Cepsa to invest €3B in green hydrogen project

According to Chief Executive Maarten Wetselaar, the Spanish oil company Cepsa intends to invest 3 billion euros ($3.1 billion) in a green hydrogen project in Andalusia, southern Spain.

With its abundant solar and wind power and close proximity to the sea, Spain has expressed its ambition to become a major player in the production of green hydrogen or hydrogen made from renewable energy, which is seen as a solution to decarbonizing heavy transport such as commercial shipping and airlines.

Two electrolyzers totaling one gigawatt (GW) each will make up the project, which will be located in the port cities of Algeciras and Huelva.

Wetselaar stated that in order to power the plants, Cepsa would also invest 2 billion euros in renewable energy in the area.

According to him, the project will enable Spain to develop into “an energy superpower with the ability to export to the rest of the world and ensure Europe’s energy independence.”

However, given the high cost of fuel production, the project’s success will depend on Cepsa’s ability to maintain a steady demand, according to Faig Abbasov, director of the umbrella NGO group Transport & Environment in Brussels, which advocates for environmentally friendly transportation across Europe.

“They need to locate priority areas to use the hydrogen, sell it under purchase agreements, or rely on government regulation that would require its usage,” Abbasov added.

In order to transport green hydrogen from southern Spain to northern Europe, Cepsa negotiated an agreement with the Dutch port of Rotterdam in October. According to the corporation, it might begin shipping hydrogen from Algeciras as early as 2027.

In October, a provision was added to a European Parliament bill on the use of renewable and low-carbon fuels in maritime transport that would make it mandatory for all ships calling at EU ports to use green hydrogen or hydrogen-based fuels for at least 2% of the annual average energy consumed by ships. The European Council and EU parliament are negotiating the proposed legislation.

According to Transport & Environment, a 2% requirement for green fuel would result in a demand for 205,000 tonnes of green hydrogen for shipping and 2.2 GW of electrolyzer capacity by 2030.