EC approves €550m Italian renewable hydrogen scheme
The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 and amended on 20 November 2023, to support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies.
The Italian measure
Italy notified the Commission, under the Temporary Crisis and Transition Framework, of a €550 million scheme to support investments enabling the substitution of methane and other fossil fuels with renewable hydrogen, which can be combined with electrification or significant energy efficiency improvements in industrial processes, to foster the transition to a net-zero economy.
Under this measure, which will be funded through resources allocated to the Italian National Recovery and Resilience Plan (PNRR), the aid will take the form of direct grants.
The measure will be open to companies relying on the use of fossil fuels as energy source or feedstock for their production processes in industrial sectors in Italy.
Eligible projects must lead to reduce greenhouse gas emissions from production processes by at least 40% or to reduce energy consumption by at least 20%, compared to today.
In order to be eligible, companies need to switch from the use of fossil fuels to renewable hydrogen, and can combine this investment with investing in the electrification of their production processes or in significantly improving their energy efficiency.
The Commission's response
The Commission found that the Italian scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework.
In particular, the aid (i) will not exceed €200 million per beneficiary; (ii) will not exceed the aid intensities set out in the Temporary Crisis and Transition Framework; and (iii) will be granted no later than 31 December 2025.
Furthermore, the public support will come subject to conditions to ensure actual emissions savings and a switch to hydrogen use.
In all hydrogen-related investments, in order to ensure that the reduction in greenhouse gas emissions of 40% is achieved, hydrogen use must represent at least 40% of the total energy inputs from the start of the operational phase of the projects, at least 75% of the total energy inputs by 2032, and 100% of the total energy inputs by 2036.
In addition, beneficiaries will not be able to increase their production capacity beyond 2%.
The Commission concluded that the Italian scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.