alert on a new tax which will weigh on the sector

The adoption of article 7 septies as part of the 2025 finance bill by the Senate is causing great concern among industrial players. This provision provides for new taxation of natural gas used to produce hydrogen by steam reforming, an essential process for several strategic sectors such as chemicals and refining. Three industrial federations, Ufip Énergies et Mobilités, France Chimie and France Gaz, are calling on the public authorities about the potential consequences of this measure. What are the risks for these industries and for the energy transition in France?

Hydrogen: a tax on already costly production

In France, 94% of hydrogen is produced by steam reforming of natural gas, representing nearly 1 million tonnes per year. This process, although emitting CO₂ (11.5 Mt per year, or 3% of national emissions), remains essential today to meet industrial needs. The introduction of a tax, in a context where European producers already bear an additional cost of 30 €/MWh due to gas prices and the carbon market, would accentuate the competitive disadvantage of French companies compared to their North American competitors.
This measure, which would aim to encourage decarbonization, paradoxically risks compromising the investments necessary to develop alternatives such as water electrolysis, which is still immature and insufficient to meet current demand.

The sectors concerned, notably chemicals and refining, are already highly exposed to international competition. These industries, vital to the French economy, are under increasing pressure. For example, several fertilizer plants have closed in recent years, unable to pass on cost increases to their customers, particularly farmers.. (like the Yara factory located in Montoir-de-Bretagne, near Saint-Nazaire, announced in October 2023 the cessation of its production of chemical fertilizers, leading to the elimination of 139 of 171 positions.) In refining, similar closures have weakened domestic oil processing capacity.
The implementation of this tax could worsen the situation, leading to job losses and a weakening of the production chain. At the same time, the carbon neutrality objectives, supported by the ecological transition contracts signed with the State, could be seriously compromised.

An obstacle to the energy transition?

While hydrogen is presented as a key solution for decarbonizing industry and transport, this taxation seems to contradict France’s climate ambitions. By slowing down investment projects in innovative technologies such as CO₂ capture and storageor the production of low-carbon hydrogen, the measure could delay the emergence of sustainable solutions.
In addition, this tax could dissuade manufacturers from engaging in costly energy transition initiatives, but necessary to achieve the climate objectives set for 2050. According to Ufip Énergies et Mobilités, “ nothing justifies this tax which weakens French factories and compromises their decarbonization roadmap ».

If the climate emergency requires strong measures, these must be consistent with industrial realities. Appropriate taxation could encourage investments in low-carbon hydrogen production solutions, while maintaining the competitiveness of French companies. Rather than penalizing industries in difficulty, it seems more relevant to support their transformation with targeted incentives and public-private partnerships.
In conclusion, the taxation of natural gas used for the production of hydrogen raises fundamental questions about the balance between ecological transition and economic competitiveness. Faced with these challenges, consultation between public authorities and industrial federations will be decisive in finding suitable and sustainable solutions.

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