Spanish oil and gas company Cepsa and the Dutch port of Rotterdam have agreed to establish a “green hydrogen corridor” to bring the zero-carbon fuel from the sunlit expanses of Spain to northern Europe’s industrial heartland.
Cepsa chief executive Maarten Wetselaar said the agreement, which was signed last month, aims to connect southern Europe’s solar potential with northern Europe’s energy demand for the first time.
Under the REPowerEU scheme to overhaul the bloc’s energy sector, the EU forecasts annual consumption of 20mn tonnes of green hydrogen by 2030, half of which it says should be produced within the bloc.
To do that competitively, most of the production would need to take place in southern Europe where renewable electricity, the main input in green hydrogen, was cheapest, Westelaar told the Financial Times.
“The first project to establish the link between a major future production hub of affordable green hydrogen, south Spain, and a major northern European industrial hub, Rotterdam, is iconic for the fast progress the EU is making on its green agenda,” he said.
Westelaar joined Cepsa, which is owned by Abu Dhabi sovereign wealth fund Mubadala and US private equity firm Carlyle Group, in January after a 25-year career at Shell.
In April, he launched a new strategy to pivot the Spanish group from fossil fuels to greener forms of energy and committed to invest at least €5bn — equivalent to 60 per cent of the group’s total capital expenditure — on new low-carbon business by 2030.
Central to that plan is the development of Andalucía in southern Spain as a key source of green hydrogen production for Europe. Cepsa already has 1 gigawatt of renewable electricity generation connected to the grid and plans to develop a further 7GW of solar and wind power in the region.
“I am absolutely certain that the cheapest green hydrogen in Europe will be in Andalucía because 80 per cent of the cost of hydrogen is power and the cheapest power is there,” said Westelaar.
Green hydrogen is produced by separating the hydrogen from the oxygen in water through an electrolysis process powered by renewable electricity. The fuel, which releases energy when burnt but emits no carbon, is tipped to play a key role in transporting renewable power over long distances and decarbonising the global energy system.
But while dozens of projects are under development around the world, very few are operating yet and some experts still question whether it will be possible to produce cost-effectively and at scale.
Cepsa plans to transport the green hydrogen to Rotterdam by first converting it into ammonia, with shipments from the Spanish port of Algeciras planned to begin in 2027.
The hydrogen will either be used in Rotterdam or piped to industrial clusters such as the German region of North Rhine-Westphalia, according to Nico van Dooren, director of new business at the Dutch port.
Rotterdam — already Europe’s main port for imports of crude oil, refined products and coal, representing 13 per cent of the continent’s energy demand — intends to play the same role for renewable energy.
Shell is building Europe’s biggest hydrogen electrolyser in Rotterdam, while Dutch chemicals group OCI is expanding its ammonia import terminal at the port. Other companies including BP and energy trader Gunvor have also announced plans to develop green hydrogen infrastructure in the city.
If all Rotterdam’s green hydrogen projects under development succeed, 600,000 tonnes a year would be produced there by 2030 and 4mn tonnes imported, representing roughly 25 per cent of the EU’s forecast demand, said van Dooren. By 2050, he expects 20mn tonnes of green hydrogen to “flow through the city”, of which 2mn tonnes could be locally produced.
The port was leasing land for electrolysis, helping to get hydrogen pipes in the ground and lobbying government to put in place the regulations and subsidy schemes the sector required, he said. “As a port authority, our role is to make Rotterdam an attractive location for private businesses to invest in these developments.”