EC gives nod to renewable hydrogen production

The European Commission has approved a €450m Italian scheme to support renewable hydrogen production.

The European Commission is supporting renewable hydrogen production through the approval of a €450m Italian scheme. This will foster the transition to green energy, as part of the Green Deal Industrial Plan.

The scheme was approved under the State aid Temporary Crisis and Transition Framework which was adopted by the Commission on 9 March 2023. This framework is set to support measures in sectors that are vital to accelerate the green transformation and reduce dependency on fuel. It amends and prolongs the Temporary Crisis Framework, adopted on 23 March 2023, to enable Member States to support the economy in the context of the current geopolitical crisis.

Under the Temporary Crisis and Transition Framework, Italy notified the Commission of a €450m scheme to support investments in renewable electricity and hydrogen production in brownfield industrial areas.

Financed under the Recovery and Resilience Facility, the measure will be open to companies of all sizes active in Italy, with the exception of credit and other financial institutions. The projects under the scheme will be selected through an open competitive bidding process.

The public support will take the form of direct grants covering investment costs, with a maximum amount of aid per project of €20m.

The Italian renewable hydrogen production scheme aligns with the conditions set out in the Temporary Crisis and Transition Framework. In particular, (i) the aid will be granted on the basis of a scheme with an estimated volume and budget; (ii) the aid amount will be determined through an open, clear, transparent, and non-discriminatory competitive bidding process; and (iii) the aid will be granted before 31 December 2025.

The European Commission concluded that the Italian scheme is necessary to support green hydrogen production, and subsequently facilitate the green energy transition. This is in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework. Because of this, the Commission approved the aid measure under EU State aid rules.

A priority for the EU is to facilitate renewable hydrogen production. Renewable hydrogen will play a key role in decarbonising sectors where other alternatives may be more expensive or unfeasible. It can replace fossil-based hydrogen used in the transport sector and industry and start new industrial products, such as green fertilisers and steel.

Renewable hydrogen production is important for supporting the EU’s electricity sector by providing long-term and large-scale storage. Hydrogen’s storage potential is beneficial for power grids because it allows for renewable energy to be kept not only in large quantities but also for long periods of time. Renewable hydrogen can help improve the flexibility of energy systems when produced at times when solar and wind energy resources are abundantly available. This will help boost energy efficiency in the EU.