1 Introduction

In Spain, renewable hydrogen has been enthusiastically embraced by the Government, devolved administrations, the private sector and, to some extent, civil society. When the Spanish Hydrogen Roadmap was published in 2020, in the midst of the economic and social crisis caused by COVID-19, renewable hydrogen was seen as a tool for industrial development and economic diversification. The strategy focused on the creation of hydrogen valleys or clusters that could concentrate hydrogen production and consumption, attracting economic activity associated with the molecule. For this reason, the external dimension of Spain's hydrogen strategy was relatively modest in its initial design.

The Russian invasion of Ukraine and the European Commission's call in the REPowerEU to increase the level of ambition for renewable hydrogen led to a change in the Spanish hydrogen policy, reinforcing its external dimension with a new focus on exports and infrastructure development. This strategic shift exposes a trade-off between hydrogen production for domestic consumption as a driver of green reindustrialisation, versus an export model that enhances the Iberian Peninsula's energy integration with Europe.

Both the Spanish Roadmap and the private sector have shown a clear preference for renewable hydrogen over other low-carbon alternatives, which has endowed its domestic development with a certain strategic continuity compared to other European players with more ambiguous technological preferences.

Spain is concerned that the obstacles to Iberian gas and electricity interconnections with European markets historically posed by France will be replicated for hydrogen, even more so given the path of self-sufficiency based on nuclear-derived hydrogen presented by the Elysée. Until now, Spain has focused its hydrogen diplomacy on key European allies (Portugal, France, Italy, Germany and the Netherlands). In the long run, hydrogen is a vector for integration and energy cooperation in the Euro-Mediterranean energy space, as well as for business and investment cooperation in Latin America.

The main documents that define the Spanish hydrogen strategy are the Hydrogen Roadmap published in 2020, the National Integrated Energy and Climate Plan (PNIEC) 2023–2030, the Climate Change and Energy Transition Law approved in 2021, the 2050 Long-Term Decarbonisation Strategy, the Just Transition Strategy and the Energy Storage Strategy.

2 Domestic Development of Hydrogen

Spain has focused its strategy on renewable hydrogen, prioritising it over other forms of decarbonised hydrogen production in the 2020 Hydrogen Roadmap. With the exception of a few specific projects associated with blue hydrogen production in refineries, private sector plans are aligned with this preference. Its lower environmental credentials (Howarth & Jacobson, 2021), and the absence of oil and gas extraction activities in Spain has left blue hydrogen (with carbon capture) out of the equation, while the nuclear phase-out programme planned for 2027–2035 excludes its use for hydrogen production. According to the Spanish Hydrogen Strategy, initial development will focus on existing industrial uses around hydrogen clusters or valleys. It is expected that the sectors that already use hydrogen as a raw material, mainly refining and fertilisers, will be the first movers for its production and consumption, progressively adding new sectors such as methanol, synthetic fuels or steel. Currently, Spain consumes approximately 500,000 tons of fossil hydrogen per year, almost exclusively for industrial uses (70% in refineries and 25% in chemical industries) with captive production of hydrogen in situ and limited trade of the molecule.

In the 2023 revision of the PNIEC, Spain has significantly elevated its renewable energy objectives. Specifically, the country has revised its electrolyser capacity target for 2030, raising it from 4 to 11 GW (Table 1). However, no hydrogen production targets are set, and no estimates of electrolyser load factors are presented. The PNIEC does not envisage hydrogen blending in the gas network, but rather proposes an initial production of hydrogen close to consumption centers and a subsequent development of a backbone network dedicated exclusively to hydrogen and developed by the national gas TSO Enagás. The new PNIEC also increases the renewable hydrogen quota in conventional industrial uses from 25 to 74% by 2030.

Table 1 Installed capacity of the electricity sector in Spain in 2020 and the interim 2023–2030 PNIEC targets in MW (PNIEC de España, 2023)
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In Spain, the development of relatively cheap green hydrogen has been seen as a unique opportunity to attract investment in the decarbonisation of the metallurgical, chemical and petrochemical sectors, where hydrogen feedstock represents an important part of the final costs. Renewable hydrogen is also seen as a backup tool for the Iberian electricity system in the absence of new interconnections, allowing better management of surpluses and possible grid bottlenecks. As the penetration of renewables progresses, generation surpluses are expected during autumn and spring as opposed to deficits on many winter and summer days. Although still at an early stage, renewable hydrogen is identified as one of the key technologies for seasonal storage in decarbonised systems (Guerra et al., 2020).

Finally, hydrogen is also an element of the Just Transition Strategy (MITECO, 2022) and is expected to serve as a lever for industrial development to provide territorial cohesion. Renewable hydrogen has been added to the Just Transition Agreements and is playing a leading role in the auctions for grid access points available after the closure of coal-fired power plants (and in the future, nuclear energy), integrating elements of local employment, reindustrialisation and territorial cohesion (Cuesta et al., 2022). There is growing optimism about the role of hydrogen in the reindustrialisation of regions in economic and demographic decline after several decades of loss of competitiveness due in part to high energy costs.

For these reasons, hydrogen has enjoyed a strong drive from the public sector, in particular with the PERTE (Strategic Projects for Economic Recovery and Transformation), funded by the NextGenerationEU Funds (Lázaro et al, 2022). The total budget allocated to the hydrogen PERTE in the Recovery Plan was initially endowed with 1.555 million euros, further increased to 3.000 million euros with the addendum made after the publication of the REpowerEU. Other support lines funded by the NextGenerationEU Funds include the allocation of 450 million euros for the transformation of ArcelorMittal's Avilés steel mill and the renewable energy and storage PERTE support initiatives with indirect connections to hydrogen. In another public initiative, the public company Navantia, specialised in the construction of military vessels and submarines, has announced its intention to develop a renewable energy business line. This would include the manufacture of electrolysers with know-how from the assembly of state-of-the-art submarines in collaboration with Repsol.

2.1 A Decentralised Hydrogen Strategy

In Spain, hydrogen development is also attracting the interest of devolved administrations. One of the key elements of this regional development is the formation of trans-regional alliances and partnerships for the creation of hydrogen corridors. Such initiatives are essential to avoid regulatory fragmentation and encourage the development of a national hydrogen market. They can also boost regional development by focusing on areas of greatest competitive advantage. This is the case of the Basque Country, which seeks to strengthen and revitalise its local industry with a clear technological development component, while Castilla y León perceives hydrogen as a way to accelerate investment in renewables and their associated value chain. Furthermore, the involvement of the Autonomous Communities in the development of renewable hydrogen is key to guaranteeing the simplification of administrative processes.

This regional development seems to respond to the growing concern in Spain about the phenomenon of rural depopulation (Junquera, 2021). Recent analyses suggest that renewable energies, especially onshore wind, are not creating long-term jobs at the local level (Fabra et al., 2022) and renewable hydrogen is expected to enable greater wealth creation in the territory. However, such initiatives involving the harnessing (directly or indirectly) of renewable resources in these regions for its consumption elsewhere have already generated scepticism among regional political forces (Sánchez, 2021).

Understanding this phenomenon and knowing how to address it will be a key element in ensuring social support for green hydrogen development in Spain, particularly if there is a long-term export ambition. Hydrogen development will have to be carried out under strict environmental and social sustainability criteria. Large projects and infrastructures such as H2Med pipeline are already facing opposition from relevant civil society actors who doubt their environmental, economic and social benefits (Fundación Renovables, 2023).

Water availability can be a limiting factor for green hydrogen production in Spain. The irregular rainfall pattern of the Mediterranean climate means that water consumption for hydrogen projects can be in direct competition with agricultural consumption in certain regions of Spain during specific dry seasons, which are expected to intensify under a + 2 °C global warming scenario (Roudier et al., 2016). Many of the regions with the best solar resources are also producers of intensive irrigated agriculture, sometimes with unsustainable water consumption patterns. In coastal areas, water desalination may be a viable solution, given its low impact on hydrogen production costs: $0.02 hydrogen per kg (Khan et al., 2021). Inland, the scarcity of water resources may become a barrier to the installation of electrolysers in the absence of a nearby wastewater treatment plant (Simoes et al., 2021). The persistent drought in southern Spain during 2020–2023 has increased media attention on the water consumption of unregulated agriculture and its impact on protected natural areas.

