Commission approves €1.3 billion German State aid to support renewable hydrogen production

The European Commission has approved, under EU State aid rules, a €1.3 billion German State aid scheme to support the production of renewable hydrogen through the European Hydrogen Bank's “Auctions-as-a-Service” tool for the auction that closed in 2026. The scheme will contribute to the objectives of the Clean Industrial Deal to accelerate the decarbonisation of EU industry, the REPowerEU Plan to reduce dependence on Russian fossil fuels, as well as the EU Hydrogen Strategy.

The German scheme

Germany notified the Commission of its intention to introduce a scheme to support the production of renewable hydrogen through the 'Auctions-as-a-Service' tool within the European Hydrogen Bank. The approved scheme will support construction of up to 1,000 MW of installed electrolyser capacity, and the production of up to 10 million tonnes of renewable hydrogen. This is estimated to avoid up to 55 million tonnes of CO_2.

The aid will be awarded through a competitive bidding process that will be supervised by the European Climate, Infrastructure, and Environment Executive Agency (CINEA).

The scheme will provide support to companies planning to construct new electrolysers feeding renewable hydrogen into the Danish Hydrogen Backbone 1 pipeline, which is a Project of Common Interest, and deliver it to buyers connected to the German Hydrogen Core Network. The aid will not only support the production of renewable hydrogen, but also cross-border infrastructure that connects renewable hydrogen sources in the North Sea to large-scale buyers.

Under the scheme, the aid will take the form of a direct grant per kilogram of renewable hydrogen produced. The aid will be granted for a maximum duration of ten years. Beneficiaries will have to prove compliance with EU criteria for the production of renewable fuels of non-biological origin (RFNBOs).

The Commission's assessment

The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union ('TFEU'), which enables Member States to support the development of certain economic activities under certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy ('CEEAG').

In particular, the Commission found that:

• The scheme is necessary and appropriate to facilitate the production of renewable hydrogen;
• The scheme has an incentive effect, as the beneficiaries would not carry out the relevant investments without the public support;
• Germany put in place sufficient safeguards to ensure that the scheme has a limited impact on competition and trade within the EU. In particular, the scheme will support beneficiaries in Denmark, the beneficiaries will be selected following a competitive bidding process and the aid will be kept to the minimum necessary;
• Limiting the eligibility of the scheme to projects that will feed renewable hydrogen into the Danish Hydrogen Backbone 1 pipeline and deliver it to buyers off-takers that are connected to the German Hydrogen Core Network does not unduly distort competition as this infrastructure will lower the cost of renewable hydrogen in the long term;
• The aid will bring about positive effects, in particular on the environment, in line with the EU's clean transition goals.

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

Background

The European Hydrogen Bank is an initiative to facilitate EU-domestic production and imports of renewable hydrogen in and to Europe. Its objective is to close the investment gap and connect the future renewable hydrogen supply to consumers to meet the intended target of 20 million tonnes by 2030, contributing to the REPowerEU objectives and the transition to climate neutrality. Run by the Innovation Fund, the hydrogen auctions implement the EU-domestic leg of the European Hydrogen Bank and are financed through the EU Emissions Trading System revenues.

Under the concept of Auctions-as-a-Service, Member States can use the EU Innovation Fund auction system to distribute national funding to renewable hydrogen projects. Projects are ranked through the EU auction, and if EU funds are not enough, they may receive national funding instead. This approach aligns national and EU support schemes, makes subsidies easier to compare, and reduces administrative burden for both countries and developers.

The scheme follows a previous German scheme approved by the Commission in April 2024, to support investments in the production of renewable hydrogen through Auctions-as-a-Service under the European Hydrogen Bank's pilot auction, Austrian and Lithuanian schemes approved by the Commission on 10 March 2025, and two Spanish schemes approved by the Commission on 15 April 2025 and 12 March 2026.

The Commission's 2022 CEEAG provide guidance on how the Commission assesses the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU.

The Renewable Energy Directive of 2018 sets out stringent criteria for RFNBOs, such as renewable hydrogen, to ensure that their environmental impact is minimal and that they contribute to the deployment of renewable energy. Amongst others, emission savings of the end product must be at least 70% across the entire value chain. Amendments to the Renewable Energy Directive in 2023 increased the EU target for the share of renewable energy in the EU's gross energy consumption to a minimum of 42.5% by 2030, with the aim of reaching 45%; and introduced a target that 42% of the hydrogen used in industry should be renewable by 2030, increasing to 60% by 2035.

For more information

The non-confidential version of the decision will be made available under the case number SA.120601 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.