29.07.2024

The EU approved a subsidy of €1,2 billion for the production of green hydrogen in Spain

The European Commission has given the go-ahead for €1,2 billion in state support for Spain's fledgling renewable hydrogen industry, a further boost to the country's ambitions to become a major producer of the climate-friendly fuel, reports Euronews.

Under a scheme to be financed entirely by Madrid's share of the EU recovery fund set up after the COVID-19 pandemic, generating plants with a capacity of 100 megawatts or more can apply for state support to develop "hydrogen valleys" in the whole country.

Spain has a huge untapped potential to increase solar and wind energy production. Green hydrogen is produced precisely with the help of renewable electricity.

The state aid will be paid by the end of 2025 through a competitive tender system. The EU allows a departure from its normally strict ban on national support for domestic industry where it promotes key EU policy objectives – in this case the transition to a net-zero economy – without unnecessarily distorting the single market.

Commission Vice-President in charge of competition policy Margrethe Vestager said the Spanish scheme would accelerate the construction of green hydrogen production facilities in line with the EU's strategic objectives.

"The scheme will also help Spain reduce its dependence on imported fossil fuels while minimizing any potential distortions of competition," Vestager said.

A giant in the hydrogen economy

In a draft of its national energy and climate plan to 2030, which is currently being finalized, Spain's target of 11 gigawatts of green hydrogen production capacity is the highest in Europe, with only Germany coming close at 10 GW.

The EU's current production target is 10 million tonnes of green hydrogen per year by 2030. However, many experts warn that this target is unrealistic.

Brussels-based trade association Hydrogen Europe - whose members range from oil multinationals planning to produce hydrogen from natural gas to wind turbine manufacturers - welcomed the EU's approval of the Spanish support scheme.

"This announcement is further proof that the Iberian Peninsula is on its way to becoming a giant in the hydrogen economy. It is also very promising that the Spanish deputy prime minister presenting these plans, Teresa Ribera, will probably become a European commissioner, hopefully for climate or energy," said the executive director of the lobby group, Yorgo Katsimarkakis.