The Battle of the Strait: Spain, Morocco and the Race to Turn Green Hydrogen into Industrial Power

There is a wrong way to imagine green hydrogen: as if it were simply the oil of the future. The comparison is tempting. Countries with abundant solar and wind resources would produce large quantities of energy, transform it into hydrogen and export it to Europe’s major industrial centres. In this scenario, Europe could progressively reduce its dependence on hydrocarbons and turn to new energy sources from regions with abundant renewable resources.

The Iberian Peninsula and North Africa would then emerge as particularly important territories.

But hydrogen has one fundamental difference from oil: it does not exist as a natural resource waiting to be extracted. It has to be produced. Doing so requires renewable electricity, water, electrolysers, infrastructure, storage, transportation and large amounts of capital. Hydrogen can also subsequently be transformed into ammonia, methanol, synthetic fuels, fertilisers or industrial products. Each of these transformations involves additional costs and energy consumption.

That is why the race now emerging between Spain and Morocco is much more important than a simple competition to produce cheap hydrogen. What is at stake is which country will be able to build an industrial ecosystem around this molecule capable of generating investment, employment and added value.

And in this competition, the distance between the two countries is much smaller than it might appear.

A Molecule in Search of an Economy

The enthusiasm surrounding green hydrogen has a clear explanation. There are sectors in which direct electrification is difficult or insufficient. A car can run on a battery and a home can be heated with a heat pump. Many industrial processes can also be directly electrified.

However, there are activities in which these solutions present greater difficulties. Fertilisers, certain chemical processes, primary steel production, maritime transport, some synthetic fuels and certain segments of aviation are among the areas where hydrogen could play an important role.

This means that the future of hydrogen will probably not consist of using it for everything, but rather of concentrating it where fewer alternatives exist.

The consequence is significant. Success will not necessarily depend on who announces the most gigawatts of electrolyser capacity, but on who manages to produce a competitive molecule and, above all, find industries willing to consume it consistently for decades.

This second challenge may prove more difficult than the first.

Renewable hydrogen is still not, in general, a cheap raw material. The central question of this decade will be how to close that cost gap and create enough industrial demand to sustain investment.

And few European territories start from a position as favourable as Spain.

Spain Has Something Europe Needs

For decades, Spain occupied a relatively peripheral position within the European energy system. Located at the western edge of the continent and with limited connections to the rest of Europe, its energy position was heavily conditioned by dependence on imported fuels.

The energy transition could partially change that situation.

Spain has excellent solar conditions, significant wind resources, available land across large parts of its territory, a developed electricity industry and an energy network built over decades. Added to this are industrial ports, refineries, chemical plants, steel facilities and experience in handling gases and energy products.

The Spanish Government has turned this potential advantage into a strategic commitment. The update of the National Energy and Climate Plan sets a target of 12 GW of electrolysers by 2030, accompanied by a major expansion of renewable capacity.

But perhaps Spain’s most important asset is not the electrolysers themselves.

It is the industry that can consume the hydrogen.

Producing Hydrogen or Manufacturing with Hydrogen

Imagine two countries.

The first manages to produce hydrogen at €2.50 per kilogram and exports it. The second produces it at €3, but uses that molecule to manufacture steel, fertilisers, methanol or synthetic fuels that it subsequently sells to the European market.

The fundamental question is where the greatest added value remains.

This issue is particularly important for Spain. Becoming simply a hydrogen producer and exporter would represent a significant opportunity, but it would be a smaller achievement than using the availability of competitive renewable energy to attract and retain energy-intensive industry.

Huelva, Puertollano, Cartagena, Tarragona, Bilbao and Asturias could play as important a role in this transformation as the major solar parks of Extremadura or Aragón.

Spain already has potential industrial consumers: refineries that use conventional hydrogen, fertiliser plants, chemical industries, steelmaking and major port complexes on both the Mediterranean and Atlantic coasts.

This helps reduce one of the major risks facing any new energy industry: building enormous production capacity before sufficient demand exists.

The objective, therefore, should not simply be to produce hydrogen. It should also be to use it to transform the industrial structure.

If Europe increases pressure on carbon-intensive products, the availability of renewable electricity could allow certain Spanish regions to become competitive locations for manufacturing products that currently depend on natural gas or coal.

In that scenario, hydrogen would cease to be the final product.

It would become the input.

The relevant exports would no longer necessarily be millions of tonnes of H₂, but green steel, fertilisers, methanol or synthetic fuels.

And this is precisely where Morocco enters the picture.

On the Other Side of the Strait

Morocco has reached a similar conclusion. Its strategy, known as Offre Maroc, represents a large-scale commitment to developing an industry linked to green hydrogen.

The country has allocated areas of land for energy projects and selected national and international consortia for initiatives involving renewable generation, electrolysis and the production of derivatives.

The comparison with Spain requires some caution. Spain’s target of 12 GW by 2030 is a national objective, while many of the Moroccan figures refer to announced or selected projects that still have to pass through development, financing and construction stages.

They are therefore not directly equivalent figures.

But the strategic direction is clear.

Morocco does not appear to want to limit itself to producing hydrogen either. Its projects include ammonia, synthetic fuels and green steel.

The industrial logic is clear: use its energy resources to develop higher-value products.

In other words, Rabat does not simply want to export energy.

It wants to export industry.

