Remarks by Executive Vice-President Vestager on Important Project of Common European Interest in the hydrogen technology value chain

Today, the Commission has approved “IPCEI Hy2Tech”, the first ever Important Project of Common European Interest in the hydrogen sector.

The project aims at developing innovative technologies for the hydrogen value chain to decarbonise industrial processes and mobility. It involves 35 companies and 41 projects from 15 Member States: Austria, Belgium, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Italy, the Netherlands, Poland, Portugal, Slovakia and Spain.

Hydrogen has a huge potential going forward. Russia’s unprovoked and unjustified military aggression against Ukraine has only underlined the need for Europe to diversify its energy sources and fast-forward the green transition. Among the many technologies required, hydrogen proves to be an indispensable component.

Currently, there is no established hydrogen market in Europe. This makes it risky for companies or even Member States to invest alone in such innovative technologies. That is where State aid has a role to play to unlock, crowd-in and leverage substantial private investments that would otherwise not materialise.

State aid rules for IPCEI allow Member States to pool resources and cooperate. They bring together knowledge, expertise, financial resources and economic actors. They enable breakthrough innovation in key sectors and technologies, where the market would not deliver, and ensure positive spill-overs for the EU economy while preserving fair competition.

Our assessment focused on four key elements:

First, the entire IPCEI must contribute concretely and significantly to one or more EU objectives. The IPCEI Hy2Tech contributes to the EU’s decarbonisation targets, as laid down in the EU Climate Law. It also contributes to the REPowerEU Plan, playing its part to diversify energy supplies and moving away from Russian fossil fuels.

Second, we make sure that the IPCEI Hy2Tech generates positive spill-over effects across the EU. Results of the research and development, which are not protected by intellectual property rights, will be widely disseminated. Results protected by intellectual property rights will be licensed on fair, reasonable, and non-discriminatory terms. That is to the benefit of companies which are not part of the IPCEI.

Third, all individual projects must aim at breakthrough innovation: we conducted a technical assessment for all 41 projects to determine whether each project complies with the innovativeness requirements going beyond the global state-of-the-art.

Fourth, companies can only receive what is necessary for the project to happen. Potential competition distortions must be minimised:

So, we have verified that the approved State aid per beneficiary is not higher than the eligible costs and the so-called funding gap. This is the difference between the positive and negative cash flows over the lifetime of the investement.

As a safeguard to public funds, Member States have also agreed to put in place a claw-back mechanism for those projects receiving large amounts of aid. The claw-back would kick-in if the project generates extra net revenues beyond projections. In such case the companies will return to the respective Member States part of the money received.

The Commission’s assessment is key to make sure that taxpayers’ money is spent wisely. Only the truly innovative projects are supported, and only those that, without public support, would not take place. And even for these projects, we need to make sure that the public support does not lead to overcompensation and does not crowd out, but rather crowds in, private investments.

In this case, the Commission has authorised under the State aid rules up to 5.4 billion euros of aid.  And this public support will crowd in another 8.8 billion euros of private investments. The Commission’s scrutiny has halved the potential aid that could be granted under this IPCEI.

Participation in this project is impressive: 35 companies from 15 Member States will participate in 41 projects. These are both well-known large industrial players, such as Symbio, Arkema, Daimler Truck and Ansaldo, but also small and medium enterprises and start-ups, such as Advent, H2B2 and McPhy. They will engage in additional collaborations with over 300 indirect partners all over Europe, including universities and research organisations.

The project is structured in four technology fields, concerning generation of hydrogen, fuel cells, storage, transportation and distribution of hydrogen, and end-users applications:

• First, the development of hydrogen generation technologies. To give a concrete example, Elcogen, an Estonian SME, will develop an electrolyser with a reduced amount of critical raw materials and an optimised manufacturing process.
• Second, the development of hydrogen fuel cell technologies, which use hydrogen to generate electricity. For instance, Nedstack, a Dutch SME, will develop fuel cells for fixed and maritime use.  This will increase fuel cells’ efficiency and applicability.

• Third, the development of technologies for hydrogen storage, transportation and distribution. As an example, the French company Arkema will develop and produce materials for hydrogen tanks with bio-based inputs. This can drastically reduce the manufacturing time and cost, while being fully recyclable and increasing safety.
• Fourth, the development of technologies for end-users across a number of applications, in particular in the mobility sector, such as heavy-duty trucks, trains and ships. But also in energy systems, in which hydrogen can serve as a stabilising reserve. To give an example, Daimler Truck aims at creating trucks powered by liquid hydrogen.

To conclude, and give you a bit of perspective, this is the fourth project to receive green light under the State aid framework for Important Projects of Common European Interest.

IPCEIs are an example of truly ambitious European cooperation, where companies, Member States and the Commission play their role to reach a common objective. We know that Member States are actively working towards designing other projects both relating to the hydrogen value chain, as well as for other key technologies. As always, the Commission stands ready to support their plans, provide guidance and coordinate efforts, while protecting the level playing field. Because IPCEIs are not meant for general support schemes for which other State aid rules may be better suited.

The total investments under the IPCEI Hy2Tech are expected to be almost 14.2 billion euros. These funds will allow the development and first industrial deployment of breakthrough technologies in the hydrogen value chain. Boosting innovation and first industrial deployment of such breakthrough technologies is part of the EU’s contribution to a more resilient, greener and digital future.