MADRID (Reuters) – Spain’s second-largest oil company Cepsa said on Friday it would delay investments worth 3 billion euros ($3.25 billion) in green hydrogen it had planned in the country’s south if a temporary windfall tax on energy firms becomes permanent.
Oil companies have been among the most vocal critics of Spain’s windfall tax, which has also drawn criticism from utility companies such as Endesa.
Cepsa said in a statement sent to Reuters it would instead “prioritise its international expansion with projects that had initially been planned for the second phase of its transition strategy”.
The company said it remained committed to generating more than half of operating profits from sustainable activities by 2030.
In December 2022, Spain imposed a two-year 1.2% levy on energy companies with a turnover of at least 1 billion euros to ease cost-of-living pressures during a bout of inflation partly caused by the Ukraine war and pandemic-related supply shortages. The government has since said it wants to make a version of the tax permanent.
Last year, a lobby group representing the country’s main oil companies warned that an extension of the tax could put 16.5 billion euros in investments linked to the energy transition at risk.
On Monday, Spanish oil company Repsol told Reuters it was putting planned green hydrogen projects in Spain with an electrolysis capacity of 350 megawatts on hold due to an unfavourable regulatory environment.
Green hydrogen – hydrogen produced using renewable electricity – is seen as key to decarbonising Europe’s economy. However, given its cost, green hydrogen projects in general are not competitive without subsidies.
($1 = 0.9240 euros)
(Reporting by Pietro Lombardi; Writing by David Latona; Editing by Charlie Devereux and Jane Merriman)
