EC clears German scheme to support green H2 production outside EU

Germany has been granted EU approval to spend EUR 900 million (USD 1.01bn) to support investments in the production of green hydrogen in countries outside the EU that will be then imported into the union.

The financial support that will be provided under the H2Global scheme is necessary because it will help meet the demand for green hydrogen in the EU which is expected to grow significantly in the next years, the European Commission (EC) said on Monday.

The EU regulator concluded that the aid is proportionate and will not unduly distort competition because it will be determined through competitive auctions and will have a positive impact on the environment that outweighs any potential harm to competition.

“This EUR 900 million German scheme will support projects leading to substantial reductions in greenhouse emissions, in line the EU’s environmental and climate objectives set out in the Green Deal. […] The design of the scheme will enable only the most cost effective projects to be supported, reducing costs for taxpayers and minimising possible distortions of competition,” said EU Vice President Margrethe Vestager.

The H2Global initiative, launched by the German government in March, is meant to work as an auction-based mechanism to support the production of green hydrogen and its derivatives, such as ammonia, methanol, and sustainable aviation fuel on an industrial scale. With the scheme, Germany aims to establish partnerships with countries whose geographical location allows the efficient production of green hydrogen and where the green transition will be promoted. The aid will compensate for the difference between supply and demand prices, thus providing planning and investment security and enabling operators and investors to develop large-scale electrolysis capacities.