Commission approves €140 million Portuguese State aid scheme to support the production of renewable hydrogen and biomethane to foster the transition to a net-zero economy

The European Commission has approved a €140 million Portuguese scheme to support the production of renewable hydrogen and biomethane to foster the transition to a net-zero economy, in line with the Green Deal Industrial Plan. The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 and amended on 20 November 2023, to support measures in sectors which are key to accelerate the green transition and reduce fuel dependencies.

Under the scheme, the aid will take form of a variable premium under a two-way contract for difference concluded for a duration of 10 years. The aid is awarded through a competitive bidding process where renewable hydrogen producers and biomethane producers compete separately. In the competitive bidding process, beneficiaries are selected on the basis of the strike price per MWh of renewable hydrogen or biomethane offered.

The Commission found that the Portuguese scheme is in line with the conditions set out in the Temporary Crisis and Transition Framework. In particular, the aid (i) will be granted on the basis of a scheme with an estimated capacity volume and budget; (ii) will take the form a two-way contract for difference and (iii) will be granted no later than 31 December 2025. Furthermore, the aid is subject to conditions to limit undue distortions of competition, including safeguards to guarantee the competitiveness of the bidding procedure. The Commission concluded that the scheme is necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance to implement the REPower EU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework. On this basis, the Commission approved the scheme under EU State aid rules.

More information on the Temporary Crisis and Transition Framework and other actions taken by the Commission to address the economic impact of Russia’s war against Ukraine and foster the transition towards a net-zero economy can be found here. The non-confidential version of the decision will be made available under the case number SA.109042 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved.