Spain Sets a $10.5 Billion Goal for Green Hydrogen

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Spain is stepping up its efforts to enter the race to build a hydrogen industry, putting it on par with France and Germany in seeking a greener fuel for heavy industry.

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The government in Madrid has a roadmap to build 4 gigawatts of green hydrogen capacity by 2030 and is expected to announce Cabinet approval of the program on Tuesday, according to Sara Aagesen, the secretary of state of energy. The program would require an investment of 8.9 billion euros ($10.5 billion) within the next decade. 

“Things are getting very competitive,” Aagesen said in an interview on Monday. “Spain has the capacity to become a relevant player in the renewable hydrogen sector by taking advantage of our high potential of generating renewable power at very competitive prices.” 

The European Union has put hydrogen at the heart of its measures to cut greenhouse gas emissions by at least 55% in 2030 and to become climate neutral by 2050. Hydrogen, if it’s made with renewables, could replace oil, natural gas and coal and help eliminate about a third of emissions from industries like steel and cement by mid-century, according to BloombergNEF. The processes to make green hydrogen aren’t yet economically viable without government support. 

Spain’s plan includes 60 measures that will help establish a hydrogen supply chain, according to a government document seen by Bloomberg. The roadmap targets manufacturing plants with a capacity to make 300 to 600 megawatts of hydrogen from renewables by 2024 and 4 gigawatts by 2030. That would represent 10% of the EU’s target, which is for 40 gigawatts by 2030. Spain plans to start measuring hydrogen production by energy source and to review targets at least every three years. 

The government has not yet established how much of the 8.9 billion euros needed will be publicly-funded, Aagesen said. It wants 25% of hydrogen used for industrial purposes to be made using renewable power by 2030, a green hydrogen-powered fleet of 150 buses, 5,000 light and heavy vehicles, two commercial train lines and the installation of at least 100 hydrogen refueling stations and hydrogen-powered handling machinery in the country’s top five ports and airports. 

Key to scaling up green hydrogen are electrolyzers, machines powered by electricity that separate the hydrogen atoms in water from the oxygen. At the moment, electrolyzers in Spain have a capacity to make about 2.7 megawatts of hydrogen. The plan includes a target to build large-scale units that can each make as much as 100 megawatts. 

While the short and medium term focus is on the local industry and transport, the plan does mention Spain’s potential to become an exporter of the clean gas to the rest of Europe. Both Germany and the Netherlands have said they don’t expect to build enough renewable energy capacity to power all the clean hydrogen they’ll need, which will effectively make them importers over the long term. 

“By 2050, there’s quite a positive outlook for a market like Spain to export to Germany, if all parts of the puzzle come together,” said Emma Champion, an energy transition policy analyst at BloombergNEF. Spain has 61.2 gigawatts of renewable power capacity —including wind, solar, biomass and hydro— and targets additional 60 gigawatts by 2030. 

By comparison, France is seeking 6.5 gigawatts of green hydrogen by 2030 and Germany 5 gigawatts by the same year. France’s plan includes government spending of 7 billion euros within the next decade. Germany would invest 9 billion euros through 2040. 

“The level of ambition in Europe is very promising if it can get delivered,” Champion said. “Who makes up the rest is still the big question.”

BNEF says the industry needs $150 billion in subsidies by 2030 to expand and $11 trillion of investment by 2050 to make hydrogen able to supply 24% of energy demand by 2050. Shifting economics of the energy business would help — especially if the cost of producing hydrogen falls and pollution allowances become more expensive. 

“There’s a long path ahead of us,” Aagesen said. “But the political will is there. The objective is on the table, and I don’t think the hydrogen strategy will slow down. We have seen that some sectors are really hard to decarbonize without renewable-powered hydrogen.”

— With assistance by Will Mathis, and Jeremy Hodges

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