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Part 2

Hy-Politics – political considerations shaping the evolution of clean hydrogen policy

Summary of the use case in Spain

In October 2020, the Spanish Government officially released the “Hydrogen Roadmap: a commitment to renewable hydrogen” which sets out a steps plan and measures to implement hydrogen-based projects in Spain46. This Roadmap, which derives from and is in line with the measures and targets contemplated in the draft Spanish Integrated National Plan for Energy and Climate, has been prepared pursuant to a consultation process with relevant stakeholders. It will be updated every three years.

The Roadmap encourages the use of hydrogen for the following end uses:

  1. As a raw material, particularly in industries such as oil refining, chemicals (e.g. fertilisers) and metallurgy.
  2. Integration of energy sectors, regarding particularly storage, utilisation of renewable production surpluses, utilisation of existing natural gas infrastructure and the circular economy. This will boost the potential uses of renewable hydrogen to store energy and/or decarbonise the heat sector in both industry and homes.
  3. Mobility sector, as a solution in areas in which electrification is not the most efficient solution or not technically feasible in the medium term, such as public transport, urban services or various uses in intermodal transport nodes such as ports, airports or logistics platforms.
Examples of demonstration/feasibility projects in Spain

The Roadmap compiles two groups of projects (a) five ongoing projects that have already obtained public funds granted by Spanish or EU institutions, and (b) proposals identified in the call for interest carried out by the Spanish Ministry for Industry, Commerce and Tourism for value-added projects in manufacturing activities under the Important Projects of Common European Interest mechanism.

This is an "evolving" selection and further projects will be added after the Hydrogen Roadmap has been published.

The five ongoing projects described in the Roadmap are as follows:

H2SPORTS: Test project located in the Port of Valencia that develops and validates the transformation to hydrogen of two machines (telescopic crane and truck head) under real operating conditions. The project includes the development of a hydrogen generator, as well as the study and development of the logistics of H2 supply in the Port. This project is participated in by the Port Authority of Valencia, Girimaldi Group, MSC, Enagás, amongst others.
SUN2HY (Sun to Hydrogen): Pre-commercial project for the direct conversion of solar energy into hydrogen using PEC photoelectrochemical cells. This project is participated in by Enagás and Repsol.
SEAFUEL: Renewable energy facility (51 MW) associated with a hydrogen generator that will be directly connected to the wind turbines and will be supplied by sea water producing hydrogen from available natural resources. The hydrogen generated will be used to replace part of the diesel vehicle fleet with hydrogen co-chargers. The photovoltaic plants will supply the service station and the desalination plant (125 m3/day (2.4 kW/m3)). This project is participated in by Enagás and others.
HIGGS (Hydrogen In Gas Grid): This project entails a study for the decarbonisation of the gas network and its use, covering the gaps in knowledge of the impact that high levels of hydrogen could have on gas infrastructure, its components and its management. The project comprises in several activities, including the mapping of technical, legal and regulatory barriers and enablers, testing and validation of systems and innovation and modelling and preparation of a set of conclusions as a way to enable hydrogen injection into high pressure gas networks. It is participated in by Redexis Gas, the Aragon Hydrogen Foundation, Tecnalia, DVGW (HSR (University of Applied Sciences of Rapperswil, Switzerland) and ERIG (European Research Institute for Gas and Energy Innovation, Belgium).
GREEN HYSLAND: Project for industrial-scale production of renewable hydrogen, using up to 7.5 MW of electrolysis, from dedicated photovoltaic electricity generation. The electrolysis facilities would be located in Lloseta, in order to reindustrialise the municipality in the face of the closure of a cement production plant and to take advantage of its transport and energy infrastructure. The uses are related to the tourism sector’s energy demand. In particular, the supply by means of tankers and use in the fleet of five buses owned by Palma City Council and in 10 vehicles in a rent-a-car fleet, for the generation of electricity in the Port of Palma and to satisfy thermal uses in hotel and administrative buildings. It is participated in by Acciona, Enagás and Cemex, together with the Government of the Balearic Islands, IDAE, Redexis, FHa and the University of the Balearic Islands.

We note that Enagás, which is one of the promoters in most of the above projects, is the main gas transmission system operator in Spain and the gas system manager.

Additionally, there are 28 proposals identified in the call for interest for value-added projects in manufacturing activities. These include a project to apply green hydrogen to industrial purposes, a green hydrogen production project by electrolysis of electricity from renewable sources and its subsequent use as a reducing agent in the production of iron, and an industrial-scale project for the production of renewable hydrogen and its subsequent integration into fertilizer production processes. Another industrial-scale project is for the production of renewable hydrogen and its subsequent use in transportation.

