Insider Brief
- The European Commission has approved a €400 million Austrian State aid scheme and a €36 million Lithuanian State aid plan to support green hydrogen production through the European Hydrogen Bank’s “Auctions-as-a-Service” initiative for 2025.
- The funding aims to facilitate the production of up to 112,000 tons of renewable hydrogen in Austria and 13,000 tonnes in Lithuania, contributing to EU climate targets, industrial decarbonization, and energy transition strategies under the REPowerEU Plan and the EU Hydrogen Strategy.
- The aid will be awarded through a competitive bidding process in early 2025, providing direct grants per kilogram of renewable hydrogen produced for up to ten years, with strict compliance requirements under EU criteria for renewable fuels of non-biological origin (RFNBOs).
PRESS RELEASE – The European Commission has approved, under EU State aid rules, a €400 million Austrian State aid scheme, and a €36 million Lithuanian State aid scheme, to support the production of renewable hydrogen through the European Hydrogen Bank‘s “Auctions-as-a-Service” tool for the auction closing in 2025. The schemes will contribute to the objectives of the Clean Industrial Deal to accelerate the decarbonisation of EU industry while strengthening its competitiveness, of the REPowerEU Plan to reduce dependence on Russian fossil fuels and accelerate the green transition, as well as the EU Hydrogen Strategy.
The schemes
Austria and Lithuania notified the Commission of their intention to introduce schemes to support the production of renewable hydrogen through the “Auctions-as-a-Service” tool within the European Hydrogen Bank. The approved schemes will support the production of up to 112,000 tons of renewable hydrogen in Austria, and 13,000 tons of renewable hydrogen in Lithuania, resulting in the avoidance of the equivalent of up to 536,000 tons and 61,000 tons of CO2 respectively. This will help the Member States achieve their national hydrogen objectives, as well as the targets for the share of renewable fuels of non-biological origin (RFNBOs) consumed in transport and in industry that are set in the Renewable Energy Directive.
The aid will be awarded through a competitive bidding process to be concluded in the first quarter of 2025. The bidding process will be supervised by the European Climate, Infrastructure, and Environment Executive Agency (CINEA) which will receive, assess, and rank bids for projects in all Member States. The support provided under the schemes will be open to companies planning to construct new electrolyzers in Austria and Lithuania.
Under the schemes, the aid will take the form of a direct grant per kilogram of renewable hydrogen produced. The aid will be granted for a maximum duration of ten years. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin (RFNBOs). This includes contributing to the deployment or financing of the additional renewable electricity which is needed to produce the hydrogen supported under the scheme.
The Commission’s assessment
The Commission assessed the schemes under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which enables Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy (‘CEEAG’).
In particular, the Commission found that:
- The schemes are necessary and appropriate to facilitate the production of renewable hydrogen and thus the decarbonization of the industrial, transport and/or energy sectors.
- The schemes have an incentive effect, as the beneficiaries would not carry out the relevant investments without the public support.
- Austria and Lithuania put in place sufficient safeguards to ensure that the schemes have a limited impact on competition and trade within the EU. In particular, the beneficiaries will be selected following an open, transparent and non-discriminatory bidding process and the aid will be kept to the minimum necessary to undertake the projects.
- The aid will bring about positive effects, in particular on the environment, in line with the European Green Deal, that outweigh any possible negative effects in terms of distortions to competition.
On this basis, the Commission approved the Austrian and Lithuanian schemes under EU State aid rules.
Background
On 18 November 2024, Austria and Lithuania announced their participation in the European Hydrogen Bank “Auctions-as-a-Service” scheme for the second 2024/2025 auction.
The European Hydrogen Bank is an initiative to facilitate EU-domestic production and imports of renewable hydrogen in and to Europe. Its objective is to close the investment gap and connect the future renewable hydrogen supply to consumers to meet the intended target of 20 million tons by 2030, contributing to the REPowerEU objectives and the transition to climate neutrality. Run by the Innovation Fund, the hydrogen auctions implement the EU-domestic leg of the European Hydrogen Bank and are financed through the EU Emissions Trading System revenues.
Under the concept of Auctions-as-a-Service, Member States may choose to use the EU-wide auction mechanism under the Innovation Fund to also allocate a pre-defined amount of national funding to renewable hydrogen production projects on their territory. These projects will be assessed and ranked in the competitive auction procedure under the auction and can become eligible for national funding if the Innovation Fund budget is insufficient to cover those projects. Auctions-as-a-Service are aimed at harmonizing, and tying together national and European support schemes, increasing the comparability of subsidy levels, and saving on the administrative costs to Member States and project developers of developing and understanding different hydrogen support schemes.
The schemes follow a previous German scheme approved by the Commission in April 2024, to support investments in the production of renewable hydrogen through Auctions-as-a-Service under the European Hydrogen Bank’s pilot auction.
The Commission’s 2022 CEEAG provide guidance on how the Commission assesses the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU.
The Renewable Energy Directive of 2018 set out stringent criteria for RFNBOs, such as renewable hydrogen, to ensure that their environmental impact is minimal and that they contribute to the deployment of renewable energy. Amongst others, emission savings of the end product must be at least 70% across the entire value chain. Amendments to the Renewable Energy Directive in 2023 increased the EU target for the share of renewable energy in the EU’s gross energy consumption to a minimum of 42.5% by 2030, with the aim of reaching 45%; and introduced a target that 42% of the hydrogen used in industry should be renewable by 2030, increasing to 60% by 2035.
“These schemes mark an important step in boosting renewable hydrogen development, and reducing the cost of this strategic clean fuel. They will support the most competitive projects in Austria and Lithuania, reducing the burden on taxpayers and minimising possible market distortions. Austria and Lithuania are among a growing number of Member States choosing to make use of this EU auction, which offers an accelerated solution for awarding public support in this strategic sector,” said Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition.
