Spanish energy giant Repsol is promising to invest up to €3bn ($3.25bn) to upgrade its massive energy complexes so they produce and use clean fuels such as renewable hydrogen instead of fossil fuel — but only if it can be sure of favourable fiscal and regulatory regimes.

And despite last year threatening to freeze investment in some of its upcoming green hydrogen projects amid a row with the Spanish government over a controversial windfall tax on oil companies, Repsol has also upgraded its green H2 capacity targets to the end of the decade by hundreds of megawatts.

In a strategic update today (Thursday) Repsol said that it plans to spend €5.5-6.8bn to 2027 on seven of its existing “multi-energy hubs”, of which €2-3bn would go towards developing production capabilities in renewable hydrogen, renewable fuels (which includes H2-derived products such as methanol) and biomethane.

To this end, the company is targeting 700MW of green hydrogen production by 2027, and 2.4GW by 2030, up from the end-of-decade target of 2GW announced in 2021.

However, the 700MW target for 2027, while considerably higher than the 550MW by 2025 target announced in 2021, appears to be a recognition that the company will need more time — currently it has just 2.5MW in operation, at the Petronor refinery in Bilbao.

Six of the seven hubs earmarked for investment are located on the Iberian peninsula, Repsol said, which is why its investments in clean fuels will depend heavily on the “evolution” of Spain’s fiscal and regulatory regimes.

Repsol operates several industrial complexes in Spain and Portugal, focusing variably on energy and petrochemicals production as well as refining and chemicals.

“A stable tax framework is... needed [for hydrogen and clean fuels investment], as are energy and regulatory policies that do not pose any technological bias, thus supporting all the investments needed to transform the industry,” said Repsol in its strategic update.

This refers “mainly to the Spanish government’s plans to extend/perpetuate the so-called windfall profit tax for energy companies,” a spokesperson for Repsol told Hydrogen Insight. “But also the need for a general regulatory framework that is stable and guarantees the competitiveness of industry going forward in the energy transition.”

The news comes as reports surfaced that BP is lobbying hard to get the EU’s updated Renewable Energy Directive (RED III), which mandates 42% of hydrogen use meet renewable standards by 2030, transposed into Spanish law in order for it to pull the trigger on a €2bn investment in its green hydrogen project in Valencia.

Spain introduced its windfall tax — a 1.2% levy on revenue — in 2022 as a one-off extraordinary measure to bring some relief to Spanish citizens suffering from high energy prices caused by Russia’s invasion of Ukraine.

Described as “nonsense” by Repsol in the past, the tax has been extended beyond its one-year tenure for at least another year, despite the oil giant taking its host government to court over it.

Repsol, which has previously threatened to jettison hydrogen investment over the tax, admitted in today’s strategic review that it “may be here to stay”.

The company paid the Spanish government €443m in windfall taxes in 2023, a relatively small percentage of its giant €10.4bn tax contribution to the country — however Repsol argued that its tax burden in Spain is already disproportionately high, accounting for 69% of all the taxes it pays across five different continents.