Green Hydrogen in Spain: Opportunities and Regulatory Challenges

Overview and scope

Green hydrogen as a key energy vector for achieving decarbonisation goals

Green hydrogen, also known as renewable hydrogen, is expected to become one of the main energy vectors to meet the decarbonisation and climate neutrality goals set by the EU and the Paris Agreement in key economic sectors such as high-temperature industrial processes, long-distance heavy transport, maritime shipping and aviation.

Spain is especially well positioned to lead in the development of green hydrogen. It boasts one of the largest capacities for solar and wind energy generation in Europe, has a well-developed natural gas infrastructure, and its geographic location – on the edge of Europe and near North Africa, with key ports – places it in a strategic position to become one of the leading hubs for green hydrogen production and export.

Although green hydrogen production is still at an early stage, both European and national goals are ambitious. As part of the policies outlined under the European Green Deal, the EU Hydrogen Strategy sets a goal for the 2025–2030 period, aiming to integrate hydrogen as a key element of an integrated energy system. By 2030, at least 40 GW of electrolysers should be installed, producing up to ten million tons of renewable hydrogen within the EU.

New European framework and regulatory challenges in Spain

In pursuit of these goals, the European Parliament and the Council recently adopted the Directive (EU) 2024/1788 and Regulation (EU) 2024/1789, providing common rules for the internal markets of renewable gas, natural gas and hydrogen.

While Spain has made significant progress in recent years towards laying the groundwork for regulations adapted to the specific needs of green hydrogen, these initial measures have not been given the necessary momentum, and progress on developing a fully adequate regulatory framework has stalled. As a result, Spain currently has a fragmented regulatory system that is not fully aligned with the needs of this emerging energy sector.

In this context, the new European regulations not only provide a reference for what member states must implement but also offer an excellent opportunity for Spain to develop a comprehensive regulatory framework. Based on the current national regulatory landscape, this article examines the key regulatory challenges Spain faces in advancing green hydrogen.

Creating a specific and simplified administrative framework

Current status of administrative procedures for green hydrogen projects

One of Spain’s key challenges is the creation of a cohesive regulatory framework tailored to the specific requirements of green hydrogen. Currently, the development of these projects faces fragmented regulations governing aspects like renewable energy production, access to water resources, and hydrogen generation, storage and distribution, all separately regulated.

Added to this, there are strict environmental requirements that stem from regulations traditionally focused on hydrogen as an industrial product, primarily for the chemical sector. As a result, the administrative process is complex, inefficient and subject to time delays.

A clear and efficient permitting framework

Although Spain has made some modest progress in this direction in recent years through specific regulatory changes, there remains a pressing need for a cohesive regulatory framework that simplifies and streamlines the processes for granting permits and administrative authorisations for the production of green hydrogen.

This system should remove unnecessary regulatory barriers and establish clear timelines to allow competent authorities to make swift decisions, ensuring that the deployment of hydrogen production facilities and associated infrastructure can proceed at an appropriate pace.

Furthermore, to guarantee the sustainable development of green hydrogen in Spain, it is essential to improve legal certainty in both the renewable energy production sector (wind and solar) and the environmental sector. Experience shows that investors currently face significant uncertainty due to the administrative milestones required for grid access and connection in these projects.

Moreover, the judicial suspension of wind farms based on alleged environmental issues introduces additional uncertainty. A balance must be struck between energy development and environmental protection, with clear and predictable regulations that allow progress on both fronts in a sustainable manner.

Certification system and renewable hydrogen guarantees of origin

The existence of a reliable system of guarantees of origin and traceability for renewable hydrogen is crucial for building trust among producers and consumers alike and for developing a solid, transparent and competitive market.

In recent years, Spain has made significant strides in this regard by implementing a certification system for renewable gases, including green hydrogen, primarily through Royal Decree 376/2022, and Order TED/1026/2022, which establishes the procedure for managing guarantees of origin for gas from renewable sources.

However, the new European regulatory package offers an excellent opportunity to clarify the criteria for renewable hydrogen and to align this system with European standards, ensuring greater cohesion in the European market.

The adoption of clear criteria and transparent certification mechanisms will be essential for Spain to position itself as a leader in green hydrogen production within the EU.

Infrastructure adaptation, market integration and network access

Adapting existing gas infrastructure

Spain currently has specific regulations that partially govern the transportation, storage and supply of renewable gases, such as Royal Decree-law 6/2022, which partially aligns these activities with those in the natural gas sector. However, this regulation is insufficient to address the technical and economic challenges posed by the development of hydrogen infrastructure.

A comprehensive regulatory framework is needed to adapt the existing gas infrastructure to transport hydrogen, including updating technical and safety standards to ensure that the networks can transport hydrogen safely. Guidelines and administrative plans must also be established to facilitate this transition.

