Repsol has announced the suspension of its investment plan for a hydrogen plant located in the Basque country, northern Spain. The decision was made due to lingering uncertainty surrounding the future of an energy tax imposed on companies in the sector, according to the company's top regional executive.
This development represents the first concrete action in response to recent comments by Repsol's Chief Executive, Josu Jon Imaz, who expressed concerns about a potential extension of a windfall tax on major energy companies. The tax proposal was included in a coalition agreement between center-left political parties aiming to form a new government, and it has raised apprehensions about the future of investments in the energy sector.
Imaz argued that the tax arrangement appeared to favor foreign energy producers over their Spanish counterparts, leading to uncertainty regarding return on investments in the country. He also emphasized that Repsol had alternative investment opportunities in other countries.
The hydrogen project, which has been put on hold, was designed to generate 100 megawatts (MW) of green hydrogen and had an estimated value of approximately €200 million ($212 million), according to an inside source cited by Reuters. The uncertainty regarding energy taxes may also impact other eco-friendly projects in Repsol's portfolio, potentially jeopardizing approximately €1.5 billion worth of green initiatives, including hydrogen plants in Cartagena and Tarragona.
Emiliano Lopez, head of Repsol's local unit, Petronor, explained that the Basque country plant was part of a broader initiative to produce green hydrogen for use as a raw material in sustainable fuels at the company's local refinery. In a recent interview with Basque station Euskadi Radio, Lopez underscored the necessity for energy companies to operate within a stable and foreseeable regulatory framework.
Lopez stated, “If there is no stability, there is no future, if there is no stability there is no investment and no strategy.”
Spain's government has been actively encouraging the production of green hydrogen as a means to decarbonize its economy. Green hydrogen is produced through the process of electrolysis using renewable energy to extract hydrogen from water. However, the production of green hydrogen remains costly and unprofitable without substantial subsidies.