The kings of the tile line their leap to hydrogen to break the ‘yoke’ of gas

They say that nothing accelerates science more than a war. The Russian invasion of Ukraine has been an incentive for the Spanish industry intensive in gas consumption to decide to take a green leap that, just a year ago, was relegated to the vagueness of the long term. The acceleration is cooking in the large ovens of the Valencian Community, where the ‘kings’ of the tile sector are heading towards renewable hydrogen.

The thrust is more noticeable where the wound of the extra energy cost bleeds more intensely. Ceramic giants such as Grupo Pamesa, a company chaired by Valencian businessman Fernando Roig, have taken pole position in this race, according to several sources in the energy sector consulted by La Información. But they do not advance alone.

Other sectors such as fertilizers (Fertiberia), metallurgical (Asturiana de Zinc) or steel (Acerinox) have joined the tile industry. “Traditionally, it has been thought that the implementation of green hydrogen would be first in its use as a feedstock, then for mobility and, later, for industry. But the latter could occupy the second position, in the heat of the current energy shock, “explains Carlos Mínguez, partner of Andersen specialist in Public and Regulatory Law.

The Spanish industry is already testing this scenario. “We are talking about projects that have ceased to be valued in years. Now the deadlines point to several months,” says the lawyer. Companies such as Pamesa or Asturiana de Zinc have started pilot projects and hope to move towards hydrogen in 2023, according to business sources to this media.

Who else, who less has been forced to stop machines at some point in the energy crisis. In the most severe cases, ERTEs have been resorted to – Pamesa took advantage of this measure last August for the 117 workers of its subsidiary Azuliber. A fact, the national consumption of natural gas – excluding that used to produce electricity – fell by 15.2% between January and August 2022 compared to the same period last year. 60% of the national demand corresponds to industry.

Last Friday, the price of gas in the Dutch TTF market exceeded 187 euros/Mwh. An increase of more than 400% compared to the same period last year, when the price of gas was around 36 euros. Just a few weeks ago, it climbed above 300.

“Since the war began in Europe, electricity and gas bills have been reviewed with a magnifying glass,” says an energy control technician from a company in the ceramic sector. “At these prices and with the levels of consumption that are handled in large industry, any failure in the receipt supposes an extra cost of at least four digits,” ditch.

The aim of these initiatives is to supply factories with green hydrogen, as a substitute for the natural gas they now use. The most advanced projects are therefore limited to a self-consumption model. Precisely for this reason, the industry is managing to circumvent some of the bureaucratic procedures that hinder the expansion of this fuel. For now.

“The production of hydrogen by electrolysis – and not by reforming natural gas – in Spain encounters the obstacles of what still has no regulation. A kind of Terra incognita”, says Mínguez, “The regulatory approach must start from the favorable environmental and energy effect that this change will cause in the process of decarbonization of the industry”. There are two issues of particular concern to the industry. The first is the normative issue. Among other doubts, uncertainty arises about the system of guarantees of origin that will be applied to the production of this non-polluting gas.

“At the end of July, Enagás, a company that the Government has entrusted with the development of this framework in its capacity as technical manager of the gas system, presented a draft in this regard,” says Ramón Vázquez, partner of Energy at Fieldfisher, “This is a key document that should already be approved.” The draft, which received almost thirty proposals in the public consultation phase, was sent to the Secretary of State for Energy, under the Ministry for Ecological Transition, on July 29.

Another source of uncertainty is taxation. The European Commission has already made a move in this regard. The latest revision of the Energy Taxation Directive (DFE) in July 2021 focused for the first time on the taxation of renewable hydrogen. The document signed in Brussels establishes that this non-polluting fuel will be applied the lowest minimum rate, of 0.15 €/GJ (euros per gigajoule) for a transitional period of 10 years, substantially below the reference rate given its contribution to the Community objective of achieving climate neutrality by 2050.

“More than a year later, Spain has still not transposed this directive,” agree legal sources and the energy sector in conversations with this media. This tax limbo worries large industry, as it makes it difficult to forecast the costs of its ecological transition plans. Sources from the Ministry of Finance have confirmed to this newspaper that the department has not yet begun to design the green hydrogen tax regime.

Source: La Información