By contributing to the development of the European renewable hydrogen value chain, the Italian scheme – in force until 31 December 2029 – will help achieve the objectives of the EU Hydrogen Strategy of 2020 and the Clean Industrial Deal, presented by the Commission last year.
“The scheme,” said Teresa Ribera, Executive Vice-President for a Clean, Fair and Competitive Transition, “will support the production of renewable hydrogen in Italy for sectors where it can most contribute to emission reductions.”
What the Italian Scheme for Green Hydrogen Development Provides
More specifically, the scheme notified by Italy to the European Commission provides support for the production of 200,000 tonnes of renewable hydrogen per year. Under the measure, two production chains are eligible: hydrogen obtained by electrolysis using electricity from renewable sources, and hydrogen produced from biogenic sources through biological, biothermochemical, and thermochemical processes.
As for the form of aid, it will take the form of two-way contracts for difference, under which the strike price for hydrogen is determined through a competitive bidding process.
In practice, if the price of an alternative fuel that could be used by hydrogen consumers falls below this strike price, Italy will pay the difference to hydrogen producers. Conversely, if the price of the counterfactual fuel exceeds the strike price, beneficiaries will pay the difference to the Italian State.
Brussels Approves State Aid for Hydrogen in Italy
The Commission’s assessment of the scheme is based on two main regulatory references. On the one hand, on the EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to support the development of certain economic activities under specific conditions. On the other hand, Brussels’ verification of the adequacy of the Italian scheme is based on the 2022 State aid guidelines for climate, environmental protection, and energy (CEEAG).
According to the European Commission’s review, the Italian scheme has certain features that make it compliant with EU State aid rules. Firstly, the aid is necessary and aimed at facilitating the production of renewable hydrogen for the decarbonization of the industrial and transport sectors. Secondly, the scheme has an incentive effect, as without public support, beneficiaries would not produce renewable hydrogen. The incentive is also proportionate because it will be granted following a competitive bidding process based solely on the strike price proposed by bidders. Finally, the aid will have positive effects, particularly on the environment, as it will contribute to the decarbonization of high-emission sectors. These positive effects outweigh the negative effects on competition.
Translation AI assisted
