EC approves up to €5.2bn of public support by thirteen member states for the second important project of common European interest in the hydrogen value chain

The project, called “IPCEI Hy2Use” was jointly prepared and notified by thirteen Member States: Austria, Belgium, Denmark, Finland, France, Greece, Italy, Netherlands, Poland, Portugal, Slovakia, Spain and Sweden

EC approves up to €5.2bn of public support by thirteen member states for the second important project of common European interest in the hydrogen value chain. (Credit: Dimitris Vetsikas from Pixabay)

The Commission has approved, under EU State aid rules, a second Important Project of Common European Interest (‘IPCEI’) to support research and innovation, first industrial deployment and construction of relevant infrastructure in the hydrogen value chain.

The project, called “IPCEI Hy2Use” was jointly prepared and notified by thirteen Member States: Austria, Belgium, Denmark, Finland, France, Greece, Italy, Netherlands, Poland, Portugal, Slovakia, Spain and Sweden.

The Member States will provide up to €5.2 billion in public funding, which is expected to unlock additional €7 billion in private investments. As part of this IPCEI, 29 companies with activities in one or more Member States, including small and medium-sized enterprises (‘SMEs’) and start-ups, will participate in 35 projects.

IPCEI Hy2Use will cover a wide part of the hydrogen value chain by supporting (i) the construction of hydrogen-related infrastructure, notably large-scale electrolysers and transport infrastructure, for the production, storage and transport of renewable and low-carbon hydrogen; and (ii) the development of innovative and more sustainable technologies for the integration of hydrogen into the industrial processes of multiple sectors, especially those that are more challenging to decarbonise, such as steel, cement and glass. The IPCEI is expected to boost the supply of renewable and low-carbon hydrogen, thereby reducing dependency on the supply of natural gas.

Several projects are expected to be implemented in the near future, with various large-scale electrolysers expected to be operational by 2024-2026 and many of the innovative technologies deployed by 2026-2027. The completion of the overall project is planned for 2036, with timelines varying in function of the project and the companies involved.

Norway, as part of the European Economic Area, also participates to the IPCEI ‘Hy2Use’ with two individual projects. The EFTA Surveillance Authority is in charge of assessing State aid notified by Norway.

IPCEI Hy2Use follows and complements the first IPCEI on the hydrogen value chain, the IPCEI “Hy2Tech”, which the Commission approved on 15 July 2022. While both IPCEIs address the hydrogen value chain, Hy2Use focuses on projects that are not covered by Hy2Tech, namely hydrogen-related infrastructure and hydrogen applications in the industrial sector (while Hy2Tech focuses on end-users in the mobility sector).

Commission assessment

The Commission assessed the proposed project under EU State aid rules, more specifically its Communication on Important Projects of Common European Interest.

Where private initiatives supporting breakthrough innovation and the construction of large-scale infrastructure of great EU importance fail to materialise because of the significant risks such projects entail, IPCEI enable Member States to jointly fill the gap to overcome these market failures. At the same time, they ensure that the EU economy at large benefits from the investments and limit potential distortions to competition.

The Commission has found that the IPCEI Hy2Use fulfils the required conditions set out in its Communication. In particular, the Commission concluded that:

• The project contributes to a common objective by supporting a key strategic value chain for the future of Europe, as well as theobjectives of key EU policy initiatives such as the European Green Deal, the EU Hydrogen Strategy and the REPowerEU Plan.
• All 35 projects part on the IPCEI are highly ambitious, as they aim at developing technologies and infrastructure that go beyond what the market currently offers and will allow major improvements in performance, safety, environmental impact, as well as on cost efficiencies.
• The IPCEI also involves significant technological and financial risks. Therefore, public support is necessary to provide incentives to companies to carry out the investment.
• Aid to individual companies is limited to what is necessary, proportionate and does not unduly distort competition. In particular, the Commission has verified that the total planned maximum aid amounts are in line with the eligible costs of the projects and their funding gaps. Furthermore, if large projects covered by the IPCEI turn out to be very successful, generating extra net revenues, the companies will return part of the aid received to the respective Member State (claw-back mechanism).
• The results of the project will be widely shared by participating companies benefitting from the public support with the European scientific community and industry, beyond the companies and countries that are part of the IPCEI. As a result, positive spill-over effects will be generated throughout Europe.
  On this basis, the Commission concluded that the project is in line with EU State aid rules.

Funding, beneficiaries and amounts

The IPCEI will involve 35 projects from 29 companies, including SMEs and start-ups, with activities in one or more Member States. The direct participants will closely cooperate with each other through numerous planned collaborations, as well as with over 160 external partners, such as universities, research organisations and SMEs across Europe.

Quotes by Members of the College of Commissioners

President Ursula von der Leyen said: “Hydrogen can be a game changer for Europe. It is key in diversifying our energy sources and helping us reduce our dependency on Russian gas. We need to bring this niche market to scale. That is why we are creating a Hydrogen Bank. And we will also increase our financial participation in Important Projects of Common European Interest. This will help enabling breakthrough innovation and positive spill-overs for all of the EU economy and help power the economy of the future.”

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Developing technologies for low carbon and, in particular, green hydrogen, and building the necessary infrastructure for its deployment, will take us one step closer to making Europe the first climate-neutral continent by 2050. The hydrogen value chain in Europe is in its infancy. This makes it risky for companies and Member States to invest alone in such innovative market. That is where State aid has a role to play to unlock, crowd-in and leverage substantial private investments that would otherwise not materialise.”

Commissioner Thierry Breton, in charge of the internal market, said: “Hydrogen is key for the green transition of Europe’s energy-intensive industries: it allows us to produce carbon-free steel, cement and chemicals and can replace large quantities of fossil fuels. Europe’s industry is a global technology leader in hydrogen. Now is the time to roll out our technologies to Europe’s factory floors. Our hydrogen IPCEIs support just that: a first generation of large-scale hydrogen industrial projects in Europe.”

Source: Company Press Release