Spain Allocates €490.5 Million to Boost Renewable Hydrogen and Industrial Decarbonization

Significant Investment in Green Transition

Spain has announced a substantial allocation of €490.5 million from its post-pandemic recovery funds to accelerate projects in renewable hydrogen and industrial heat decarbonization. The decision, approved at a recent cabinet meeting, underscores the country's commitment to fostering a green economy and reducing its carbon footprint. This funding is part of Spain's broader Recovery, Transformation and Resilience Plan (PRTR), which has already seen over €3.1 billion dedicated to renewable hydrogen development and its associated value chain.

Funding Breakdown and European Collaboration

The allocated funds will be strategically distributed to target key areas of the energy transition. A significant portion, €440.5 million, is earmarked for renewable hydrogen production under the third European renewable hydrogen auction. Within this, €304.1 million will specifically support renewable fuels of non-biological origin (RFNBO), while €136.4 million will be directed towards hydrogen projects in the maritime and aviation sectors, focusing on RFNBOs.

Additionally, €50 million will be contributed to the first European auction aimed at reducing industrial process heat emissions. These funds are designed to facilitate projects that replace fossil fuels with electric technologies, such as heat pumps and resistive or plasma heating systems, as well as with renewable heat sources including solar thermal and geothermal energy.

The funding mechanism utilizes the Auctions-as-a-Service (AaaS) system, operating under the European Commission's Innovation Fund. This includes initiatives like the European Hydrogen Bank and the Industrial Decarbonisation Bank. The AaaS system enables countries within the European Economic Area to use national funds to support eligible domestic projects that were placed on reserve lists in European auctions but did not receive funding due to budget constraints at the EU level.

Strategic Goals and Administration

The grants will be administered by the Institute for Energy Diversification and Saving (IDAE), an implementing agency of the Ministry for the Ecological Transition. This latest financial injection builds upon previous efforts, including an allocation of €126.4 million last year to two green hydrogen projects that narrowly missed out on European funding.

Spain's overarching green hydrogen strategy aims to replace 25% of the approximately 500,000 tonnes of fossil-based hydrogen currently consumed annually by Spanish industry with green hydrogen. This initiative is projected to reduce CO2 emissions by 4.6 million tonnes by 2030. The country has set an ambitious target to install 12 GW of electrolysis capacity by 2030, positioning itself as a leader in the European green hydrogen landscape.