Out-Law News 1 min. read

European Commission approves German hydrogen import programme H2Global

The European Commission has granted state aid approval to the German government to allow the funding of the hydrogen import programme, ‘H2Global’, with €900 million.

H2Global aims to promote the development of green hydrogen production plants in sunny non-EU countries. The hydrogen produced there will then be imported to the EU. ‘Green’ hydrogen is hydrogen that is produced from electricity from 100% renewable energy sources.

As the funding to be provided under the H2Global scheme is considered a form of state aid, the EU Commission first had to clear the plans under EU state aid law. The EU Commission has now granted this approval on the grounds that the funds are compatible with the European Single Market competition rules. The EU Commission also said that in the future H2Global should help to meet the expected hydrogen demand not only of Germany but also of the EU, since the EU Commission expects demand to increase significantly.

"It was important to obtain a quick approval decision from the EU Commission to allow the German hydrogen industry to be established and expanded as quickly as possible," said Alice Boldis, an expert in large-scale projects in the energy sector at Pinsent Masons. "Since Germany cannot produce the quantities of green hydrogen required, the international imports targeted by H2Global are indispensable. Germany cannot afford a further delay, especially against the backdrop of the new ambitious climate targets of the new German government."

The multi-million project was launched by the previous German government. The new government has already announced that it wants to strengthen H2Global and develop it further at the European level.

The H2 Global Foundation will purchase green hydrogen abroad via auctions under long-term contracts. The first purchase contracts are to be awarded as early as 2022, with the first deliveries of hydrogen envisaged to arrive in Germany in 2024.

The EU Commission has now confirmed that producers of renewable hydrogen and hydrogen derivatives wishing to participate in the tenders must comply with the greenhouse gas emission reduction target of up to 70% set in the revised Renewable Energy Directive (RED II) for plants with a construction date after January 2021. They must also meet social and environmental sustainability aspects. This will also be included in the procurement criteria for awarding contracts via H2Global. RED II thus indirectly binds producers who manufacture hydrogen in non-EU countries.

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