technologies such as soil moisture sensors and irrigation systems controlled by AI help to reduce water use, which is crucial in drought-prone regions. Data-driven precision farming has also become a reality, allowing farmers to make more informed decisions about irrigation, fertilisation and pest control. Start-ups and companies are developing solutions integrating real-time data analysis with AI and machine learning to improve agricultural efficiency and productivity. Sustainable packaging solutions in production, agro-industry and distribution have been developed and there has been an increase in demand in response to the growing awareness of the impact of plastic on the environment. To combat food waste, digital platforms for redistributing food have emerged, such as Too Good To Go or Phenix; technological solutions have also been developed to monitor waste.

A strategic plan is the mainstay of Portugal’s work to achieve the farm-to-fork strategy targets, with several eco-schemes and agri-environmental measures in place, enhancing the ambition to support organic farming, agroecology farming and animal welfare. Under rural development, there is support for traditional permanent crops and extensive agricultural systems. There are interventions aiming to promote the healthy consumption of fruit and vegetable products. The support for investments will also allow farmers to modernise, restructure their farms and improve their negotiating capacity in the food supply chain.

Finally, the innovation agenda for agriculture for 2030 includes initiatives such as fostering access to safe, diverse, seasonal and high-quality foods, implementing traceability measures and technologies and boosting communication. Another important document is the national plan to combat antimicrobial resistance.

The energy system

In Portugal, the awareness and adoption of sustainable energy practices is increasing. Smart metering helps consumers manage energy and adopt more sustainable behaviours. Although widespread, the full potential of smart meters remains untapped, especially with regard to dynamic pricing and load management (e.g. for electric vehicles and heat pumps). To utilise this potential, better energy literacy is needed, supported by the national energy and climate plan and the long-term strategy for energy poverty. Under the renovation strategy and the Energy Performance of Buildings Directive, efficient appliances and improved heating/cooling systems will enhance energy efficiency, although some technical upgrades may increase consumption. Energy certificates have raised awareness and led to efficiency upgrades.

Self-consumption increased from 12.2 MW in 2015 to 1 608.5 MW in 2023. Energy communities and cooperatives are increasing, especially through small-scale solar power.

The national energy and climate plan drives innovation, focusing on decarbonisation, digitalisation and decentralisation. Key technologies include green hydrogen, solar power, storage, smart grids, energy efficiency and e-mobility. On the supply side, Portugal has boosted renewables (wind, solar, hydro). Offshore wind power is expected to expand, using stronger coastal resources. In 2023, hydropower made up 40% of renewable energy generation, followed by wind, solar, biomass and geothermal power.

Major growth in wind and solar power is expected by 2030. Renewable energy’s share in final energy consumption hit 34% in 2020; the 2030 target is 51%. Challenges include integrating decentralised units, repowering plants and expanding grid capacity. Storage is crucial: pumped hydropower may reach 3.9 GW and batteries 2 GW by 2030. Hydrogen and biomethane are also prioritised in efforts to decarbonise industry and transport. Hylab45 supports hydrogen-related research and development.

On the demand side, system change will be driven by AI and the internet of things, enabling smart energy management; building renovation (envelope and technical systems), where funding is vital; and the intensive energy consumption management system; which promotes efficiency in energy-intensive industries.

Ambitious goals – 51% renewables by 2030 and carbon neutrality by 2045 – drive investment and frame incentives to promote the clean energy transition. Schemes include the recover Portugal mission, the Environmental Fund and the 2020 Financial Instrument for Urban Rehabilitation and Revitalization. Carbon taxes apply to fossil fuels not covered under the EU emissions trading system. The bottom line is that policy, incentives and financing should align.

Since 2019, Portugal has used renewable energy auctions, which have led to record-low solar prices and should lead to increased capacity (from 3.9 GW in 2023 to 20.8 GW by 2030). Framework conditions for licensing are being reinforced and offshore plans are advancing through a dedicated plan.

The creation of a strategic grid vision is in progress. As variable renewables grow, storage and grid upgrades are essential.

Coal was phased out by 2021; transition support helped workers move to renewables.

The mobility system

Portugal identifiedthe importance of adopting an integrated mobility and urban planning strategy to respond to the objectives defined in European policies, particularly the Paris Agreement. In this context, the Portuguese Climate Law defines the governance framework for climate policy, particularly with regard to regional and local climate policies, and provides for the development of sectoral climate policy instruments. Within the scope of the principles relating to energy policy, and within the framework of mobility and transport, it defines the principle of the ‘Decarbonization of mobility, giving priority to the public transport, active modes of transport, electric mobility and other zero-emission technologies, as well as reducing the carbon intensity of maritime and air transport’.

Societal and behavioural changes in lifestyles in Portugal have also had significant impacts on the mobility system, driven by a combination of factors, such as environmental concerns, technological innovations, public policies and changes in citizens’ preferences. The use of public transport has increased in the post-COVID-19 period, especially in metropolitan areas such as Lisbon and Porto, although the use of private vehicles has also continued to rise. Incentives to use public transport have mainly been driven by an increase in the supply of public transport services and a reduction in fares. Several investments in public transport infrastructure are currently under way and should reinforce the public transport options offered. As regards active modes of transport, the national strategy for active mobility stands out, bringing together the pedestrian and cycling components and making it possible to develop a holistic vision for guiding public policies in the areas of mobility, transport and land use planning. In this context, shared micromobility is a new reality in the urban context. The following figures on electric vehicles are also noteworthy.

In January 2024, 7 227 new electric, plug-in and hybrid electric passenger cars were registered, 15.3% more than in the same month of the previous year. For battery electric vehicles specifically, there was a 10.5% increase in January 2024 compared with the same month in 2023. The heavy vehicle market – including passenger and goods vehicles – grew by 266.7% in January 2024 compared with the same month in 2023. These sales, supported by a network of charging stations, are indicative of a transformation in the automotive sector, driven by technological, environmental and social changes.

One of the most important financial incentives with an impact on the mobility systems in Portugal is the Environmental Fund, which has driven many of the areas mentioned above. The fund concentrates the resources of previous funds and constitutes an instrument with greater financial capacity and greater adaptability to the challenges Portugal faces.