The European Commission (EC) has cleared a €200 million German aid to boost Canadian-produced renewable hydrogen and its derivatives for the European market. This scheme will support the construction of up to 300 MW of electrolysis capacity.
The European Commission has approved the €200 million German scheme under the European Union (EU) State aid rules to support the production of renewable hydrogen and its derivatives in Canada, known as renewable fuels of non-biological origin (RFNBOs), which will be imported to Germany and sold in the EU.
This budget will unlock an additional €200 million of funding provided by Canada. The scheme is perceived to contribute to the objectives of the Clean Industrial Deal, the EU Hydrogen Strategy, and the REPowerEU Plan, aimed at curbing the dependence on Russian fossil fuels and accelerating the clean energy transition.
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Teresa Ribera , Executive Vice-President for Clean, Just and Competitive Transition, commented: “ This German scheme will help to meet growing demand for renewable fuels in the EU and support the development of renewable fuel production in our valued trade partner Canada.
“It builds on the success of the EU-Canada Comprehensive and Economic Trade Agreement, the Strategic Partnership on Raw Materials, and the EU-Canada Industrial Policy Dialogue. The design of the scheme will enable only the most cost-effective projects to be supported, thereby reducing costs for taxpayers and minimising possible distortions of competition.”
The aid will be awarded through a competitive bidding process, planned to be concluded in 2027. Germany expects the scheme to enable up to 2.47 million tonnes of CO2 equivalent to be avoided, which will also assist the country in fulfilling its EU climate targets.
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The scheme is based on a double auction system, which brings together RFNBO producers in Canada and RFNBO buyers in the EU. The companies offering to sell RFNBOs at the lowest price, and to buy RFNBOs at the highest price, will enter into a contractual relationship, with state resources helping to fill the funding gap between the two prices.
This aid will help meet a growing demand for RFNBOs in Germany and support the EU’s ambition for renewable hydrogen technologies to be deployed on a large scale from 2030 onwards by helping to meet the demand for renewable hydrogen and its derivatives.
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The latest approval follows two previous schemes approved by the European Commission in December 2021 and 2024 to back investments in the production of renewable hydrogen in non-EU countries, which would be imported and sold in the EU.