2.2 Leading Sectors: Refining, Fertilisers, Steel and Synthetic Fuels

The Spanish refining sector has positioned itself as a world pioneer in the production and use of renewable hydrogen. By 2030, all operators in the sector (Repsol, BP and Cepsa) expect to have decarbonised all their consumption of hydrogen. Spain has one of the most modern refining fleets in Europe following counter-cyclical investments of €6.5 billion made by the main players in the sector between 2012 and 2015 at a critical time for the sector (MINCOTUR, 2018). Indeed, Spain is a net exporter of refined products, which in 2022 reached a combined value of €29 billion, equivalent to 7.5% of total exports (Comex, 2023). The adoption of green hydrogen would enable a significant reduction in scope 1 carbon emissions in the short term, a priority for the three companies involved in the refining activity in Spain, all with ambitious decarbonisation strategies.

The use of green hydrogen would also be favoured by high natural gas prices, the end of free EU ETS allowances in 2034 as the Carbon Border Adjustment Mechanism (CBAM) is introduced, the proven renewable development capabilities of Spanish refining operators and the excellent financial results between 2021 and 2023, with refining margins at record highs. This use of renewable hydrogen would initially focus on its traditional uses in refining (hydrogenation and hydrocracking) and subsequently on the production of synthetic fuels. Renewable hydrogen is therefore presented as a transition vector between the traditional activities of refineries and their subsequent reconversion to the production of decarbonised fuels.

In the fertiliser sector, Fertiberia, a national leader with a dominant market position in Spain and Portugal, is making rapid progress in the integration of green hydrogen for ammonia production with a project portfolio of 860 MW of electrolytic capacity. Together with Iberdrola, Fertiberia is operating one of Europe's first large-scale green-hydrogen to ammonia plant with a 20 MW electrolyser at its Puertollano plant and plans to build another in Huelva of 200 MW together with Cepsa by 2026. Again, the alliance between Fertiberia, Cepsa and Iberdrola comes at a key moment for the fertiliser sector, with the phasing out of free EU ETS emission allowances, the entry into force of the CBAM and raw material prices at record highs. In addition, Fertiberia divested its Algerian subsidiary (Fertial) under political pressure from Algiers in 2019, losing a key cost-competitive ammonium supplier. Consequently, investment in renewable hydrogen also presents itself as a hedging strategy against geopolitical risks. Fertiberia has announced plans to achieve carbon neutrality by 2035, hoping to become a leading company in low-carbon fertiliser production and compete in the EU market (Fertiberia, 2019).

Although there was no domestic methanol production in Spain, projects have emerged for the production of low-carbon methanol associated with renewable hydrogen involving chemical companies (traditionally importers) and energy companies. While obtaining a sustainable source of CO2 is becoming a challenge for the development of these projects, there is still no discussion about a potential pipeline network for CO2 transport.

In recent decades, the Spanish steel industry has undergone a profound restructuring to electric arc furnace (EAF) steel production, leaving only ArcelorMittal as an integrated blast furnace steel producer at its plant in Gijón (Asturias). This ArcelorMittal plant, with an output of around five million tonnes of primary steel, is the core of HyDeal, one of the world's largest integrated hydrogen and renewables projects. Although its initial ambitions have been substantially scaled down from 7.4 to 3.3 GW by 2031, this project aims to produce electricity in Castilla y León, taking advantage of renewable resources and land availability, to produce green hydrogen that would be used for direct reduction of iron (DRI). Doubts remain as to whether the resizing of the project is a sign of rationalisation or evidence of the difficulties in implementing it. In February 2023, the European Commission approved a €460 million grant for Spain's ArcelorMittal's HyDeal project, paving the way for the development of the project, which has not yet reached a final investment decision.

