Spanish company Cepsa to invest €3 billion in green hydrogen project

By Charlie Devereux

CADIZ, Spain (Reuters) – Spanish oil company Cepsa plans to invest 3 billion euros ($3.1 billion) in one of the largest green hydrogen projects in Europe, the company said on Thursday.

The project will produce 300,000 tons of hydrogen per year, which will be used to power the company’s refineries as well as local heavy haulage and transportation. It will also be used to produce biofuel for the aviation industry, the company said.

Green hydrogen, or hydrogen produced from renewable energy, is seen as a solution to decarbonise heavy transport, including commercial shipping and airlines, and Spain has signaled its ambition to become a major player thanks to its abundant solar and wind power and proximity to the sea providing renewable energy energy options.

The project will consist of two electrolysers with a combined capacity of 2 gigawatts (GW) in the port cities of Huelva and Algeciras, with the first expected to come online in 2026 and the second in 2027.

CEO Maarten Wetselaar said Cepsa will also invest €2 billion in renewable energy to power the plants.

With this project, Spain will become “an energy power capable of exporting to the rest of the world and guaranteeing Europe’s energy independence,” he said, presenting the project.

Its success will depend on whether Cepsa can secure steady demand, said Faig Abbasov, director of the shipping program at Brussels-based NGO Transport & Environment, which promotes sustainable transport in Europe.

“For these investments to be profitable, they need to find priority sectors, sell hydrogen under purchase agreements or rely on government regulations that would make it mandatory to use this hydrogen,” Abbasov said.

Cepsa signed an agreement in October with the Dutch port of Rotterdam to supply green hydrogen from southern Spain.

Wetselaar told Reuters that Cepsa is confident it will be able to produce hydrogen for less than 3 euros per kilogram — cheaper than the current price of diesel fuel for trucks. One of the project’s factories could produce enough hydrogen to power up to 15,000 trucks, he said.

He added that Cepsy’s refineries could plug any drop in demand.

“There is enough credible and robust demand that we can apply base economics,” he said.

An amendment has been added to the European Parliament’s draft law on the use of renewable and low-emission fuels in maritime transport from October, which would require all ships using EU ports to use green hydrogen or hydrogen-based fuels for at least 2% of the average annual energy consumption on board ships. The draft law is being negotiated between the European Council and the EU Parliament.

According to Transport & Environment, introducing a 2% green fuel mandate would trigger demand for 205,000 tonnes of green hydrogen for shipping by 2030 and 2.2GW of electrolyser capacity.

(1 dollar = 0.9577 euros)

(Reporting by Charlie Devereux, Inti Landauro, Jakub Olesiuk and Marta Serafinko Editing by David Goodman and Mark Potter)