Morocco’s Advantage

Morocco has a particularly interesting combination of factors. It has exceptional solar resources, significant areas with wind potential, large amounts of available land and lower labour costs than Europe.

It is also only a short distance from the European Union and occupies a strategically important geographical position between the Atlantic, the Mediterranean, Europe and Africa.

There is another factor that could prove decisive: phosphates.

Fertiliser production requires ammonia, and ammonia production requires hydrogen. The combination of phosphates, renewable energy and green hydrogen provides a much stronger industrial logic than simply building electrolysers to produce a molecule for export.

Morocco also appears to have understood another fundamental factor: large energy projects require the integration of land, electricity, water and infrastructure.

Its strategy incorporates renewable generation, electrolysis and desalination.

Water is particularly important. Morocco faces significant water stress, and hydrogen production requires water, although its economic weight is generally lower than that of electricity. In arid regions, using freshwater for large energy projects can create growing competition with other uses.

Desalination could therefore become a condition for the viability of part of this industry.

Spain’s Advantage

Spain faces a different situation.

Morocco may be able to produce certain molecules at potentially very competitive costs, but Spain is located within the market that intends to buy them.

The difference is structural.

Spain is part of the European Union, the single market and the regulatory framework that is defining what can qualify as renewable hydrogen, how emissions must be accounted for and what support mechanisms projects may receive.

It also has a developed gas infrastructure, major port connections, industrial capacity and direct access to European financial markets.

And there is one particularly important factor: its proximity to France.

This is why H2Med is strategically significant.

The project is not simply about building infrastructure to transport hydrogen. Its importance lies in the possibility of transforming the Iberian Peninsula from Europe’s energy periphery into a future gateway to the continent’s main industrial centres.

If the corridor develops as planned, some of the hydrogen produced in Spain and Portugal could move towards France and subsequently reach Germany and other European markets.

For decades, the Pyrenees have represented one of the main bottlenecks in Spain’s energy connections with Europe.

In the hydrogen economy, they could become the frontier that determines how much value Spain can extract from its renewable advantage.

Competitors and Partners

Here, a paradox emerges.

The more successful Morocco becomes, the greater Spain’s strategic importance could also become.

Both countries are competing for international investment, ammonia projects, synthetic fuels, green steel and new industrial facilities. But they can also be complementary.

Spain and Morocco share an interest in Europe developing a hydrogen economy large enough to absorb production, attract capital and create industrial value chains.

The most interesting scenario does not necessarily have to be one in which Spain displaces Morocco or Morocco displaces Spain.

An Iberian-Maghreb energy system connected to Europe’s major industrial centres could emerge.

The strategic question would then be where the added value remains within that system.

Spain could make a familiar mistake associated with resource-based economies: celebrating production volumes while exporting much of the value generated.

The country has sun and wind. It can produce competitive renewable electricity and transform it into hydrogen. But that does not guarantee that factories will be located in Spain.

If hydrogen produced in Spain ultimately ends up being transported to Germany to power German industry, Spain will have improved its energy position, generated investment and created economic activity, but it will have captured only part of the potential value.

If, on the other hand, this energy availability attracts steel, fertiliser, chemical, maritime fuel or industrial component production, the economic impact could be much greater.

For that reason, the key metric should perhaps not be the number of tonnes of hydrogen announced or the amount of gigawatts projected.

It should be the industrial value created by each renewable megawatt.

The Demand Problem

This entire race contains an uncertainty that is often hidden behind the large investment figures: future demand.

During the first years of enthusiasm for hydrogen, virtually universal applications were proposed. Heating, cars, electricity generation, heavy transport, industry, aviation and energy storage were all presented as potential markets.

Technological and economic developments are forcing a distinction between uses.

Batteries have gained ground in road transport. Heat pumps offer a more efficient alternative for many heating applications. And direct electrification avoids the losses associated with converting electricity into hydrogen and subsequently using it as an energy source.

This is progressively concentrating the economic case for hydrogen around certain hard-to-decarbonise sectors.

That does not necessarily mean the market will be small.

It means that it will probably be more industrial and less universal than some initial forecasts suggested.

By the end of this decade, it will be possible to assess more accurately how much of the hydrogen narrative has become reality.

The reference point should not simply be investment announcements.

We will need to look at how many electrolysers are actually operating, how many hours they run, at what cost they produce, who buys the hydrogen, how many projects reach final investment decisions and how much private capital arrives after public support.

And, above all, we will need to observe which industries have been established around them.

The New Energy Map of the Strait

The Strait of Gibraltar occupies a central position in this new map.

To the north lies a European country with some of the continent’s best renewable resources, developed energy infrastructure and a significant industrial base.

To the south lies an emerging economy with exceptional solar and wind resources, large areas of available land, potentially lower costs and an increasingly ambitious industrial policy.

Spain starts with advantages linked to the European market, infrastructure and existing industry.

Morocco starts with advantages linked to its natural resources, land availability and potentially lower costs.

Both are pursuing the same objective: achieving enough scale to turn their energy advantages into a lasting industrial position.

Both have understood that simply selling hydrogen could mean stopping halfway.

That is why the race beginning on both sides of the Strait will not simply determine who can produce the cheapest green molecule.

It will determine where the fertilisers, steel, methanol and fuels that Europe will need to decarbonise the sectors it cannot easily electrify will be manufactured.

The real battle is not over hydrogen.

It is over the industry that comes after it.