EU Member States Raise €5.4 Billion Funding To Develop Hydrogen Value Chain

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The European Commission has approved €5.40 billion (~$5.47 billion) in funding for the ‘IPCEI Hy2Tech’ project to support research, innovation, and the first industrial deployment in the hydrogen technology value chain.

Important Project of Common European Interest (IPCEI) Hy2Tech was jointly prepared and notified by fifteen member states— Austria, Belgium, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Italy, Netherlands, Poland, Portugal, Slovakia, and Spain.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said, “Hydrogen has a huge potential going forward. It is indispensable for the diversification of energy sources and the green transition. However, investing in such innovative technologies can be risky for one Member State or company alone. This is where State aid rules for IPCEI have a role to play. Today’s project exemplifies truly ambitious European cooperation for a key common objective. It also shows how competition policy works hand in hand with breakthrough innovation.”

The Member States will provide up to €5.4 billion (~$5.47 billion) in public funding, which is expected to unlock an additional €8.80 billion (~$8.89 billion) in private investments. As part of this IPCEI, 35 companies with activities in one or more member states, including small and medium-sized enterprises, and start-ups, will participate in 41 projects.

The IPCEI will cover a vast part of the hydrogen technology value chain, including hydrogen generation, fuel cells, storage, transportation, and distribution of hydrogen, and its end-user applications. It is expected to contribute to developing critical technological breakthroughs, including new highly efficient electrode materials, more performant fuel cells, and innovative transport technologies, among which the first roll-out will be hydrogen mobility. The IPCEI is expected to create about 20,000 direct jobs.

Among the participants in the chosen projects are energy majors such Enel and Ørsted, electrolyzer manufacturers like Cummins, John Cockerill, McPhy Energy SA, and Sunfire GmbH are also a part of the project.

The Commission has found that the IPCEI Hy2Tech contributes to a common objective by supporting a key strategic value chain for the future of Europe and the objectives of key EU policy initiatives such as the Green Deal, the EU Hydrogen Strategy, and REPowerEU.

The Commission also noted that all the 41 projects which are a part of the IPCEI are highly ambitious, as they aim at developing technologies and processes that go beyond what the market currently offers. This will significantly improve performance, safety, environmental impact, and cost efficiencies.

The IPCEI also involves significant technological and financial risks, and public support is necessary to incentivize companies to carry out the investment.

The Commission stated that the aid to individual companies is limited to what is necessary and proportionate and does not unduly distort competition. In particular, the Commission has verified that the total planned maximum aid amounts are in line with the eligible costs of the projects and their funding gaps.

Furthermore, suppose large projects covered by the IPCEI are successful, generating extra net revenues, the companies will return part of the aid received to the respective Member states.

The project results will be widely shared by participating companies benefitting from the public support from the European scientific community and industry beyond the companies and countries that are part of the ICPEI. As a result, the Commission believes positive spill-over effects will be generated throughout Europe.

European Commission is investing €1.8 billion (~$1.804 billion) in 17 large-scale innovative clean energy projects worldwide. The 17 selected projects worldwide will bring breakthrough technologies in energy-intensive industries, hydrogen, renewable energy, carbon capture, and storage infrastructure, and manufacturing key components for energy storage and renewables.

Last month, the EU provided £2.4 billion (~$2.405 billion) to seven European nations to modernize energy systems, reduce greenhouse gas emissions and support them in meeting their 2030 climate and energy goals. Under the program, funds will be provided for eight solar parks in Romania.