Spanish petroleum company Cepsa has decided to suspend its investments in green hydrogen projects in Spain, influenced by the potential permanence of the country's extraordinary and temporary tax on energy revenues. This tax, initially enacted to support vulnerable households during the energy crisis, is now under review for potential long-term implementation, which could significantly impact Cepsa's investment strategy.
Cepsa's management indicated that this investment freeze will redirect funds toward green hydrogen initiatives abroad, particularly in Algeria, Morocco, Brazil, and the United States. The company's board of directors has mandated the halt until the Spanish government clarifies the tax's status and future.
The uncertainty surrounding the tax directly affects Cepsa's flagship project, the Andalusian Green Hydrogen Valley, a large-scale development in southern Spain aimed at installing 2 GW of electrolysis capacity and 3 GW of renewable energy. This initiative represents an investment of approximately EUR 3 billion (USD 3.25 billion) for the deployment of 1 GW of electrolysers at each of Cepsa's refineries in Huelva and Cadiz.
The temporary windfall tax, originally approved in December 2022, targets energy companies with revenues exceeding EUR 1 billion for the years 2022 and 2023. Initially set to alleviate the impact of rising energy costs, it has since been extended and is now being considered for permanence.
Cepsa's decision follows a similar move by Spain's largest oil company, Repsol, which also announced a suspension of its investments in 350 MW of green hydrogen projects within Spain, opting instead to redirect its resources to Portugal. The Spanish association of refiners and petroleum products distributors has criticized the tax as economically counterproductive, warning that it could undermine the competitiveness of the industry and hinder the energy transition.
