The European Commission has approved, under EU State aid rules, a €998-million (US$1.1-billion) Dutch scheme to support the production of renewable hydrogen. The measure aims to contribute to the development of renewable hydrogen in line with the objectives of the EU Hydrogen Strategy and the European Green Deal. The scheme will also contribute to the objectives of the REPowerEU Plan to reduce dependence on Russian fossil fuels and accelerate the green transition.

The Netherlands notified the Commission of its intention to introduce a €998-million scheme to increase the country’s electrolysis capacity and support the production of renewable hydrogen.

The scheme will support the construction of at least 200 MW of electrolysis capacity. The aid will be awarded through a competitive bidding process planned to be concluded in 2024. The tender will be open to projects with a capacity of at least 0.5 MW.

The aid will take the form of a direct grant combining an upfront investment grant up to 80% of the investment costs and a variable premium over a period of 5 to 10 years. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin (RFNBOs), as set out in the delegated acts on renewable hydrogen.

The scheme will contribute to the Netherlands’s efforts to achieve 500 MW of electrolyzer capacity in 2025 and 3-4 GW by 2030. It will also support the EU’s ambitions to install at least 6 GW of renewable hydrogen electrolysers by 2024, and at least 40 GW by 2030. The Netherlands expects that the scheme will lead to the equivalent of around 55 kilotons of CO₂ being avoided every year until 2030, which will contribute to the Netherlands’ and EU’s climate targets.

In its assessment, the Commission determined that:

• The scheme is necessary and appropriate to facilitate the production of renewable hydrogen. At the same time, it supports the objectives of key EU policy initiatives such as the European Green Deal, the EU Hydrogen Strategy, and the REPowerEU Plan.

• The measure has an ‘incentive effect', as the beneficiaries would not carry out the relevant investments without the public support.

• The Netherlands put in place sufficient safeguards to ensure that the scheme has 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 that outweigh any possible negative effects in terms of distortions to competition.

On this basis, the Commission approved the Dutch scheme under EU State aid rules.