Spain holds the third position in the EU for high-temperature industrial consumption, utilizing 33 TWh of natural gas across sectors like ceramics, metallurgy, glass, and cement (Agora Energiewende, 2021). Notably, these industries are tackling technical hurdles by initiating programs like Orange. Bat, focused on incorporating low-carbon hydrogen in ceramics production. In a similar vein, Hydro, a Norwegian aluminium company, achieved in Spain a world-first by producing recycled aluminium using green hydrogen instead of natural gas in the extrusion process.

2.3 Technological Development, R+D+I and Professional Skills

Spain lacked the know-how associated with renewable hydrogen when the Hydrogen Roadmap was published, having to develop its entire industrial and innovation complex. This technological situation contrasts with the initiative shown by the private sector to start up green hydrogen projects, which has been forced to look abroad for electrolytic technology to develop the first pilot projects. The main projects announced use technology from Nel, John Cockerill, Siemens and Cummins. The preference for electrolysers from Western manufacturers is explained by greater reliability and ease of obtaining financing. However, Chinese-manufactured alkaline electrolysers have managed to significantly reduce their costs (Ansari et al., 2022), sparking growing interest among Spanish project developers (Urbasos, 2023). In the field of power electronics, a considerable part of the hardware investment costs for large-scale electrolysis plants, leading Spanish companies are successfully extending their product lines and services associated with renewable hydrogen.

In the future, Spain is expected to develop a significant local electrolyser assembly industry to supply the domestic market without necessarily relying on innovation by Spanish companies. This could replicate the situation in the automotive or onshore wind industry, where Spain is one of the European leaders in terms of industrial output without a major national champion. The first large project is the Cummins plant in Guadalajara, which will have the capacity to manufacture 500 MW of electrolysers per year by 2024, scalable in the future to 1 GW. The foreseeable development of green hydrogen in Morocco, Tunisia and Portugal would offer a potential market for the world's leading Spanish companies in technical project development and infrastructure construction.

Spain's hydrogen-related innovation strategy has also followed a process of increasing internationalisation. Spain joined the Mission Innovation 2.0 project in September 2022 and four Spanish projects were selected in the Commission's €5.4 billion Hydrogen IPCEI (Important Projects of Common European Interest) call to support the first deployment and innovation in the hydrogen technology value chain in July 2022. In the second edition of the IPCEI, held in September 2022 and focused on the development of industrial and infrastructure development projects, Spanish companies obtained 20% of the projects selected.

Spain is experiencing two bottlenecks associated with the lack of skilled human capital. On the one hand, many companies, in particular SMEs, are unable to benefit from the generous funds of the Recovery and Resilience Mechanism due to a lack of qualified personnel in the public and private sectors to carry out administrative procedures (Olcese, 2022). This lack of skilled personnel not only affects project development in the short term, but may also slow down project development in the future, when the demand for skilled labour will be higher. For this reason, the Recovery Fund hydrogen package included vocational training and re-skilling as one of its five strategic objectives.

3 External Dimension of Hydrogen in Spain

The external dimension of hydrogen in Spain has evolved since the publication of the Hydrogen Roadmap in 2020, moving from a focus on domestic industrial development to one of greater integration through exports in response to the Russian invasion of Ukraine. Spain took on the mandate set out in the REPowerEU to design hydrogen strategies not only in terms of decarbonisation but also in terms of energy security. So far, Spain has signed bilateral hydrogen cooperation agreements with Italy in 2020 and Portugal in 2021, highlighting the need to share information, explore private investment opportunities and integrate supply chains. With Germany there is a broad understanding on energy transition and climate ambition that extends to hydrogen. However, there are some elements of antagonism, in particular on hydrogen imports from outside the EU and potential conflicts over state aid and industrial policy. With France, the announcement of the construction of the H2Med pipeline in December 2022 marked the beginning of a new phase of cooperation, although the rapprochement between Madrid and Paris on energy integration appears fragile. For Spain, it is a priority to secure France's commitment to the construction of new infrastructures that integrate Spain into the EU energy market, especially electricity but also hydrogen. The construction of the H2Med pipeline, which will connect the Iberian Peninsula with Europe via France, will be crucial in determining whether Spain's hydrogen strategy is geared towards domestic consumption or also targets exports (Table 2).

