EU hydrogen growth stalls on state aid delays

European Commission delays in granting state aid approval for EU clean hydrogen projects threaten to derail the bloc’s attempt to meet its 2030 targets on expanding production of the fuel, according to Hy24, the world’s largest pure-play hydrogen infrastructure fund.

Dozens of projects put forward by member states to receive state aid under a derogation of the EU’s Important Projects of Common European Interest (IPCEI) scheme have stalled because they are waiting for clearance by the Commission to receive the funds, says Pierre- Etienne Franc, CEO of Hy24.

“It is absolutely critical now for the IPCEI derogation to be enacted,” he tells Hydrogen Economist. “All the projects have stalled. The longer we wait, the steeper the curve is to reach the 2030 ambition.”

The EU has recently doubled its previous clean hydrogen targets, setting a 2030 goal to produce 10mn t/yr within the EU and to import a further 10mn t/yr. The target is set under RepowerEU, a new energy strategy designed to end the bloc’s dependence on Russian fossil fuels in response to the war in Ukraine.

“All the projects have stalled. The longer we wait, the steeper the curve is to reach to 2030 ambition” Franc, Hy24

The Commission say it is assessing state aid for hydrogen projects as a priority.

“Our IPCEI on hydrogen shall be approved by the summer. This will kickstart large industry- driven investments, which are worth well over €50bn ($52.8bn),” says Commission president Ursula von der Leyen.

Germany selected 62 large-scale hydrogen projects in May last year to receive more than €8bn in federal and state funding under the IPCEI scheme. At the time, the German government said it hoped to gain approval from the Commission by the end of 2021.

Franc says the IPCEI situation reflects delays between the EU’s headline ambitions and the policy execution support tools on the ground.

“The situation we have now is that policymakers are somewhat ahead of industry in the ambition,” Franc says. “They are implementing plans which the industry, as it stands today, is not capable of delivering. Policymakers could address this by accelerating the execution support tools and the downstream demand boosters to secure offtake growth.”

Nevertheless, the EU’s new 2030 targets for hydrogen are impressive up to a point, Franc says. “The target is very large for the industry, but it is still a very small as part of the larger energy system—20 mn t is barely going to replace 10pc of the natural gas consumption of Europe.”

“However, it shows the way, and it is impressive that European policymakers, with the support of many of the industry players, have captured and designed this plan. It is very bold and it is welcome,” he adds.