Spanish energy company Repsol has announced it will pause its green hydrogen development projects in Spain. The decision comes in response to an unfavorable regulatory environment, including a proposed permanent windfall tax on energy firms, a Repsol spokesperson told Reuters on Monday.
Repsol has plans for 350 megawatts (MW) of electrolysis capacity for green hydrogen projects across Spain. However, the company has expressed concerns about the regulatory framework, which it views as a barrier to investing in green energy.
Instead, Repsol now intends to build its next electrolyzer for green hydrogen in Portugal, as reported by the spokesperson. The company joins a growing list of European firms that have paused or abandoned green hydrogen initiatives due to concerns about policies or market demand.
Recently, Shell and Equinor also abandoned their plans for low-hydrogen production and transportation in Northern Europe, citing insufficient demand.
The International Energy Agency (IEA), a strong advocate for renewable energy, has warned that uncertainties in policy and demand are hindering the adoption of green hydrogen. In its latest report, the IEA noted that uncertainty regarding demand and incentives, combined with cost pressures, is slowing down global investment in low-carbon hydrogen, despite an increase in final investment decisions over the past year.
Global hydrogen demand rose by 2.5% to 97 million tons in 2023. This demand is mainly concentrated in the refining and chemicals sectors and is primarily met by hydrogen produced from fossil fuels without carbon capture.
The IEA identified several key factors contributing to the slow growth of low-carbon hydrogen, including unclear demand signals, financing challenges, delays in incentives, regulatory uncertainties, and issues with licensing and permitting.
“Low-emissions hydrogen producers need buyers for these projects to succeed,” said IEA Executive Director Fatih Birol. He urged policymakers and developers to carefully consider how to support demand while also reducing costs and ensuring clear regulations to promote further investment in the sector.
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