Repsol Freezes Spanish Hydrogen Investment Plan Due to Tax Uncertainties
(Reuters) - Spanish oil major Repsol has frozen the investment plan for a hydrogen plant in the Basque country, northern Spain, due to uncertainty about the future of a tax imposed on energy companies, its top regional executive said on Monday.
The freeze is the first move since Chief Executive Josu Jon Imaz last week said a potential extension of a windfall tax on large energy companies - which was included in a coalition deal between center-left parties seeking to form a government - threatened investments in the country.
Imaz said the tax favored foreign energy producers over Spanish ones and created uncertainty over returns on investment in the country. He added Repsol had other countries to invest in.
The 100 megawatts (MW) hydrogen project put on hold is worth around 200 million euros ($212 million), a person familiar with the matter told Reuters, adding other green projects being developed by the company may be derailed due to the regulatory uncertainty. Green projects worth around 1.5 billion euros, including hydrogen plants in Cartagena and Tarragona, are on the line, the person said.
The plant in the Basque country is part of a broader plan to produce green hydrogen to be used as raw material for sustainable fuels at its local refinery, Emiliano Lopez, the head of Repsol's local unit, Petronor, said on Monday in an interview with Basque station Euskadi Radio.
Energy companies, which invest in the long term, need a stable and foreseeable regulatory framework, Lopez, who is also Repsol board member, said.
"If there is no stability, there is no future, if there is no stability there is no investment and no strategy," he said.
The Spanish government is encouraging the production of green hydrogen - extracted from water by electrolysis using renewable energy - as a solution to decarbonise the economy.
Green hydrogen, though, remains costly and unprofitable without heavy subsidies.
($1 = 0.9426 euros)
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