EU approves €3 billion German-Dutch RFNBO scheme, hydrogen in focus

The European Commission has approved, under EU State aid rules, a €3 billion German-Dutch scheme to support the production of renewable fuels of non-biological origin (RFNBOs), including renewable hydrogen, throughout the world.

As informed, Germany and the Netherlands intend to introduce a €3 billion scheme to cost-efficiently support RFNBO production. Germany will contribute €2.7 billion to the scheme and the Netherlands €300 million.

The construction of at least 1.875 GW of electrolysis capacity will be supported, the Commission revealed, adding that the aid will be awarded through a competitive bidding process planned to be concluded in 2025. The tenders, organized on a multi-regional basis, will be open to projects with an electrolyzer capacity of at least 5 MW.

The scheme is, reportedly, based on a double auction system, which brings together RFNBO producers, most of which will be in non-EU countries, and RFNBO buyers in Germany and the Netherlands. The Commission said that the companies offering to sell RFNBOs at the lowest price, and to buy RFNBOs at the highest price, will each be awarded a contract for the sale or purchase of the RFNBOs produced under the scheme, with State resources filling the funding gap between the two prices.

Beneficiaries will have to prove compliance with EU criteria for the production of RFNBOs, as set out in the delegated acts on renewable hydrogen.

According to the Commission, the scheme will contribute to meeting Germany’s and the Netherlands’ demand for RFNBOs from 2030 onwards and support the EU’s ambition for renewable hydrogen technologies to be deployed on a large scale from 2030 onwards. Germany and the Netherlands expect that the scheme will lead to up to 5.73 million tonnes of CO2 equivalent being avoided, which will contribute to Germany’s, the Netherlands’ and the EU’s climate targets.

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, commented: “In line with the future Clean Industrial Deal, this €3 billion German-Dutch scheme will help to address the increasing demand for renewable fuels in the EU by supporting their development throughout the world. It will lead to the creation of international value chains that will substantially reduce greenhouse gas emissions. 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.”

To note, this scheme follows a previous German scheme approved by the Commission in December 2021, to support investments in the production of renewable hydrogen in non-EU countries, to then be imported and sold in the EU.

It is also worth mentioning that, in June 2024, the Commission approved an estimated €3 billion German scheme to support the construction of the Hydrogen Core Network (HCN), which is set to be the backbone of long-distance transport pipelines for hydrogen in Germany and part of the European hydrogen backbone connecting several member states. The first major pipeline is expected to be operational as from 2025, while the completion of the entire HCN is expected in 2032.