In Andalusia, greenhouse gas (GHG) emissions increased from 42 015 kt CO2 eq. in 1990 to 54 416 kt CO2 eq. in 2019 (Instituto de Estadistica y Cartografia de Andalucia, 2020[1]). Hydrocarbons still represent the largest share in the energy mix of Andalusia compared to Spain and EU average, especially driven by the transport sector (Junta de Andalucia, 2020[2]). In 2020, transport represented 41.3% of CO2 emissions (41.2% in 2019), the largest emitters, followed by generation (25.6% vs 31.1% in 2019) and industry (12.8% vs 11.8% in 2019) () (Agencia Andaluza de la Energia, 2020[3]). The year 2020 is an outlier because of the COVID-19 pandemic. Andalusia has a high potential for renewable energy as there is a high availability of renewable energy sources, which is judged capable of meeting the energy demand of the autonomous community (Junta de Andalucia, 2020[2]). The gross electricity production of renewables as compared to final electricity consumption sharply grew from 7.2% in 2005 to 44.6% in 2020 (Instituto de Estadistica y Cartografia de Andalucia, 2020[1]). Regarding the transport sector, the number of vehicles per 100 inhabitants increased from around 64 in 2010 to 71 in 2020, of which 0.57 per thousand vehicles were electric, hybrid or used biofuels in 2020 (Instituto de Estadistica y Cartografia de Andalucia, 2020[1]).

This section examines how Andalusian, Spanish and EU-level pricing of emissions from stationary relate to climate change and air pollution. While climate change and air pollution are two separate environmental issues, they partly overlap. Climate change is mostly due to Greenhouse Gas (GHG) emissions and their impact are at the global level. Even if GHGs are emitted in a specific area, their concentration in the atmosphere will contribute to climate change across the globe. Air pollution, on the other hand, is mostly due to other pollutant emissions with generally local impacts.

Driving is a major source of carbon emissions, local air pollutants, congestion and noise and can contribute to road accidents. Particular in urban areas, congestion and air pollution are of key concern. Such damage on the environment and on society – commonly referred to as external costs – are typically not reflected in an individual’s or a firm’s decision to own and drive a car. Tax policy can contribute to reflecting the full costs from environmental damage in drivers’ and vehicle owners’ decision making process by relating a price to it, thereby improving transport and environmental outcomes.