Table 2 Matrix of the external dimension of hydrogen in Spain based on domestic consumption levels and infrastructure development
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Spain has remained on the sidelines in the development of bilateral and multilateral agreements with non-European players in the hydrogen sector. The absence of a cooperation agreement with Morocco is noteworthy, bearing in mind the importance that the North African country is giving to the external dimension of green hydrogen with the signing of agreements with Germany and Portugal. The Spanish private sector is actively participating in the development of the external dimension of hydrogen in Spain. In October 2022, Cepsa and the Port of Rotterdam announced the establishment of Europe's first green (ammonia-based) hydrogen shipping corridor from the Port of Algeciras. The private energy sector has also shown interest in investing in markets with great potential for hydrogen development, such as Chile and Brazil, constituting an incipient vector of business diplomacy and decarbonised cooperation in Latin America. Spain's 2023 rotating Presidency of the EU Council served to position Spain as a key interlocutor with Latin America, with hydrogen enjoying a relevant position in the EU-Celac Summit negotiations.

3.1 The Role of Exports and the Iberian Peninsula as a Hub for Hydrogen Trade

Spain and Portugal aspire to contribute to the development of a European hydrogen market that would result in a hydrogen corridor between the Iberian Peninsula and Central Europe, potentially later extended to include North Africa. France's historical reluctance to help Spain's energy integration beyond the Pyrenees raises fears that the current lack of natural gas and electricity interconnections could be replicated: Spain has excess LNG regasification and electricity generation capacity (both gas and renewables) that it cannot export due to this lack of infrastructure (Escribano, 2021). In the absence of an integrated hydrogen pipeline network in Western Europe, Spain's exports would risk losing the competitive advantage generated by its abundant renewable resources, its geographical proximity to European import markets and its institutional and geopolitical stability (Núñez-Liménez and De Blasio, 2022). Hydrogen pipelines are considered the most efficient option for transporting hydrogen in large quantities and over distances of less than 3.000 km, especially if there is fossil infrastructure that can be retrofitted (IEA, 2022).

Another key element of the external dimension of green hydrogen is the possibility of integrating the North African and European markets into the Mediterranean import corridor already identified in the REPowerEU package. Morocco's ambitions to become a green hydrogen exporter would be coupled with Algeria's pressing need to replace its hydrocarbon exports and the existence of gas pipelines. Both countries, with excellent geographical conditions for the development of green hydrogen (and blue in the case of Algeria) would offer the possibility of establishing a trans-Mediterranean corridor through Spain. In addition, Spain and Morocco are experiencing growing energy integration in the areas of electricity, natural gas and trade in refined products that could be extended to the green hydrogen sector (Urbasos, 2023). Although the costs of adapting hydrogen pipelines would be significant, the Maghreb-Europe gas pipeline (GME) connecting Algeria and Spain via Morocco would have favourable characteristics for trans-Mediterranean hydrogen transport with an underwater route of only 45 km, which would considerably reduce the compression problems that these infrastructures have in their conversion (Amore-Domenech et al., 2023). The Algeria-Morocco section of the GME ceased operating in October 2021 in a context of growing rivalry between Algiers and Rabat, exposing a key barrier to future Mediterranean energy integration: the increasing geopolitical polarisation of North Africa.

