European Commission green lights $153M in state aid for renewable hydrogen and biomethane

In Belgium, European Commission has approved a €140 million Portuguese scheme to support the production of renewable hydrogen and biomethane to foster the transition to a net-zero economy, in line with the Green Deal Industrial Plan. The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on March 9, 2023 and amended on November 20, 2023, to support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies.

Under the scheme, the aid will take form of a variable premium under a two-way contract for difference concluded for a duration of 10 years. The aid is awarded through a competitive bidding process where renewable hydrogen producers and biomethane producers compete separately. In the competitive bidding process, beneficiaries are selected on the basis of the strike price per MWh of renewable hydrogen or biomethane offered.

The Commission found that the Portuguese scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework. In particular, the aid (i) will be granted on the basis of a scheme with an estimated capacity volume and budget; (ii) will take the form a two-way contract for difference and (iii) will be granted no later than December 31, 2025. Furthermore, the aid is subject to conditions to limit undue distortions of competition, including safeguards to guarantee the competitiveness of the bidding procedure. The Commission concluded that the scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance to implement the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework. On this basis, the Commission approved the scheme under EU State aid rules.