Spanish Prime Minister Pedro Sanchez announced on Thursday that the government is in the process of revamping its windfall tax targeting excess revenues of energy companies, claiming these firms are reaping extraordinary profits amid the ongoing energy crisis. Sanchez stated that the windfall tax, initially approved by Spain's Senate in December 2022, is being redesigned to encourage investments in industrial projects rather than penalizing companies.
In an interview with Spanish TV channel Antena 3, Sanchez highlighted the positive impact of Europe's energy policy and Spain's renewables initiatives on reducing electricity bills, despite prevailing high energy prices. He stressed the importance of an energy policy that incentivizes large-scale investments in renewable energy to support industrial projects.
The revised windfall tax aims to encourage investments in green hydrogen corridors, large-scale wind and solar farms for industrial power, significant decarbonization projects, and initiatives for areas formerly dependent on now-closed coal-fired power plants.
Originally, the windfall tax deducted 1.2% from energy revenues exceeding EUR 1 billion (USD 1.08 billion) generated in 2022 and 2023. The tax, payable in 2023 and 2024, was intended to fund measures alleviating the impact of the energy crisis on vulnerable households.
The tax applied universally to all energy companies, irrespective of their energy production methods. However, revenues from international operations and Spain's regulated business, including grids and retail of power and gas at regulated prices, were exempt.
Spanish multi-energy major Repsol SA has been among the most vocal critics of the windfall tax, expressing concerns over potential impacts on its future industrial projects in Spain. In response to Sanchez's announcement, Repsol emphasized the importance of maintaining a stable legal framework for investment.
Sanchez countered such concerns, citing Spain's significant share of global green hydrogen projects and attributing the country's success to legal certainty. The Spanish Prime Minister asserted that 20% of all global green hydrogen projects are located in Spain, indicating the country's attractiveness for sustainable energy initiatives.
