European Commission competition officials have given the green light to €1.2 billion in government support for Spain’s fledgling renewable hydrogen industry, in a further boost to the country’s ambition of becoming a major producer of the climate friendly fuel.
Under a scheme that will be funded entirely from Madrid’s share of the EU recovery fund set up in the wake of the covid pandemic, production plants with a capacity of 100 megawatts or more can apply for state support to develop ‘hydrogen valleys’ across the country.
Green hydrogen is produced using renewable electricity – Spain has huge untapped potential to increase is solar and wind power generation – to split water into its component oxygen and hydrogen, which can either be used directly as an energy carrier, or as a feedstock to produce synthetic liquid fuels with a near-zero carbon footprint.
The state aid will be disbursed by the end of 2025 through a competitive bidding system. The EU allows deviation from its usually strict prohibition of national support for domestic industry in cases where it furthers key EU policy goals – in this case, the transition to a net-zero economy – without unduly distorting the single market.
Commission vice-president in charge of competition policy Margrethe Vestager said the Spanish scheme would accelerate the build-up of green hydrogen production facilities in line with EU strategic goals.
“The scheme will also help Spain reduce its dependence on imported fossil fuels, while minimising any potential distortions to competition,” Vestager said.
In a draft of its national energy and climate plan to 2030, which all EU members were required to produce and are currently being finalised, Spain’s target of 11 gigawatts of electrolyser capacity for green hydrogen production was the highest in Europe, with only Germany coming close on 10 GW.
The current EU production target is for an annual 10 million tonnes of green hydrogen a year by 2030, although EU auditors warned last week the goal was unrealistic.
The Brussels-based trade association Hydrogen Europe – whose members range from petroleum multinationals with an eye on producing hydrogen from natural gas to wind turbine manufacturers – welcomed the EU endorsement of the Spanish support scheme.
“The Spanish announcement is yet more proof that the Iberian peninsula is on the way to become a giant in the hydrogen economy,” the lobby group’s CEO Jorgo Chatzimarkakis told Euronews.
“It’s a very promising that the Spanish Vice Prime Minister putting forward these plans, Teresa Ribera, will likely become a European commissioner, hopefully for climate or energy,” the German former MEP added.
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