Hydrogen exports from North Africa would face the same obstacles as those from the Iberian Peninsula to reach North European markets, unless alternative transit pipelines, such as the proposed H2Med, are built or transport by sea becomes competitive, in this case avoiding the peninsula as a transit hub (Escribano, 2021). Retrofitting LNG terminals could be a long-term solution if a hydrogen pipeline network is not fully developed in the EU. The main LNG plant operator in Spain, Enagás, is prioritising the development of hydrogen pipeline infrastructure in the framework of the European Hydrogen Backbone, leaving LNG plants operational for natural gas and biomethane, as well as for bunkering in the long run (Enagás, 2022). Given that all new LNG regasification plants in Germany must be hydrogen-ready, whether in the form of ammonia, biomethane or liquid hydrogen, these infrastructures could be decisive in the flow of renewable hydrogen from the Iberian Peninsula if their conversion is eventually techno-economically feasible.

In a scenario of isolation from the rest of Europe, Spain could alternatively focus on generating a low-carbon hydrogen ecosystem in the Western Mediterranean based on local industrial consumption. Industrial activities in Mediterranean countries would benefit from relatively lower hydrogen production costs than in the rest of the EU, which could be a driver for the competitiveness of associated industry. This industrial development could have a greater or lesser level of complexity and added value: from the simple production of ammonia, methanol or iron with DRI to the production of green steel or more advanced petrochemicals. The supply of green hydrogen from North Africa would allow for increased scale and industrial competitiveness. It would also enable a higher degree of economic integration in the Western Mediterranean at a time of rapid transformations, such as the entry into force of the CBAM and the Net Zero Industry Act, offering attractive transition prospects and greater interconnections with the Southern Neighbourhood.

3.2 Infrastructure: Hydrogen as a Driver for Greater Energy Integration

Intensifying interconnections with the rest of Europe has been a traditional priority of Spanish energy policy since its accession to the EU (Escribano et al., 2019). Given Spain's ambitions to be a key country in hydrogen transit, a strategic element is the development of infrastructures that enable the achievement of a green corridor from the Iberian Peninsula to Central Europe. So far, hydrogen infrastructures are limited due to the industrially concentrated and poorly distributed use of hydrogen in Spain. For this reason, interconnections must be developed simultaneously at the national and international level to connect renewable resources, hydrogen production and industrial centres.

Spain and Portugal have progressively integrated the electricity (MIBEL) and, to a lesser extent, the gas (MIBGAS) markets. This has provided a well-developed market structure for energy trading that would facilitate further coordination between the electricity and gas sectors in the future creation of an Iberian-wide hydrogen value chain. Portugal's Hydrogen Strategy aims to install 2 GW of electrolysis capacity by 2030 for export markets. Spain's role as a final destination for Portuguese hydrogen will depend on Iberian industrial consumption and its level of integration in the European hydrogen market (Table 2). The signing between Spain and Portugal in December 2022 of an agreement for the construction of an interconnection between the cities of Zelorico and Zamora is the first major bilateral project in this area.

The proposed IPCEI candidate pipeline, with a budget of 350 million euros, is slated to commence construction in 2025, contingent upon securing 50% of the project's financing from EU funds. The pipeline is designed to supply hydrogen produced in Portugal to the new green steel industrial cluster in Asturias (see Fig. 1), functioning as an element of Iberian integration and industrialisation, rather than as an export-oriented project.

Fig. 1
A map of Spain exhibits the regional development of hydrogen, highlighting key areas such as the primary steel industry in Asturias, the Basque H2 valley, HyDeal Spain project, Sines H2 production cluster, refining and fertilizers in Huelva, the Magreb-Europa pipeline, the Medgaz pipeline, the Escombreras valley, the H2 Ebro corridor, the Mediterranean corridor, and petrochemical and ceramics industries, among others.

Source the authors

Regional development of hydrogen in Spain and its international implications.

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In the case of Italy, Spain signed a cooperation agreement aimed at exchanging technology and taking advantage of Italy's vast diplomatic-business networks in the Mediterranean region and the African continent (Giulli, 2022). This agreement came in a context of high-level bilateral energy understanding with the creation of a virtual LNG pipeline between Barcelona and Livorno, and shared interests in pressing France on new energy interconnections. After the victory of Giorgia Meloni, and the change of government in Italy, bilateral energy initiatives, including those related to hydrogen, have been substantially reduced.

