Spanish parliament rejects tax rollover following energy sector backlash

Spain's parliament rejected Jan. 22 a final attempt by the government to roll over a contentious 1.2% temporary tax on energy companies following strong pushback from leading energy groups.

Opposition parties and some of the government's coalition partners united to reject an extension of the temporary tax, which was applied to companies' gross income in 2023 and 2024.

The government attempted to modify the tax with a Dec. 24, 2024, proposal to exclude "strategic investments" in the ecological transition and decarbonization sectors after the major energy companies united against the levy.

In a joint statement in November, Club Espanol de la Energia -- which includes Repsol, Moeve (formerly Cepsa), TotalEnergies and BP, and Iberian power and gas groups Iberdrola, Endesa, Naturgy and EDP -- said that Eur30 billion ($31 billion) of investment would be compromised over the next three years if the levy remained, with a likely knock-on effect for the country's 2030 National Energy and Climate Plan.

In the two years it was applied, the levy has cost Repsol around Eur800 million, Moeve Eur570 million, Endesa Eur410 million, Iberdrola Eur370 million and Naturgy Eur254 million, according to estimates from Spain's El Economista.

Repsol CEO Josu Jon Imaz had said Oct. 31 that ending the tax would allow the company to press ahead with its major green hydrogen projects at its refineries, namely a 150-MW electrolyzer in Tarragona, 100 MW at Bilbao and 100 MW at Cartagena as well as a green methanol plant at Tarragona. The company declined to add further comments Jan. 23.

Moeve also said in October that if the tax was approved, it would "slow the green hydrogen investments it had planned in Spain and prioritize international expansion."

Moeve also declined to add further comments Jan. 23.

Spain has a target of reaching 12 GW of green hydrogen electrolyzer capacity by 2030 from a current capacity of just 2.5 MW in operation.