Brussels, 29 July 2024
The European Commission has approved, under EU State aid rules, a €998 million Dutch scheme to support the production of renewable hydrogen. The measure aims to contribute to the development of renewable hydrogen in line with the objectives of the EU Hydrogen Strategy and the European Green Deal. The scheme will also contribute to the objectives of the REPowerEU Plan to reduce dependence on Russian fossil fuels and accelerate the green transition.
The Dutch scheme
The Netherlands notified the Commission of its intention to introduce a €998 million scheme to increase the country’s electrolysis capacity and support the production of renewable hydrogen.
The scheme will support the construction of at least 200 MW of electrolysis capacity. The aid will be awarded through a competitive bidding process planned to be concluded in 2024. The tender will be open to projects with a capacity of at least 0.5 MW.
The aid will take the form of a direct grant combining an upfront investment grant up to 80% of the investment costs and a variable premium over a period of 5 to 10 years. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin (RFNBOs), as set out in the delegated acts on renewable hydrogen.
The scheme will contribute to the Netherlands’s efforts to achieve 500 MW of electrolyser capacity in 2025 and 3-4 GW by 2030. It will also support the EU’s ambitions to install at least 6 GW of renewable hydrogen electrolysers by 2024, and at least 40 GW by 2030. The Netherlands expects that the scheme will lead to the equivalent of around 55 kilotons of CO2 being avoided every year until 2030, which will contribute to the Netherlands’ and EU’s climate targets.
The Commission’s assessment
The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) the Treaty on the Functioning of the EU, which enables Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’).
In particular, the Commission found that:
- The scheme is necessary and appropriate to facilitate the production of renewable hydrogen. At the same time, it supports the objectives of key EU policy initiatives such as the European Green Deal, the EU Hydrogen Strategy, and the REPowerEU Plan.
- The measure has an ‘incentive effect’, as the beneficiaries would not carry out the relevant investments without the public support.
- The Netherlands put in place sufficient safeguards to ensure that the scheme has a limited impact on competition and trade within the EU. In particular, the beneficiaries will be selected following an open, transparent and non-discriminatory bidding process and the aid will be kept to the minimum necessary to undertake the projects.
- The aid will bring about positive effects that outweigh any possible negative effects in terms of distortions to competition.
On this basis, the Commission approved the Dutch scheme under EU State aid rules.
Background
This scheme follows a previous Dutch scheme approved by the Commission in July 2023, which aimed to support specifically small-scale electrolysers (with a capacity of up to 50 MW).
The 2022 CEEAG provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with the important EU’s objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and will cater for the increased importance of climate protection.
The Renewable Energy Directive of 2018 set out stringent criteria for RFNBOs, such as renewable hydrogen, to ensure that their environmental impact is minimal and that they contribute to the deployment of renewable energy. Amongst others, emission savings of the end product must be at least 70% across the entire value chain. Under the revised Renewable Energy Directive of 2023, the target for the share of renewable energy in the EU’s gross energy consumption is increased to 42.5% by 2030, and a new target is introduced to reach 42% of renewable hydrogen in total hydrogen used in industry by 2030 and 60% by 2035.
In July 2020, the Commission published its EU Hydrogen Strategy, setting ambitious goals for clean hydrogen production and use, and launched the European Clean Hydrogen Alliance, bringing together the European hydrogen community (industry, civil society, public authorities).
With the European Green Deal Communication in 2019, the Commission set an objective of net zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law. In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors in the economy. Specifically, following the reform of the gas market, the EU now has in place a framework for the development of a hydrogen market.
The non-confidential version of the decision will be made available under the case number SA.110068 in the State aid register on the Commission’s Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
Quote
Developing renewable hydrogen production is a key aspect of EU’s climate neutrality goal. This €998 million Dutch scheme will help scaling up the production of renewable hydrogen in the Netherlands by providing support to electrolysers projects of all size, while ensuring that any potential competition distortions are kept to the minimum.
Margrethe Vestager, Executive Vice-President in charge of competition policy
Source – EU Commission
EU Commission approves €80 million Dutch State aid measure to support an innovative technology for the production of renewable hydrogen
Brussels, 29 July 2024
The European Commission has approved, under EU State aid rules, a €80 million Dutch measure to support Djewels B.V., a subsidiary of the hydrogen company HyCC B.V., in the demonstration of an innovative renewable hydrogen production technology. The measure will contribute to the development of renewable hydrogen production in line with the objectives of the EU Hydrogen Strategy and the European Green Deal.
The Dutch measure
The Netherlands notified to the Commission its plans to support the construction and operation over three years of a demonstration project for the production of renewable hydrogen.
The project supported under the measure is a first of its kind in the EU and represents a significant innovation that goes well beyond the state of the art. In particular, the project aims at demonstrating the feasibility of producing renewable hydrogen with an alkaline electrolyser with high current density electrodes, high-pressure hydrogen output and a small spatial footprint. The innovative electrolyser will have a a capacity of 20 MW.
The beneficiary of the measure, Djewels, will own and operate the hydrogen production facility. The aid will take the form of a direct grant of €80 million, covering the expected funding gap of the project. As the actual funding gap of the project will depend on market developments, the measure foresees that, if the project turns out to be very successful, generating extra net revenues, the beneficiary will return to the Netherlands part of these extra revenues (‘clawback mechanism’). Moreover, the beneficiary will disseminate the technical know-how gained as a result of the project.
The construction of the electrolyser is expected to start in 2024, with the project expected to be operational as of 2027.
The Commission’s assessment
The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU, which enables Member States to support the development of certain economic activities subject to certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’).
The Commission found that:
- The measure facilitates the development of an economic activity, namely the demonstration of an innovative technology to produce renewable hydrogen. At the same time, it supports the objectives of key EU policy initiatives, such as the European Green Deal and the EU Hydrogen Strategy.
- The aid has an ‘incentive effect’, as the beneficiary would not carry out the project without the public support.
- The measure is necessary and appropriate to support the demonstration project. In addition, aid is proportionate, as it does not exceed the expected funding gap of the project. Moreover, a clawback mechanism provides safeguards against overcompensation.
- The measure has a limited impact on competition and trade. In particular, the beneficiary will be required to disseminate the learnings from the project.
On this basis, the Commission approved the Dutch measure under EU State aid rules.
Background
The 2022 CEEAG provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner.
In July 2020, the Commission published its EU Hydrogen Strategy, setting ambitious goals for clean hydrogen production and use, and launched the European Clean Hydrogen Alliance, bringing together the European hydrogen community (industry, civil society, public authorities).
With the European Green Deal Communication in 2019, the Commission set an objective of net zero emissions of greenhouse gases in 2050 that is enshrined in the European Climate Law. In force since July 2021, the law also introduced the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030. Through the adoption of the ‘Fit for 55′ legislative proposals, the EU has in place legally binding climate targets covering all key sectors in the economy. Specifically, following the reform of the gas market, the EU now has in place a framework for the development of a hydrogen market.
The non-confidential version of the decision will be made available under the case number SA.103720 in the State aid register on the Commission’s Competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
Quote
This €80 million measure enables the Netherlands to support a demonstration project for the production of renewable hydrogen, while limiting possible distortions of competition. The innovative technology behind this project has the potential to contribute to the achievement of the EU Hydrogen Strategy and the European Green Deal ambitions across the EU.
Margrethe Vestager, Executive Vice-President in charge of competition policy
Source – EU Commission