Cepsa will delay $3.3 billion in hydrogen projects if Spain's Windfall Tax is made permanent

Cepsa, Spain's second largest oil company, said it would postpone investments of 3 billion euros in green hydrogen in the south of the country if a temporary tax on windfall profits becomes permanent.

The windfall tax in Spain has been criticized by many companies, including oil companies. Endesa is also among those who have criticised it.

Cepsa stated in a letter that it would "prioritise its international expansion by focusing on projects originally planned for its second phase of transition strategy".

The company stated that it was committed to generating over half of its operating profit from sustainable activities by the year 2030.

In December 2022 Spain implemented a 1.2% tax for two years on energy companies that had a turnover greater than 1 billion euro to help ease the cost of living during an inflationary period caused in part by the Ukraine War and supply shortages related to pandemics. Since then, the government has said that it would like to make this tax permanent.

A lobby group representing the main oil companies in the country warned last year that an extension of this tax could threaten investments related to the energy transformation worth 16,5 billion euros.

Due to a less-than-favourable regulatory climate, Repsol, a Spanish oil company, announced on Monday that it had put plans for green hydrogen projects with an electrolysis capability of 350 megawatts in Spain on hold.

Green hydrogen, or hydrogen produced from renewable electricity, is considered a key element in decarbonising Europe’s economy. Green hydrogen projects are generally not competitive because of their cost.

(source: Reuters)