The European Commission has approved Germany’s €1.3 billion hydrogen initiative

The European Commission (EC) has approved a €1.3 billion German state aid scheme to support renewable hydrogen production. The decision was made in accordance with EU state aid rules and concerns support provided through the European Hydrogen Bank’s “Auctions-as-a-Service” tool for an auction concluding in 2026. This is stated in an EC press release.

The scheme is intended to contribute to the goals of the Clean Industrial Deal, aimed at accelerating the decarbonization of EU industry, as well as the REPowerEU plan to reduce dependence on Russian fossil fuels and the EU’s hydrogen strategy.

The approved program provides support for the construction of up to 1 GW of installed electrolyzer capacity and the production of up to 10 million tons of renewable hydrogen. According to the European Commission’s estimates, this will prevent up to 55 million tons of CO2 emissions.

Support will be provided through a competitive tender process overseen by the European Climate, Infrastructure, and Environment Executive Agency (CINEA). Support will be available to companies planning to build new electrolysers to supply renewable hydrogen to the Danish Hydrogen Backbone 1 pipeline. This infrastructure has the status of a project of common interest and will be connected to buyers linked to the German Hydrogen Core Network.

Assistance will be provided in the form of a direct grant for each kilogram of renewable hydrogen produced, with a maximum support period of 10 years. Beneficiaries must confirm compliance with EU criteria for renewable fuels of non-biological origin.

The European Commission noted that the scheme is necessary and proportionate, has an incentive effect, and includes sufficient safeguards to limit the impact on competition and trade within the EU. It is also intended to support cross-border infrastructure that will connect renewable hydrogen sources in the North Sea with large industrial consumers.

As a reminder, Germany previously announced plans to allocate €5 billion ($5.8 billion) in financial aid to energy-intensive industries to facilitate the adoption of low-carbon technologies.