Access for hydrogen producers to gas networks

Ensuring fair and non-discriminatory access to natural gas networks for green hydrogen producers is critical. The regulatory framework must establish specific rules governing the rights of hydrogen producers and the conditions for accessing gas infrastructure, ensuring an open and competitive market. Additionally, clear pricing criteria and rules on the permissible percentages of hydrogen blending must be defined.

Although the joint operation of hydrogen and natural gas networks may create synergies, Spanish authorities must ensure that hydrogen transportation networks are managed by legally independent entities, as required by European law, in order to ensure transparency regarding the financing and use of access tariffs.

However, while the joint operation of hydrogen and natural gas networks can create synergies, it is important that the Spanish authorities ensure, as required by European regulations, that hydrogen transport networks be operated by a legally independent entity. This is to ensure transparency regarding the financing and use of access tariffs.

Planning and developing new grid infrastructures

In the long term, regulations need to promote the creation of infrastructures to produce pure green hydrogen. The regulatory framework should establish financial support mechanisms and define strategic planning for the development of these infrastructures, ensuring alignment with decarbonisation goals and integration into the European energy market.

Furthermore, regulatory measures should be developed to simplify and ease the construction of direct electricity lines dedicated to renewable hydrogen production under existing electricity regulations, as well as pipelines for transporting green hydrogen.

Economic barriers and project financing

The green hydrogen market, like other network markets that may be considered natural monopolies, faces significant economic barriers. The investment required for these projects (particularly for adapting gas infrastructure or creating new hydrogen networks) is substantial, and the return on investment periods are long. Additionally, there is considerable regulatory uncertainty about how these projects will be financed.

This lack of clarity regarding investment returns may discourage private sector participation.

However, it is not enough to simply establish a framework of incentives and financial aid to promote investments in hydrogen infrastructure. It is also crucial to provide legal certainty to investors through a clear and stable regulatory model over time, offering the necessary guarantees for investment in the development of this energy vector.

Increasing demand for green hydrogen

Boosting demand in the industry sector

Promoting demand for green hydrogen in industry is crucial for scaling the sector. Currently, the production of renewable hydrogen does not meet the volumes required for commercial viability, limiting its adoption in energy-intensive industries such as steel, cement and chemicals.

To address this imbalance, it is essential to promote demand through regulatory tools that encourage industries to switch from fossil fuels to green hydrogen.

Hydrogen clusters

Hydrogen clusters or “hydrogen valleys” should form a central pillar of the hydrogen economy, as highlighted by the EU. These clusters are areas where hydrogen production, transformation and consumption are concentrated, creating economies of scale that reduce costs and increase efficiency. By fostering collaboration between producers and consumers in a specific geographic area, the development of shared infrastructure and a more stable demand base can be facilitated.

This concentration of activities could catalyse the creation of pilot projects and innovative solutions that integrate hydrogen into local energy systems, including industrial applications and heavy transport.

Regulatory challenges: simplified requirements for hydrogen clusters

On a regulatory level, these hydrogen clusters could benefit from simplified regulatory requirements during the market strengthening phase, particularly regarding the application of ownership unbundling to the supply networks within these clusters.

It is crucial to ensure that industries have access to the necessary infrastructure for green hydrogen consumption, guaranteeing interconnections between production areas and industrial consumption hubs.

The corresponding simplified regulatory requirements should therefore also address the need for flexibility in terms of direct pipeline connections between hydrogen producers and individual customers.

Conclusions

• Green hydrogen is set to become one of the main energy vectors for achieving decarbonisation and climate neutrality goals set by the EU and the Paris Agreement, particularly in key sectors like high-temperature industries, heavy transport, shipping and aviation.
• Spain is especially well positioned to lead in the development of green hydrogen. It boasts one of the largest capacities for solar and wind energy generation in Europe, has a well-developed natural gas infrastructure, and its geographic location – on the edge of Europe and near North Africa – places it in a strategic position to become one of the leading hubs for green hydrogen production and export.
• Spain has made significant strides in establishing a regulatory framework adapted to green hydrogen. However, the new European regulation provides an excellent opportunity for Spain to develop a suitable and stable regulatory framework to meet the sector’s needs.
• Players require a cohesive regulatory framework that simplifies and streamlines the permitting process. Unnecessary regulatory barriers need to be removed, and clear timelines must be set to ensure green hydrogen production is implemented at an appropriate pace.
• A clear and transparent certification and traceability system is essential to ensure that the hydrogen produced is renewable and to strengthen market confidence.
• To integrate green hydrogen into the energy system, a clear regulatory framework for adapting gas infrastructures and creating new hydrogen transport networks is essential. Furthermore, it is crucial to guarantee fair and non-discriminatory access to natural gas networks for hydrogen producers, ensuring transparent rules.
• The development of green hydrogen faces significant economic barriers, especially concerning infrastructure adaptation and new network construction. Public support must include incentives and financial aid, along with a stable regulatory framework that provides investors with stability and legal certainty.