Spanish oil company and shipping giant to develop €1bn green hydrogen-to-methanol project, the largest in Europe
Cepsa and C2X, majority-owned by Maersk parent company AP Moller, to build 300,000-tonne plant — combining green hydrogen with captured CO2 — in southern Spain
Spanish oil company Cepsa and Danish developer C2X — which is majority-owned by shipping giant Maersk’s parent company — have announced plans to build Europe’s largest green methanol project, with an annual production of 300,000 tonnes.
The plant, to be built in Huelva, southern Spain, at a cost of up to €1bn ($1.08bn), would combine green hydrogen produced at the 2GW Andalusian Green Hydrogen Valley, which is being co-developed by Cepsa and EDP, with “non-fossil sources of carbon [dioxide] captured from the atmosphere or from agricultural and forestry waste”.
Cepsa says the methanol (CH3OH) produced would be used to “reduce carbon emissions in hard-to-abate industries such as long-distance shipping and other industries such as chemicals and plastics”.
“A step change is needed to scale production capacity of non-fossil methanol to meet the demand that is building now,” the company said in a statement. “However, significant support from governments and other bodies is also required to ensure that this production capacity can supply green methanol at a price that is acceptable to its target customers.”
A final investment decision on the project is “expected to be made” in 2025.
“The project places Andalusia as one of the most competitive locations globally for the production and transportation of green molecules thanks to its renewable electricity capacity and industrial and port infrastructure, positioning Spain as a leading sustainable energy hub and securing independent and affordable clean energy for Europe,” said Cepsa.
The unnamed project was unveiled at COP28 in Dubai in the presence of Spanish Prime Minister Pedro Sánchez and ecological transition minister Teresa Ribera.
Sánchez described the project as “a significant step towards a future free of fossil fuels”
“This investment is fully aligned with Spain’s strategy of reindustrialisation and energy transition. We want that 81% of our power generation come from renewable sources by 2030,” he said. “Green hydrogen will play a crucial role and, thanks to projects like this, Spain stands as a global reference.”
C2X CEO Brian Davis hinted that the project will need some kind of government support to move forward: “While this project has strong fundamentals it will need an enabling framework in order to offer a competitive source of green methanol to its target customers. We look forward to working with Cepsa and the Spanish government as we develop the project.”
Cepsa CEO Maarten Wetselaar added: “This partnership is another milestone in our strategy to make Spain a European hub for green molecules this decade, with viable projects to reduce emissions in sectors that are difficult and urgent to decarbonise. We will work with the Spanish government to develop the regulatory framework needed for this project to be successful and scalable.”