EU green lights $232M German scheme to support Canadian renewable hydrogen

In Belgium, the European Commission has approved, under EU State aid rules, a €200 million German scheme to support the production in Canada of renewable hydrogen and its derivatives, known as renewable fuels of non-biological origin (RFNBOs). These RFNBOs will be imported to Germany and sold in the EU, contributing to the objectives of the Clean Industrial Deal, the EU Hydrogen Strategy, and the REPowerEU Plan to reduce dependence on Russian fossil fuels and accelerate the clean transition.

Germany notified the Commission of its intention to introduce a €200 million scheme to cost-efficiently support RFNBO production in Canada. This budget will unlock an additional €200 million of funding provided by Canada. RFNBOs are synthetic gaseous or liquid fuels derived from renewable electricity and carbon dioxide.

The scheme will support the construction of up to 300 MW of electrolysis capacity. The aid will be awarded through a competitive bidding process, planned to be concluded in 2027.

Germany expects that the scheme will lead to a total of up to 2.47 million tonnes of CO2 equivalent being avoided, which will also contribute to Germany fulfilling its EU climate targets.

The scheme is based on a double auction system, which brings together RFNBO producers in Canada, and RFNBO buyers in the EU. The companies offering to sell RFNBOs at the lowest price, and to buy RFNBOs at the highest price, will enter into a contractual relationship, with State resources helping to fill the funding gap between the two prices.