The European Commission has approved a €200 million state aid program submitted by Germany to support the production of renewable hydrogen and its derivatives in Canada, intended for import and sale in the European Union. The decision was made in accordance with EU state aid rules.

The program will support the production of renewable non-biological fuels (RNBFs), including renewable hydrogen and gaseous or liquid synthetic fuels produced from renewable electricity and carbon dioxide. The initiative contributes to the objectives of the Clean Industrial Deal, the EU Hydrogen Strategy, and the REPowerEU Plan, which aim to reduce dependence on fossil fuels and accelerate the energy transition.

The German scheme will also leverage an additional €200 million from Canada and will support the construction of up to 300 MW of electrolysis capacity. The allocation of aid will be carried out through a public tender process, scheduled to conclude in 2027.

Germany estimates that the program will prevent up to 2.47 million tons of CO₂ equivalent, contributing to the achievement of European climate objectives. The mechanism is based on a dual auction system, connecting producers of renewable non-carbon hydrogen (RNBH) in Canada with buyers in the EU, using public funds to cover the difference between bid and ask prices.

Beneficiaries must comply with EU criteria for RNBH production, established in the delegated acts on renewable hydrogen, including a minimum 70% reduction in greenhouse gas emissions throughout the entire value chain.

During its assessment, the Commission concluded that the program is necessary, appropriate, and proportionate, has an incentive effect, and incorporates sufficient safeguards to limit distortions of competition and trade within the EU. The beneficiaries will be selected through open, transparent, and non-discriminatory tenders, and no restrictions will be imposed on sales within the European market.

This initiative builds on two similar programs approved in 2021 and 2024, aimed at supporting the production of renewable hydrogen outside the EU for use in the European market, and reinforces the EU’s objective of scaling up the use of renewable hydrogen and its derivatives from 2030 onwards.

Source and Credits to EU Comission

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