The European Commission has approved a €6 billion Italian state aid scheme to support the production of renewable hydrogen for use in the transport and industrial sectors, with biomass-derived hydrogen explicitly included among eligible production routes.
The scheme, which runs until the end of 2029, aims to support annual production of 200,000 tonnes of renewable hydrogen.
Eligible projects include hydrogen produced via electrolysis powered by renewable electricity and hydrogen derived from biogenic sources through biological, bio-thermochemical and thermochemical processes, encompassing a range of biomass conversion technologies.
Support will be delivered through two-way contracts for difference, with a strike price determined by competitive tender. Where the price of an alternative fuel falls below the agreed strike price, Italy will pay producers the difference; where it exceeds the strike price, producers will repay the difference to the Italian state.
The Commission concluded that the aid is necessary and proportionate, finding that producers would not develop renewable hydrogen capacity without public support, and that the scheme's environmental benefits, particularly for hard-to-decarbonise sectors — outweigh any distortive effects on competition.
Teresa Ribera, executive vice-president for clean, just and competitive transition, said the scheme would direct support towards sectors where hydrogen can contribute most to cutting emissions.
The approval falls under the Commission's 2022 guidelines on state aid for climate, environmental protection and energy, which provide the framework for member states to support Green Deal objectives in a cost-effective manner.
