The European Commission has granted its approval for a significant French state aid scheme designed to accelerate the production of renewable and low-carbon hydrogen. Aligned with the EU Hydrogen Strategy and the Clean Industrial Deal, the initiative aims to bolster energy independence by reducing reliance on imported fossil fuels while driving the decarbonisation of heavy industry.
The approved scheme will support the construction of 1 gigawatt (GW) of hydrogen electrolysis capacity across France. Funding will be allocated through a competitive bidding process spanning three tender rounds. The initial phase, which carries an estimated budget of €797 million (£665 million), will focus on 200MW of electrolysis capacity.
To ensure the most effective environmental impact, the hydrogen produced must be sold exclusively for direct industrial use. This restriction targets sectors where electrification is currently not an economically viable alternative. The aid will be provided as a fixed premium over a 15-year period, helping to offset the higher costs associated with renewable electricity compared to traditional fossil-fuel-based hydrogen production.
France anticipates that the measure will prevent up to 1,100 kilotonnes of CO2 emissions annually. This supports the national ambition of reaching 4.5GW of electrolyser capacity by 2030 and 8GW by 2035.
Following an assessment under the 2022 Climate, Environmental Protection and Energy Aid Guidelines (CEEAG), the Commission concluded that the scheme is necessary to incentivise production that would otherwise be financially unviable. The Commission also noted that the open and transparent bidding process provides sufficient safeguards to prevent unfair distortions to competition within the EU single market.
This approval marks a pivotal step in France’s contribution to the REPowerEU plan, which seeks to rapidly transform the European energy landscape through energy savings, clean energy production, and the diversification of supplies.
