Spanish energy major Repsol has announced the freezing of its investment plans for a significant hydrogen plant located in the Basque Country, northern Spain.
The decision was attributed to growing uncertainty concerning the future of a tax imposed on energy companies. This pause in investment activity marks the first concrete step taken by Repsol in response to concerns about a potential extension of a windfall tax on large energy companies.
Repsol’s Chief Executive, Josu Jon Imaz, recently voiced concerns about this windfall tax, which was introduced as part of a coalition deal between center-left political parties aiming to form a new government. The tax, which has raised eyebrows within the energy sector, has the potential to impact investments in the country negatively.
Imaz’s primary criticism revolves around the tax’s apparent favoring of foreign energy producers over domestic ones, creating a cloud of uncertainty regarding returns on investment within Spain. The CEO made it clear that if the situation does not improve, Repsol is open to exploring investment opportunities in other countries. This comment is significant as it comes from one of Spain’s largest companies, signaling potential consequences for the country’s green energy projects and foreign investment prospects.
The frozen project, a hydrogen plant with a capacity of 100 megawatts (MW), was estimated to be worth approximately 200 million euros ($212 million). An individual familiar with the matter revealed that other green projects initiated by Repsol might also be derailed due to the current regulatory uncertainty. This uncertainty has put green projects, collectively valued at around 1.5 billion euros, including hydrogen plants in Cartagena and Tarragona, in a precarious position.
The Basque country plant is an integral component of Repsol’s broader vision to produce green hydrogen. This hydrogen would serve as a vital raw material for the creation of sustainable fuels within the company’s local refinery. The head of Repsol’s local unit, Petronor, Emiliano Lopez, shared insights into the project during an interview with Basque station Euskadi Radio. The Spanish government has been actively advocating for the production of green hydrogen, emphasizing its potential to aid in the country’s economic decarbonization efforts.
Repsol’s freeze on its hydrogen project investment not only raises concerns about the company’s green energy ambitions but also sheds light on the broader implications of Spain’s evolving energy policies and their impact on domestic and foreign investments. With the hydrogen sector gaining momentum globally, the stability of the regulatory environment is becoming increasingly critical.