Spain’s Prime Minister Pedro Sánchez announced that the government will soon launch a €1.3 billion direct subsidy scheme for hydrogen hubs, alongside €400 million in funding for green hydrogen projects that missed out on EU-wide auction subsidies.
Speaking at Enagas’ Hydrogen Day event, Sánchez revealed that preliminary plans for the subsidy scheme will be unveiled in the coming weeks, following a public consultation launched in July 2023.
The €400 million, allocated from Spain’s Recovery and Resilience Plan (RRP), will support projects that received a “positive evaluation” in the European Hydrogen Bank (EHB) pilot auction but failed to secure funding. Of the six projects awarded subsidies in the EHB auction, three are based in Spain. The additional funding will be distributed through the European Commission’s Auction-as-a-Service mechanism, aimed at bridging the gap for high-potential projects that narrowly missed EU support.
Sánchez emphasized that Spain’s decarbonization efforts are driving economic growth, describing the country’s “green, baby green” approach as a key contributor to its success.
Spain has been aggressively pursuing its goal to become a European leader in green hydrogen production, leveraging its abundant renewable energy resources and low-cost electricity. In September 2023, the government updated its hydrogen strategy, aiming for green hydrogen to meet 74% of industrial hydrogen demand by 2030 and tripling its installed electrolyzer capacity target to 12GW. These targets align with the country’s broader energy transition goals and its commitment to reducing carbon emissions.
Windfall Tax Rejection: Boost for Hydrogen Investments
The announcement comes on the heels of a significant political development: the rejection of a proposed 1.2% windfall tax on energy firms with revenues exceeding €1 billion ($1.04 billion). The tax, which was blocked by Spain’s parliament, had drawn criticism from major energy companies, including Repsol and Moeve (formerly Cepsa). Both firms had warned that the tax could force them to relocate hydrogen projects outside Spain, jeopardizing the country’s green hydrogen ambitions.
The failure to extend the windfall tax has been seen as a win for the energy sector, particularly for companies investing in green hydrogen infrastructure. Moeve, for instance, recently confirmed plans to begin construction on a 2GW green hydrogen hub in Andalusia this summer, citing improved regulatory clarity and the removal of financial barriers as key factors in its decision.
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