<h6><strong>The Diplomat</strong></h6> <h4></h4> <h4><strong>Cepsa has decided to put its investments in new hydrogen projects in Spain on hold due to the regulatory and fiscal uncertainty in the country, given the possibility that the extraordinary tax on energy companies could become a permanent tax, and is considering prioritizing international projects.</strong></h4> Sources from the company, the second largest oil company in the country, told <em>Europa Press</em> that "it is assessing the impact that an increase in its taxation could have if a new permanent tax is approved," and stressed that, if this materializes, "it would have a very significant effect on the profitability of hydrogen projects, so it would have to slow down the investments planned in Spain and give priority to green hydrogen projects in other countries that it had initially planned in an international expansion for a second phase of the 'Positive Motion' strategic plan." The group controlled by Mubadala, the sovereign wealth fund of Abu Dhabi, and the American investment fund Carlyle has as its flagship project the Andalusian Green Hydrogen Valley, which is expected to become one of the largest green hydrogen production centres in Europe to decarbonise industry, aviation and heavy maritime and land transport, and turn Spain into a sustainable energy exporter. This project foresees an investment of 3 billion euros and the creation of 10,000 jobs, including direct, indirect and induced jobs. To produce this energy vector, Cepsa will use renewable electricity and waste water to reduce fresh water consumption and promote the circular economy. Despite this decision, the same sources specified that the transformation underway at Cepsa "is irreversible in order to ensure that more than half of its profits come from sustainable activities in 2030". According to the newspaper <em>'Expansión'</em>, Cepsa has already identified <strong>projects in Algeria, Morocco, Brazil and the United States</strong> that will be accelerated if resources are finally freed up in Spain due to the so-called 'tax increase'. Last week, the Government announced that it included among the commitments sent to Brussels the "permanent" maintenance of the extraordinary taxes on energy companies and banks. Initially approved for two years - 2023 and 2024 - due to the impact of the crisis caused by the war in Ukraine, the Government has collected more than 2.4 billion euros from the energy sector in these two years for this item. Cepsa has been one of the groups most affected by this tax in the last two years. In fact, in 2023, it closed with a loss of 233 million after paying more than 320 million euros for the tax. <h5><strong>The sector's outright rejection</strong></h5> This Thursday, the Spanish Association of Petroleum Product Operators (AOP) - the employers' association of the major oil companies, which includes Cepsa, Repsol, Galp, Disa and BP, among others - already expressed its rejection of a permanent tax on the energy sector and warned that this tax or the lack of clarity about the fiscal horizon could "discourage investments in the country", jeopardizing the 16 billion euros that the sector plans to address for its decarbonization until 2030. In addition, Cepsa is thus following in Repsol's footsteps in its outright opposition to the possibility that this tax could be perpetuated over time. The company led by Josu Jon Imaz announced this week its decision to invest 15 million euros in a new renewable hydrogen project at its Sines Industrial Complex in Portugal. A year ago, Repsol had already made clear its intention to put the investment process in some of its industrial projects in different areas of the Spanish territory on hold until stable and sufficiently attractive conditions were available to guarantee profitability. In fact, at the end of October 2023, in a conference call with analysts, Repsol CEO Josu Jon Imaz already indicated that the company had "other alternatives", such as Portugal, where it could have international activity in its industrial business. Repsol thus keeps investments close to 1.5 billion euros in the air that could affect projects in the group's portfolio in the Basque Country, Tarragona (Catalonia) and Cartagena (Murcia).
