Spain has the right conditions to become a world leader in green hydrogen, but the sector's development has been hampered by slow subsidies, Jorge Palomar, director of global hydrogen development at Spanish renewables giant Iberdrola, said Wednesday.

Alan Ripa, CEO of Accionaplug, a hydrogen project developer, agreed that subsidies are critical to the development of the fledgling industry.

WHY IT IS IMPORTANT

Green hydrogen, produced from renewable energy, is seen as key to decarbonizing the European economy in the future. However, given their cost, green hydrogen projects are generally not competitive without subsidies.

Iberdrola, Europe's largest energy company, in March cut its green hydrogen ambitions by almost two-thirds after delays in securing funding for some projects it had already submitted. This comes as it embarks on a three-year, $45 billion investment drive.

KEY QUOTES

"We are falling behind and this is one of the challenges," Palomar said at the Connecting Green Hydrogen Europe event in Madrid, referring to the allocation of grants for green hydrogen projects.

"Subsidies are necessary to boost an industry at the start," he said.

"We need grants to scale up projects," said Alan Ripa, CEO of Accionaplug.

CONTEXT

Iberdrola is awaiting the allocation of funds for an 800 megawatt project in Puertollano and Huelva that would reduce carbon emissions from the local fertilizer industry, Palomar said.

THE FIGURES

Iberdrola now plans to produce about 120,000 tons of green hydrogen annually by 2030, up from a previous target of 350,000 tons.

(Reporting by Pietro Lombardi; editing by Charlie Devereux and Tomasz Janowski; Spanish edition by Benjamín Mejías Valencia)