The European Commission has approved a €6 billion Italian program aimed at boosting renewable hydrogen production for transport and industry, in a move aligned with the EU Hydrogen Strategy and the Clean Industrial Deal.
Under the scheme, Italy plans to support the production of 200,000 tons of renewable hydrogen per year. Eligible hydrogen includes both electrolysis-powered hydrogen using renewable electricity and hydrogen produced from biogenic sources via biological, bio-thermochemical, and thermochemical processes.
The aid will take the form of two-way contracts for difference. “If the price of an alternative fuel that would be used by the hydrogen consumers falls below that strike price, Italy will pay hydrogen producers the difference,” the Commission explained.
“If the price of the counterfactual fuel exceeds the strike price, the beneficiaries will pay the difference to the Italian state.” The program will run until 31 December 2029.
The Commission assessed the scheme under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the EU and the 2022 Guidelines on State aid for climate, environmental protection and energy.
It found that the aid is both necessary and effective. “The aid is necessary and appropriate to facilitate the production of renewable hydrogen for the decarbonisation of the transport and industrial sectors,” the Commission said.
“The aid has an incentive effect as beneficiaries would not produce renewable hydrogen without the public support.”
The measure is also proportionate and environmentally beneficial. “The aid is proportionate as it will be granted following a competitive bidding process based solely on the strike price offered by bidders,” the Commission noted.
“The aid will bring about positive effects, in particular on the environment, as it will contribute to the decarbonisation of sectors with high emissions. These positive effects outweigh the negative effects on competition.”
Based on these findings, the European Commission has officially approved Italy’s renewable hydrogen scheme under EU State aid rules.
