Hydrogen law, regulations & strategy in Spain

Spain is positioning itself as one of the leading countries in the production and use of renewable hydrogen (h₂) worldwide. This is partly as a result of the recent approval of energy and climate policy instruments such as the National Energy and Climate Plan ("PNIEC"). The PNIEC establishes a target of 11 GW of electrolysers by 2030, with approximately 15 GW currently in the pipeline. Additionally, the "Hydrogen Roadmap" 1  identifies and defines clear objectives and develops a competitive regulatory framework to integrate facilities that contribute to the energy transition. 

Spain is preparing its existing natural gas transport infrastructure to allow the injection of hydrogen in accordance with the percentages stipulated by European Union standards. 2  In addition to the use of the existing network (blending projects), the construction of new, dedicated infrastructure for the transport and storage of hydrogen is being planned. For instance, Enagás, the technical operator of the gas network, is leading both national and intra-Community projects. In respect of the latter, the transmission system operators (“TSOs”) of Spain, France, Portugal and Germany are working in collaboration to promote the H2med project, which was included in the final list of Projects of Common Interest (“PCI”) of the European Union in April 2024. This project aims to create a network of hydrogen infrastructure that will favour a liquid and competitive pan-European hydrogen market. 

Furthermore, large hydrogen hubs are being planned in different areas of Spain ("hydrogen valleys"), which will connect various regions of the country. HyDeal España, an independent hydrogen producer in Spain, is the first mass-scale hydrogen hub and the first industrial implementation of the HyDeal Ambition platform (an industrial platform spanning Spain, France and Germany, bringing together 30 companies across the green hydrogen value chain). The project integrates photovoltaic energy, hydrogen production via electrolysis, and distribution via the Spanish hydrogen backbone. Alongside this, the H2Med is being developed – a future hydrogen interconnector that will link Spain and Portugal with France and Germany. The system operators of the countries involved in the project – Enagás in Spain, REN in Portugal, Teréga and GRTgaz in France, and OGE in Germany –are to launch a call for interest on 7 November 2024 to gauge the existing demand for this facility. 

It is worth highlighting the growing interest in developing hydrogen projects that harness the electrical energy produced by renewable installations at very competitive prices, many of which do not require connection to the electricity grid. Spain has great potential due to the continuous reduction in renewable energy production costs. Other noteworthy projects include the use of hydrogen to produce other industrial goods such as methanol and ammonia, which are being studied to meet the demand for synthetic fuels in the transport sector, especially the maritime and aeronautical sectors.   

In recent months, Spain has continued to develop regulatory measures to establish a comprehensive regulatory framework, both for the production and injection of hydrogen into the gas network (blending) and to encourage direct supply projects to industrial consumers. 

A key development has been the proposed amendment of Circular 8/2019 of the National Commission for Markets and Competition ("CNMC"), which establishes the methodology and conditions for access and capacity allocation in the natural gas system. The main objectives of the proposed amendment are twofold:

1. to review the mechanisms for access to gas infrastructure and the measures put in place to combat hoarding, taking into account the current market context in respect of demand and capacity utilisation; and
2. to update the conditions for connection and access as well as the allocation of capacity in the gas sector and adapt to the new needs arising from the decarbonisation of the gas sector and the promotion of renewable and low-carbon gases. 

Additionally, there has been a public consultation for the partial transposition of the amendments introduced by Directive (EU) 2023/2413 on the promotion of energy from renewable sources (“RED III”). This consultation focuses on transport and industry targets, as well as those relating to waste, biofuels, bioliquids, biogas, solid biomass, renewable fuels of non-biological origin and recycled carbon. The transposition of this standard will occur alongside the RED III Delegated Acts on renewable hydrogen conditions. 

The approval of Royal Decree-Law 8/2023, dated 27 December, allows natural gas TSOs to perform the functions of provisional hydrogen backbone system operators. 

Furthermore, Royal Decree 376/2022, dated 17 May, regulates the criteria for sustainability and reduction of greenhouse gas emissions from biofuels, bioliquids and biomass fuels. 

The Industrial Decarbonisation PERTE 2024 

In Spain, the field of sustainable fuels is making significant advances. For example, the project between CEPSA and Maersk, which was announced in April 2023, is a strategic collaboration to develop green methanol, an environmentally friendly alternative to fossil fuels, specifically designed to decarbonise maritime transport.

The CEPSA-Maersk project is framed within the context of the Strategic Projects for Economic Recovery and Transformation (“PERTE”) for Renewable Energies, Green Hydrogen and Storage, endowed with 16,370 million euros for projects of this type until 2026. An additional 4,200 million euros will be added following the RepowerEU addendum approved last October by the European Commission. 

