Commission approves €350 million German plan for renewable hydrogen

In a significant show of support for the Green Transition, the European Commission has approved a €350 million German scheme to rapidly grow the production of renewable hydrogen.

In its assessment, the European Commission found that programmes such as these are critical pathways for facilitating the production of renewable hydrogen – and through this production the decarbonisation of the industrial, transport, and energy sectors. The programme represents a significant step towards Germany’s energy independence, reducing imports of Russian fossil fuels, and is in line with the objectives of the REPowerEU Plan and the European Green Deal Industrial Plan.

Funds also offer significant opportunities for business investment in the hydrogen-based fuels sector, with the capital to be directly applied in building the country’s ability to obtain hydrogen via electrolysis – the electrical process by water is separated into hydrogen and oxygen. The programme is expected to enable the construction of up to 90 megawatts (MW) of electrolysis capacity.

These funds are also expected to have an incentive effect, as beneficiaries would not be expected to carry out relevant investments without public support. Funds are expected to incentivise production of up to 75,000 tonnes of renewable hydrogen, helping Germany achieve its ambition to have at least 10 GW of domestic electrolysis capacity by 2030. The programme will further contribute to the EU target of a minimum of 42.5% renewable energy production by 2030 – with 60% of all industrial-based hydrogen projected to be renewable by 2035.

The aid will be awarded through a competitive bidding process supervised by the European Climate, Infrastructure, and Environment Executive Agency (CINEA). The bidding closed on February 8, 2024, and the Agency is currently assessing and ranking bids for projects in all Member States. The programme will be open to companies planning to construct new electrolysers in Germany, which has put in place sufficient safeguards to ensure that the scheme has a limited impact on competition and trade within the EU.

The approval of this German scheme is a major step forward in the European Union's efforts to promote the production and use of renewable hydrogen. It aligns with the objectives of the European Green Deal and the REPowerEU Plan, contributing to the EU's transition to climate neutrality by 2050.