European Commission approves French scheme

The French scheme

France notified to the Commission plans to introduce a scheme to support the production of renewable and low-carbon hydrogen by new electrolysers for the purpose of reducing (industrial) greenhouse gas emissions.

The scheme will support the construction of 1 GW of hydrogen electrolysis capacity. The aid will be awarded through a competitive bidding process planned over three tender rounds. The first tender concerns 200 MW of electrolysis capacity with an estimated budget of €797 million. Hydrogen produced under this scheme will be exclusively sold for direct industrial use, to limit the use of hydrogen to cases where no economically viable electrification alternative exists.

The aid will take the form of a fixed premium. Contracts will be concluded for a 15-year period. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin ('RFNBO') as well as low-carbon fuels, as set out in the delegated act on renewable hydrogen and the recently adopted delegated act on low-carbon hydrogen. The aid will contribute to off-setting the additional costs related to the cost of electricity needed to produce the renewable and low-carbon hydrogen in comparison with cheaper fossil hydrogen.

The scheme will contribute to France's effort to achieve 4.5 GW of electrolyser capacity by 2030 and 8 GW of capacity by 2035. France expects that the scheme will lead to up to 1.1 million tpy of CO₂ being avoided, which will contribute to France fulfilling its EU climate targets.

The Commission's assessment

The Commission assessed the scheme under EU State 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 under certain conditions, and the 2022 Guidelines on State aid for climate, environment protection and energy ('CEEAG').

In particular, the Commission found that:

• The scheme is necessary and appropriate to facilitate the production of renewable and low-carbon hydrogen, and thus the decarbonisation of the industrial sector. At the same time, it supports the objectives of key EU policy initiatives such as the Clean Industrial Deal, the EU Hydrogen Strategy and the REPower EU Plan.
• The aid has an ‘incentive effect', as the production of renewable and low-carbon hydrogen is still more expensive than the production of fossil hydrogen, and the beneficiaries would not carry out the projects without the public support.
• France has 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, in particular on the environment, that outweigh any possible negative effects in terms of distortions to competition.

On this basis, the Commission approved the French scheme under EU State aid rules.

Read the article online at: https://www.globalhydrogenreview.com/hydrogen/24032026/european-commission-approves-french-scheme/