Also, Iberdrola, the main Spanish utility, has recently announced that it will invest, together with Fertiberia (a well-known chemical company that produces fertilizers) 1.8bn in four green hydrogen projects until 2027, all of them linked to Fertiberia’s factories in Spain. These will entail an aggregate capacity of 800 MW and expect to create 4,000 jobs up to 2027. These projects will represent 20% of the Spanish Government’s 4 GW target. One of these projects is already under construction.

Green vs. blue

There is a common view amongst leading Spanish industrials and the Government that green hydrogen should be the focus of the hydrogen strategy. This is reflected in the Spanish Government’s Roadmap, which aims to implement an effective green hydrogen production strategy by the 2025-2030.

Spanish industrials are focusing their mid-term view on the development of corporate strategies to create value in the hydrogen value chain, especially in the production stage.


Part 4

Hy-Achieving – creating a suitable incentive regime

The Spanish Government’s Hydrogen Roadmap lays the foundations for Spain to become a hydrogen cluster, setting ambitious targets towards that end.

The Spanish Government wants to create an adequate environment to incentivise investment in hydrogen projects. Some of the measures contemplated in the Roadmap are as follows:

  • Regulatory measures:
  • Cutting red tape and eliminating regulatory barriers to hydrogen production.
  • Setting up a system of guarantees of origin.
  • Fostering the competitiveness of renewable hydrogen through a yet-to-be-detailed system of new tax incentives for hydrogen related projects.
  • Sectorial measures
  • Design of financial measures to support Spanish industry (e.g. specific loans related to hydrogen production projects).
  • Promotion and incentives for the creation of a "hydrogen valley or clusters”, specifically in the industrial areas of Huelva, San Roque-Los Barrios, Cartagena, Sagunto, Bilbao, Tarragona, Avilés-Gijón, A Coruña and Puertollano, where the main industries consuming hydrogen are currently located in Spain.
  • Promotion of hydrogen-based transport, including land transport purchase plans (with financial support of €100m, under the so-called “MOVES II Plan” – Plan for Sustainable and Efficient Mobility II), drafting specific regulations in relation to hydrogen-supported ships and supporting the Spanish car industry in relation to hydrogen-powered cars (with €25m in financial support), and fostering the substitution of diesel railroad transportation and the implementation of hydrogen-powered trains, among others.
  • Developing specific laws in relation to hydrogen gas stations and applicable permits, licenses and authorisations. The Government intends to establish the same regulatory permits as for regular gas stations for hydrogen gas stations.
  • Innovation and development measures: in relation to facilities to be granted in the following State Plan for Scientific and Technical Research and Innovation (Plan Estatal de Investigación Científica y Técnica y de Innovación) in relation to the Spanish Science, Technology and Innovation 2021-2027 Strategy.
  • Other measures in relation to information campaigns and analysis of the impact of the above measures.

The relevant tax schemes and Spanish funds available for fostering the support programmes mentioned above have not been approved yet, except the so-called MOVES II Plan. Also, further funds from the European Union are expected to be received. The Roadmap includes a full list of facilities or public aid specific programmes available for the implementation of the above listed measures, both at a national and EU level.


Part 5

Hy-ly Volatile? making it safe, sustainable and transportable

The Hydrogen Roadmap has clearly identified the need to create an adequate regulatory and legal framework for the development of activities relating to clean hydrogen in Spain. This is also the position of the main industrial and energy sector players.

For example, as at today, hydrogen production is regulated as an industrial activity. As such, hydrogen production facilities can only be built on plots that are labelled as “industrial plot” under the relevant planning rules, and they are subject to rigorous environmental assessment processes. As the Spanish Government has noted, this needs to change, provided that the production of green hydrogen has a significantly lower environmental impact, and therefore the processes must be simplified.

The Spanish 1998 Act on the Hydrocarbons Sector (“Hydrocarbons Act 1998”) is the primary source of legislation governing the licensing of the Spanish downstream gas industry, which includes the production, regasification, transportation, storage and sale of gas to end-users. The definition of “gas” in the Hydrocarbons Act 1998 expressly captures any type of manufactured fuel gas.

The construction of production, storage and transportation of manufacture fuel gas facilities require specific licenses to be granted prior to the construction and operation of the facilities (ranging from sectorial licenses, to planning, environmental and other permitting requirements).

Regarding road transportation, the ADR also applies in Spain. There are numerous pieces of legislation regarding road transportation and transportation of hazardous products in particular. None of them are specific to green hydrogen.

Finally, the need to allow the blending of hydrogen into the existing natural gas network, as well as the creation of a system of guarantees of origin, are a regulatory priority for the Spanish Government.


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