The European Commission has approved state aid for Hy2tech, a €14bn ($14bn) hydrogen technology innovation project developed by 35 companies with support from 15 member state governments.

Hy2tech is the first hydrogen sector proposal to be approved under the EU’s Important Project of Common European Interest (IPCEI) scheme—which allows member states to pool state aid and cooperate in a way not allowed under the bloc’s usual state aid rules.

Hy2tech comprises 41 individual projects spanning hydrogen production, fuel cells, storage, transportation, distribution and end-user applications. Companies involved include Germany’s Daimler Truck, French speciality chemicals company Arkema, Italian power engineering group Ansaldo Energia and smaller firms including French electrolyser manufacturer Mcphy.

The Commission has granted €5.4bn for Hy2tech—half the potential aid initially proposed by member states. The project is backed by Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Italy, the Netherlands, Poland, Portugal, Slovakia and Spain. The Commission expects the project to attract an additional €8.8bn of investment from the private sector.

€8.8bn – Expected private sector investment in Hy2tech

The approval of hydrogen IPCEI projects by the Commission is seen as crucial to unlocking investment and bringing forward FIDs on dozens of projects earmarked for state aid by national governments.

“Currently, there is no established hydrogen market in Europe. This makes it risky for companies or even member states to invest alone in such innovative technologies. That is where state aid has a role to play to unlock, crowd-in and leverage substantial private investments that would otherwise not materialise,” says EU competition commissioner Margrethe Vestager.

“Hydrogen has a huge potential. Russia's unprovoked and unjustified military aggression against Ukraine has only underlined the need for Europe to diversify its energy sources and fast-forward the green transition. Among the many technologies required, hydrogen proves to be an indispensable component,” she adds.

State aid to the hydrogen sector comes as governments face financial constraints in the wake of the Covid-19 pandemic. The IPCEI approval includes a mechanism obliging companies to pay back state aid should projects generate higher-than-expected revenues.

---

Author: Stuart Penson