The European Commission has approved a €1.3 billion German State aid scheme aimed at accelerating the production of renewable hydrogen, under EU State aid rules. The measure will support projects selected through the European Hydrogen Bank’s “Auctions-as-a-Service” mechanism for an auction that closed in 2026.
The scheme is designed to contribute to the objectives of the EU’s Clean Industrial Deal, the REPowerEU Plan to reduce dependence on Russian fossil fuels, and the broader EU Hydrogen Strategy.
Up to 1,000 MW of electrolyser capacity supported
Under the approved programme, Germany plans to support the construction of up to 1,000 MW of installed electrolyser capacity and the production of up to 10 million tonnes of renewable hydrogen. According to Commission estimates, the resulting production could avoid up to 55 million tonnes of CO2 emissions.
Aid will be awarded through a competitive bidding process overseen by the European Climate, Infrastructure and Environment Executive Agency (CINEA).
The support will take the form of a direct grant per kilogram of renewable hydrogen produced, granted for a maximum period of ten years. Beneficiaries will be required to comply with EU criteria for renewable fuels of non-biological origin (RFNBOs).
Cross-border hydrogen infrastructure included
The scheme is also designed to support infrastructure linking renewable hydrogen production with demand centres across borders. Projects will feed renewable hydrogen into the Danish Hydrogen Backbone 1 pipeline, recognised as a Project of Common Interest, and supply buyers connected to the German Hydrogen Core Network.
The Commission said the measure will also support cross-border infrastructure connecting renewable hydrogen production in the North Sea region with large-scale industrial consumers.
Commission: aid is necessary and proportionate
In its assessment under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the 2022 Guidelines on State aid for climate, environmental protection and energy (CEEAG), the Commission concluded that the scheme is compatible with EU State aid rules.
It found that the measure is necessary and appropriate to facilitate renewable hydrogen production and has an incentive effect, as investments would not take place without public support.
The Commission also said Germany had introduced sufficient safeguards to limit distortions of competition. These include the use of competitive bidding, keeping aid to the minimum necessary, and ensuring compliance with EU market rules.
It further noted that limiting eligibility to projects feeding hydrogen into the Danish pipeline and German core network does not unduly distort competition, as this infrastructure will help reduce long-term hydrogen costs.
Part of the European Hydrogen Bank framework
The scheme operates within the European Hydrogen Bank, an EU initiative aimed at scaling up both domestic production and imports of renewable hydrogen. The programme seeks to close investment gaps and help reach the EU target of 20 million tonnes of renewable hydrogen by 2030.
It is financed through revenues from the EU Emissions Trading System and implemented via Innovation Fund auctions. The “Auctions-as-a-Service” model allows Member States to use the EU auction platform to allocate national funding, with projects ranked centrally to streamline support and improve comparability.
Previous approvals and policy context
The Commission noted that the scheme follows earlier approvals under the same framework, including a German scheme from April 2024, as well as Austrian and Lithuanian schemes approved in March 2025, and Spanish schemes approved in March 2026 and April 2025.
The EU Renewable Energy Directive sets binding criteria for RFNBOs such as renewable hydrogen, requiring at least 70% greenhouse gas savings across the lifecycle. Updated legislation adopted in 2023 raised the EU’s renewable energy targets to at least 42.5% by 2030, with an ambition of 45%, and set hydrogen-specific targets of 42% renewable hydrogen use in industry by 2030, rising to 60% by 2035.