France represents a somewhat paradoxical case. Although there are clear bilateral synergies in energy, and in particular hydrogen, the lack of collaboration on infrastructure development in recent decades has generated some suspicion south of the Pyrenees. The construction of the H2Med offshore pipeline would provide a greater incentive for cooperation between Portugal, Spain and France. H2Med entails major technical complexities, such as the need for a 140 MW compressor station or the irregularities of the seabed in the Gulf of Leon. Nevertheless, H2Med would link the Ebro-Mediterranean hydrogen corridors with a potential exchange capacity of two million tonnes, equivalent to 20% of REPowerEU domestic production target for 2030 (Urbasos, 2022). Enagás, the Spanish gas TSO, has already launched a first non-binding Call for Interest and a binding Open Season would be launched in 2025 to obtain access to the infrastructure.

However, France has been inconsistent in its position on the future hydrogen pipeline. First, French national preferences for an offshore route make the project substantially more expensive and technically more difficult. Secondly, France has shown a transactional attitude by pressuring Spain on H2Med in order to get Madrid's support in European negotiations on the inclusion of nuclear hydrogen as renewable or low-carbon. Finally, the French government has been ambiguous when it comes to defining certain technical details of the project, such as the location of the compressor stations. Enagás plan is to build a single station in Barcelona to provide a one-way Spain to France flow, while Paris is considering possible exports of nuclear hydrogen to Spain, advocating for a second station in Marseille. Moreover, France's credibility in the development of infrastructure has been damaged with the Spanish-French electricity interconnection in the Bay of Biscay accumulating delays due to cost overruns caused by inflation in materials and the design of the route (also offshore under French imposition).

While electricity interconnections with France are progressing slowly and are unlikely to meet the targets set out in the Spanish PNIEC to reach 8.000 MW of interconnection by 2030, renewable hydrogen could be a complementary option to connect the Iberian Peninsula renewable resources with the rest of continental Europe. This dual electricity and hydrogen connection would increase the robustness and resilience of the European and Iberian decarbonised energy systems, while providing Spain with the opportunity to capitalise on its renewable resources and land availability. However, it is advisable to rethink the compatibility of H2Med with the reindustrialisation and territorial structuring narrative employed in the 2020 Hydrogen Roadmap.

3.3 Regulatory Diplomacy

Spain aims to contribute to the development of a common European hydrogen market with a preference for hydrogen produced with renewable electricity in the EU. The Spanish government's regulatory efforts are aimed at ensuring that strict sustainability standards are in place to guarantee low emissions from hydrogen domestically produced and imported. The Spanish government has been a strong supporter of separating nuclear hydrogen, labelled as low-carbon, from renewable hydrogen. Despite pressure from Paris to change its position, Spain has made clear its preference for renewable hydrogen at both national and European level over other low-carbon alternatives.

Regarding the Hydrogen Delegated Acts (DA) of February 2023, the Spanish government welcomed its main outcomes. Spain supports a transitional period in which time correlation and additionality are extended to a monthly period instead of an immediate application of the stricter hourly correlation. This flexibility is expected to allow the development of the first projects at a competitive cost, enabling their integration into industrial processes, fertilisers and refineries, which need a continuous supply of hydrogen. Although the first reactions from the private sector pointed out that the DAs excessively favoured projects associated with renewable sources with high-capacity factors (hydropower and offshore wind), the Spanish government expressed its satisfaction with the final result.

In May 2022, Spain launched a system of Guarantees of Origin for renewable gases, including biogas, biomethane and green hydrogen. This is expected to help increase their production and allow Spain to reach other EU markets. As a transitional measure, and due to the lack of human and technical resources in the public administration, the Spanish gas TSO, Enagás, will oversee the implementation and monitoring of this mechanism, signalling the administrative and technical challenges that green hydrogen could generate. In addition, Spanish private companies have advocated the creation of premium low-carbon products and the implementation of Europe-wide guarantees of origin for industrial products related to green hydrogen. These mechanisms would enable the implementation of low-carbon fertiliser, steel, aluminium and ceramics projects being studied in Spain. Spain defended the creation of the European Hydrogen Bank, seeing it as an opportunity to deploy a common European policy of subsidies for hydrogen production. However, it has favoured a strategy of preferentially subsidising European production. The success of Spain and Portugal in the first auction of the European Hydrogen Bank has demonstrated the relative competitiveness of Iberian projects in the European market. More than 80% of the €720 million tendered in the auction were awarded to three Spanish and two Portuguese projects out of a total of seven.

