Spanish energy giant Repsol has decided to pause green hydrogen development projects in its home country, citing an unfavorable regulatory regime with the idea of a permanent windfall tax on energy companies, a spokesperson for Repsol told Reuters on Monday.
The Spanish firm has a pipeline of 350 megawatts (MW) of electrolysis capacity for green hydrogen projects across Spain, but it has flagged uncertainties over the regulatory framework in the country as a deterrent to investments in green energy.
Repsol now plans to build its next electrolyzer for green hydrogen in neighboring Portugal, the spokesperson told Reuters.
The Spanish energy giant is the latest European firm to pause or ditch green hydrogen plans, due to either policy or demand concerns.
Most recently, Shell and Equinor have ditched plans for low-hydrogen production and transportation in north Europe, due to a lack of demand.
The International Energy Agency (IEA), the most vocal backer of all things renewable, has also warned that policy and demand uncertainty are slowing down green hydrogen adoption.
The IEA said in its latest Global Hydrogen Review 2024 that uncertainty around demand and incentives coupled with cost pressures are weighing on the global adoption of low-carbon hydrogen despite an uptick in final investment decisions in the past year.
World demand for hydrogen rose by 2.5% to 97 million tons in 2023, with demand concentrated in refining and chemicals, and mostly covered by hydrogen produced from unabated fossil fuels.
According to the IEA, the main reasons for the slow uptake of low-carbon hydrogen “include unclear demand signals, financing hurdles, delays to incentives, regulatory uncertainties, licensing and permitting issues and operational challenges.”
“[F]or these projects to be a success, low-emissions hydrogen producers need buyers,” said IEA Executive Director Fatih Birol.
“Policymakers and developers must look carefully at the tools for supporting demand creation while also reducing costs and ensuring clear regulations are in place that will support further investment in the sector.”
By Tsvetana Paraskova for Oilprice.com
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