By Pietro Lombardi
MADRID (Reuters) -Spain has increased its target for green hydrogen production capacity in a sign of confidence in an industry that has seen some energy giants scale back plans due to high costs and uncertain demand.
The update of the government’s strategy set a 2030 target of 12 gigawatts (GW) for electrolysers used to make green hydrogen, up from 11 GW in a draft update presented last year, according to an energy ministry document published on Monday.
The government is expected to approve an updated national energy and climate plan, which includes the new goal, at a cabinet meeting on Tuesday.
The plan is a key roadmap for companies looking to invest, as it establishes targets for energy efficiency and renewables, among others.
Spain is vying to be a European leader in green hydrogen – which means the gas is produced using renewable electricity – by taking advantage of its bountiful sunshine and wind to produce clean energy.
It has recently approved subsidies for large projects in the country and is attracting interest from big investors, like Chinese electrolyser manufacturer Hygreen Energy and China’s Envision Group.
By contrast, some of the largest energy companies in the region have cut targets or scrapped projects tied to low carbon hydrogen, highlighting the challenges faced by an industry that depends heavily on subsidies.
While low carbon hydrogen is seen as key to decarbonising Europe’s economy in the future, it is more expensive than hydrogen produced from natural gas.
On Monday, Shell shelved a blue hydrogen – produced using natural gas in combination with carbon capture and storage – project in Norway due to a lack of demand. Last week, Norway’s Equinor cancelled a similar planned project.
Earlier this year, Europe’s largest utility Iberdrola slashed its green hydrogen ambitions by almost two-thirds after delays in obtaining funding for some projects.
Like most European peers, Madrid missed an end-of-June deadline to submit its energy and climate plan to Brussels.
While the updated plan is broadly in line with the draft presented last year, keeping for example a 32% emission reduction goal, it does tweak some objectives, such as for energy storage, now targeting 22.5 GW of capacity, up from 22 GW.
(Reporting by Pietro Lombardi; Editing by Alistair Bell and Mark Potter)
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