Plane refuelling with Sustainable Aviation Fuel.
Credit: Bulent camci – Shutterstock
Two green hydrogen plants in Malaga, Spain, will start producing sustainable aviation fuel (SAF) in 2029, a huge step towards cleaning up air travel.
Repsol leads the €1.5 billion project, backed by EU funding, to deliver 200,000 tonnes of SAF yearly and cut aviation emissions by up to 90 per cent. Located in Axarquía, near Malaga’s airport, the facilities fall in line with Spain’s hydrogen strategy and promise economic growth and job creation.
Project details and timeline
Repsol, together with partners like Enagas, plans to build two 100 MW electrolysis plants in Malaga’s Axarquia region. Construction starts in 2026, with operations planned for 2029. The €1.5 billion investment, which includes €300 million from the EU Innovation Fund, supports Spain’s goal of 4 GW electrolysis capacity by 2030, as outlined in the PERTE plan.
What is SAF and how is it produced?
The plants will use electrolysis powered by renewable energy, primarily solar, to produce green hydrogen. The hydrogen is combined with captured CO₂ to create a kind of synthetic kerosene, a near-zero-emission fuel. The process achieves 85 per cent lifecycle greenhouse gas savings, according to IATA standards. Malaga’s 2,500 annual sunshine hours are hoped to cut power costs by 50 per cent, making the location ideal.
Environmental and economic benefits
Green hydrogen SAF could reduce aviation’s carbon footprint by 80 to 90 per cent, supporting the EU’s 6 per cent SAF mix demanded for 2030. Locally, it is said that the project will create 1,500 construction jobs and 300 permanent roles, increasing Malaga’s GDP by €200 million annually, according to an Andalusian impact study. This revitalises the region east of Malaga, hit by agricultural decline due to a series of severe droughts.
Challenges in scaling production
However, high costs and supply chain bottlenecks pose risks. Electrolysis equipment costs €1,200 per kW, with 20 per cent of components facing shortages. Grid upgrades are needed to handle renewable energy fluctuations and abrupt changes in power flow, which are said to have been behind the great power outage in Spain in April 2025. Yet, EU policies, like the €40 billion Hydrogen Bank, offset 40 per cent of costs, which will reduce private investment burdens.
Global context and airline impact
Malaga’s project follows other global precedents like California’s H2@Scale, with 15 SAF plants worldwide by 2024, per the IEA. Lower SAF prices, potentially €1.5 per litre by 2030, could drive airline adoption and meet rising demand projected at 17 billion litres. Being near to Malaga’s airport and ports strengthens the export potential to EU aviation centres.
For the Malaga Province’s economy, potentially this project could give the sustainable move away from dependence on tourism and property investment by capitalising on its natural resources with a relatively low environmental impact – provided, of course, there is sufficient housing ready to take on the necessary influx of skilled workers.
