Spain’s ambition to become a major producer of “green” hydrogen – seen as a key part of Europe’s transition away from fossil fuels – has moved a step closer to reality with the approval of significant state aid by the EU.
European Commission competition officials have given the green light to 1.2 billion euros in government support for Spain’s burgeoning renewable hydrogen industry, boosting the country’s ambitions to become a major producer of the climate-friendly fuel.
Under a program to be fully financed by Madrid’s share of the EU recovery fund created after the Covid pandemic, generating plants with a capacity of 100 megawatts or more can apply for state aid to develop “hydrogen valleys” across the country.
Green hydrogen is produced by using renewable electricity (Spain has a large untapped potential to increase solar and wind energy production) to split water into its oxygen and hydrogen components, which can be used directly as an energy carrier or as feedstock for synthetic energy production. can liquid fuels with a near-zero carbon footprint.
State aid will be paid through a competitive tender system until the end of 2025. The EU allows exceptions to the generally strict ban on domestic support for domestic industry where it promotes the EU’s main policy objectives – in this case the transition to a net-zero emissions economy – without unduly distorting the common market.
Margrethe Vestager, vice-president of the Commission for competition policy, said that the Spanish program will accelerate the construction of green hydrogen production facilities in line with the EU’s strategic goals.
“This program will also help Spain reduce its dependence on imported fossil fuels, while minimizing possible distortions of competition,” said Margrethe Vestager.
Spain’s 11 gigawatt electrolyser target for green hydrogen production in the draft national energy-climate plan that all EU members must produce by 2030, which is now nearing completion, was the highest in Europe, with only Germany coming close. Up to 10 GW.
The EU’s current production target is 10 million tonnes of green hydrogen per year by 2030, although EU auditors warned last week that this target was unrealistic.
Brussels-based trade association Hydrogen Europe, whose members range from oil multinationals seeking to produce hydrogen from natural gas to wind turbine manufacturers, welcomed the EU’s approval of the Spanish support package.
Jorgo Chatzimarkakis, CEO of the pressure group, told L’Observatoire de l’Europe that “the Spanish announcement is further proof that the Iberian Peninsula is on the way to becoming a giant in the hydrogen economy.”
“It is very promising that Teresa Ribera, the Spanish deputy prime minister who proposed these plans, will probably become the European commissioner for climate or energy,” added the former German parliamentarian.