3.4 Allies and Competitors in the Hydrogen Economy

As Eicke and De Blasio (2022) argue, new tensions may arise between industrialised countries with hydrogen import needs and potential producers with a renewable resource and skilled labour force. Potential exporters, such as Spain, would be interested in attracting green hydrogen-intensive industrial activities rather than exporting hydrogen directly. Locating industrial facilities close to renewable hydrogen production would create a higher level of added value in the territory, fostering hydrogen-related industrial policies that leverage this competitive advantage. These competing interests may lead to conflicts; EU importers would protect domestic markets through state aid and subsidised hydrogen imports, as in the case of H2Global or Germany's proposed carbon contract for difference support scheme, while hydrogen producers would try to attract these hydrogen-related industries.

This could lead to tensions within the EU at a time when industrial policies, especially those associated with the key technologies of the energy transition, have regained their geostrategic value (Maihold, 2022). The relaxation of state aid allocation criteria in the EU in response to the US Inflation Reduction Act (IRA) could lead to a subsidy race that would benefit countries with the deepest fiscal pockets (Meester, 2022). In parallel, renewables appear to be increasingly integrated into narratives of natural resource nationalism traditionally limited to fossil commodities, such as hydropower exports from Scandinavian countries (Hansen & Moe, 2022), with possible ramifications for other low-carbon energy exporters. This process of diverging interests between EU hydrogen producers and importers must be taken into account when analysing the future of Spain's hydrogen strategy and its potential competitors and partners.

4 Conclusions

Renewable hydrogen represents a dual opportunity for Spain. At the domestic level, it is presented as a vector for decarbonised reindustrialisation, while at the international level, the construction of new interconnections has the potential to reconfigure the peripheral and relatively isolated position of the Iberian Peninsula within the European energy space.

In addition to contributing to the Energy Union with a diversified supply of LNG and electricity, Spain can provide a significant amount of renewable hydrogen obtained in an economically, socially, politically and environmentally sustainable manner. To this end, Spain's regulatory efforts in Brussels have been directed towards establishing a regulatory framework that values renewable hydrogen by applying strict sustainability criteria against other low-carbon options with lesser environmental, energy security and socio-economic credentials.

The H2Med offshore pipeline between Barcelona and Marseille is a strategic project to increase energy interconnections between France and the Iberian Peninsula. Its successful development requires the collaboration of other European partners such as Portugal, Germany or the Netherlands to extend its route by incorporating producers and offtakers to build a true European hydrogen market in which Spain can play a leading role. In the long term, this market could subsequently incorporate future producers of hydrogen and its derivatives from North Africa, serving as a renovating element of the Euro-Mediterranean energy space. Hydrogen also presents itself as another lever of business diplomacy for the Spanish private sector, with particular potential as a key investor in Latin America.

At the domestic level, the Spanish strategy has focused on the development of industrial clusters and valleys based on a narrative of industrialisation, just transition and territorial cohesion that has generated great expectations. This strategy involves dedicating a substantial part of national and imported hydrogen production to consumption in these new industries. Therefore, the domestic dimension, designed in the 2020 Hydrogen Roadmap, and the external dimension, updated after the Russian invasion of Ukraine in 2022, must be reconciled, assuming that renewable hydrogen will be a limited resource, at least in the medium term. Spain has yet to define the development of renewable hydrogen between two models: an interconnected one with a preference for exports versus another with a leaning towards domestic industrial development. It is urgent to build a national strategy that aligns the domestic and international dimensions of hydrogen development in Spain, sending a coherent message to civil society, the private sector and institutions.