EC boosts renewable hydrogen production, approves Italian scheme

The European Commission (EC) has approved a €450 million Italian scheme to support the production of renewable hydrogen.

According to the Commission, the measure aims to foster the transition to a net-zero economy in line with the Green Deal Industrial Plan.

The EC found that the scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 to support measures in sectors which are key to accelerating the green transition and reducing fuel dependencies.

It said that the aid will be granted on the basis of a scheme with an estimated volume and budget and the aid amount will be determined through an open, clear, transparent, and non-discriminatory competitive bidding process. The aid will be granted before 31 December 2025.

The Commission concluded that the Italian scheme is necessary, appropriate, and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107 TFEU and the conditions set out in the Temporary Crisis and Transition Framework.

To note, the Italian scheme aims to support investments in the integrated production of renewable hydrogen and renewable electricity in brownfield industrial areas to foster the transition to a net-zero economy.

EC said the measure, financed under the Recovery and Resilience Facility (RRF), will be open to companies of all sizes active in Italy with the exception of credit and other financial institutions, and under the scheme, the projects 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 €20 million, EC pointed out.

Margrethe Vestager, Executive Vice-President in charge of competition policy, commented: “This €450 million scheme will allow Italy to accelerate the deployment of renewable hydrogen capacities, in line with the EU Hydrogen Strategy. The measure will also help Italy reduce its dependence on imported fossil fuels, in line with the REPowerEU Plan, while ensuring that any potential competition distortions are kept to the minimum.”

Temporary Crisis and Transition Framework

According to the Commission, the Temporary Crisis and Transition Framework will help speed up investment and financing for clean tech production in Europe and will assist member states in delivering on specific projects under National Recovery and Resilience Plans which fall within their scope.

It provides for the following types of aid, which can be granted by member states:

• Limited amounts of aid, in any form, for companies affected by the current crisis or by the subsequent sanctions and countersanctions.
• Liquidity support in form of state guarantees and subsidised loans.
• Aid to compensate for high energy prices.
• Measures accelerating the rollout of renewable energy.
• Measures facilitating the decarbonisation of industrial processes.
• Measures aimed at supporting electricity demand reduction.
• Measures to further accelerate investments in key sectors for the transition towards a net-zero economy.

EC noted that sanctioned Russian-controlled entities will be excluded from the scope of these measures.

It said that measures particularly important to accelerate the green transition and reduce fuel dependencies will be in place until 31 December 2025, while other provisions, aimed at providing a more immediate crisis response, remain applicable until 31 December 2023. The Commission also noted it will assess the potential need for an extension at a later stage.

The Temporary Crisis and Transition Framework amends and prolongs in part the Temporary Crisis Framework, adopted on 23 March 2022 to enable member states to use the flexibility foreseen under state aid rules to support the economy in the context of Russia’s war against Ukraine.

Renewable hydrogen production

In February this year, the European Commission approved a €170 million Danish scheme to support the production of renewable hydrogen through Power-to-X (PtX) technologies.

This scheme is expected to support the upscaling of the production of renewable hydrogen and derivatives, such as renewables-based ammonia, methanol, and e-Kerosene, using PtX technologies, as well as the construction of up to 100-200 MW of electrolysis capacity.

In February, the EC also proposed detailed rules to define what constitutes renewable hydrogen in the European Union (EU), with the adoption of two delegated acts required under the Renewable Energy Directive.

These acts are expected to ensure that all renewable fuels of non-biological origin (also known as RFNBOs) are produced from renewable electricity.