The main objective of the project between CEPSA and Maersk is to produce green methanol using green hydrogen and captured carbon dioxide. This green methanol will be used as fuel in Maersk's ships, contributing to the reduction of greenhouse gas emissions in the maritime sector, which has historically been difficult to decarbonise due to its high dependence on fossil fuels. 

The first phase of the project consists of the construction of a plant to produce green methanol at CEPSA's refinery in Algeciras. Construction of the plant began in the first quarter of 2024, and it is expected to be operational by the end of 2025. The plant will use green hydrogen produced by electrolysis, combined with captured carbon dioxide, to make green methanol. This methanol will be supplied to Maersk's vessels operating on international routes, enabling a significant reduction in emissions compared to traditional fossil fuels. 

The impact of the CEPSA-Maersk project is significant, as it has the potential to transform the maritime sector by offering a sustainable fuel alternative. The production and use of green methanol will also contribute to EU and Spanish climate goals by reducing greenhouse gas emissions. Furthermore, this collaboration exemplifies how the integration of sustainable technologies can revolutionise traditional industries and foster the development of new solutions to combat climate change. 

In the long term, the project could drive the advancement of technologies related to the production and use of green methanol, positioning Spain as a leader in this emerging area. The experience gained through this collaboration between CEPSA and Maersk could be valuable for future similar projects, both in Spain and globally, promoting greater adoption of sustainable fuels and accelerating the transition to a greener future. 

First Green Hydrogen Auction 

In the context of the hydrogen market in Spain, three recent developments stand out for their impact on the evolution of the sector. 

The European Commission granted 720 million euros to seven green hydrogen projects, selected in the first auction of the European Hydrogen Bank held in June 2023, three of which were Spanish. The main objective of the auction was to incentivise renewable hydrogen production by offering financial support to the most promising projects. 

The auction evaluated the projects according to several criteria, such as technological efficiency, production capacity and their impact on reducing greenhouse gas emissions. These projects include the following: 

• Alamillo H2 Project: The Alamillo H2 project is one of the most prominent examples of hydrogen infrastructure advancement in Spain. This project, located in the region of Andalusia, focuses on the creation of a green hydrogen production plant to harness renewable energy generated in the region. 
  The project will contribute to increasing the supply of green hydrogen in Spain and to the creation of a distribution and storage network in the south of the country. This development is essential to ensure a stable and efficient supply of hydrogen to the industrial and transport sectors that will use it.
•  Hysencia Initiative aims to advance the integration of hydrogen into existing gas networks. This initiative focuses on adapting gas transmission and distribution infrastructure to allow hydrogen injection into the networks, which will facilitate its use in various applications. 
  Hysencia aims to develop technical and economical solutions for blending hydrogen with natural gas, which will contribute to reducing carbon emissions in the energy sector.
•  The Catalina project, launched in 2024, is another relevant development in the hydrogen market in Spain. Located in Catalonia, the Catalina project is designed to integrate green hydrogen production with sustainable mobility initiatives. Catalina focuses on the production of green hydrogen for use in public transport and heavy-duty vehicles in the region. This project seeks not only to increase the availability of green hydrogen in Catalonia but also to demonstrate its viability as a solution for sustainable mobility and emissions reduction in transport. 

Power to Green project in Mallorca 

The Power to Green Hydrogen Mallorca project, located in the Balearic Islands, aims to produce renewable hydrogen from solar energy for use in a wide range of applications, including transport and industry. 

The production plant generates green hydrogen through a solar-powered electrolysis process. The hydrogen produced will be used mainly in strategic sectors, such as public transport (buses and service vehicles), industry (cement plants and other factories) and power generation for buildings and homes. In addition, it is expected to contribute significantly to the decarbonisation of the island and serve as a model for other European regions to follow. 

This project is the result of a collaboration between different public and private entities, such as Enagás, Acciona, CEMEX and the Institute for Energy Diversification and Saving (IDAE), together with the support of the Balearic government and the European Commission. The plant can produce 300 tonnes of green hydrogen per year and has been partly financed by the European Fuel Cells and Hydrogen Joint Undertaking (FCH JU) programme. 

Power to Green Hydrogen Mallorca not only aims to reduce dependence on fossil fuels in the Balearic Islands but also to promote the creation of a circular economy around hydrogen. It is expected that, with the expansion of the hydrogen network on the island, more sectors will join the use of this clean energy. The initiative is also expected to promote investment in hydrogen refuelling infrastructure, thus encouraging greater penetration of hydrogen vehicles in the local market.