Green Forum • 30 July, 2024 at 10:00 AM
The European Commission has approved a €998 million Dutch initiative under EU State aid rules to promote the production of renewable hydrogen.
This measure aims to support the development of renewable hydrogen in line with the EU Hydrogen Strategy and the European Green Deal. It also aligns with the REPowerEU Plan's objectives to reduce reliance on Russian fossil fuels and accelerate the green transition.
The Netherlands has informed the Commission of its plan to implement a €998 million scheme aimed at increasing electrolysis capacity and supporting renewable hydrogen production. The scheme will back the construction of at least 200 MW of electrolysis capacity, with funding distributed through a competitive bidding process scheduled for 2024. Projects with a capacity of at least 0.5 MW are eligible to participate.
Financial support under this scheme will consist of a direct grant, covering up to 80% of investment costs, along with a variable premium throughout 5 to 10 years. Beneficiaries must meet EU criteria for producing renewable fuels of non-biological origin (RFNBOs), as specified in the delegated acts on renewable hydrogen.
The scheme aims to help the Netherlands achieve 500 MW of electrolyzer capacity by 2025 and 3-4 GW by 2030, in line with the EU's target of at least 6 GW of renewable hydrogen electrolyzers by 2024 and 40 GW by 2030. The Dutch government anticipates that the scheme will avoid the emission of approximately 55 kilotons of CO2 annually until 2030, contributing to national and EU climate goals.
The European Commission evaluated the measure under EU State aid rules, specifically Article 107(3)(c) of the Treaty on the Functioning of the EU, which allows Member States to support specific economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection, and energy (CEEAG).
The Commission found that:
The scheme is necessary and appropriate for facilitating renewable hydrogen production, supporting the objectives of key EU policies like the European Green Deal, the EU Hydrogen Strategy, and the REPowerEU Plan.
The measure has an "incentive effect," as the investments would not occur without public support.
The Netherlands has established safeguards to ensure the scheme has a limited impact on competition and trade within the EU. The selection of beneficiaries will be conducted through an open, transparent, and non-discriminatory bidding process, and the aid will be limited to the minimum required to undertake the projects.
The aid's positive effects outweigh any potential negative impacts on competition.