Spain leads the race for green hydrogen: EU approves massive state aid

The European Commission’s competition officials have given the green light to a 1.2 billion Euros of public aid for the emerging Spanish industry of renewable hydrogen, in a new boost to the country’s ambition to become a leading producer of this climate-friendly fuel.

Under a plan that will be fully funded by Madrid’s share of the EU recovery fund created in the wake of the pandemic, Production plants with a capacity equal to or greater than 100 megawatts will be able to apply for state aid to develop “hydrogen valleys” across the country.

Green hydrogen is produced using renewable electricity -Spain has enormous untapped potential to increase solar and wind energy generation- split water into its components oxygen and hydrogenwhich can be used directly as an energy vector or as raw material to produce synthetic liquid fuels with a nearly zero carbon footprint.

When will the aid arrive?

State aid will be disbursed before the end of 2025 through a system of competitive tendering. The EU allows deviations from its usually strict ban on national aid to domestic industry in cases where they promote key EU policy objectives – in this case, the transition to a net zero economy– without unduly distorting the single market.

Margrethe Vestager, Vice-President of the Commission responsible for Competition Policy, said: The Spanish regime will accelerate the creation of green hydrogen production facilities in line with the EU’s strategic objectives.

In a draft of its national energy and climate plan to 2030, which all EU members were required to submit and which is currently being finalised, Spain’s target of 11 gigawatts of electrolyser capacity for the production of green hydrogen was the highest in Europe, with only Germany coming close with 10 GW.

The actual EU production target is 10 million tonnes of green hydrogen per year by 2030although EU auditors warned last week that the target was unrealistic.

The trade association Hydrogen Europebased in Brussels and whose members range from oil multinationals looking to produce hydrogen from natural gas to wind turbine manufacturers, welcomed EU support for Spanish aid plan.

“The Spanish announcement is further proof that The Iberian Peninsula is on its way to becoming a giant in the hydrogen economy“, Jorgo Chatzimarkakis, CEO of the lobby group, told Euronews.

“It is very promising that the vice president of the Spanish Government who has presented these plans, Teresa Riberawill probably become a European commissioner, hopefully for climate or energy,” added the former German MEP.