European Commission Approves French Scheme to Boost Renewable and Low-Carbon Hydrogen Production

The European Commission has approved a French state aid scheme to support the production of renewable and low-carbon hydrogen, in line with the EU Hydrogen Strategy, the Clean Industrial Deal, and the REPowerEU Plan aimed at reducing dependence on Russian fossil fuels.

The scheme, notified to the Commission by France, will support the construction of 1 GW of hydrogen electrolysis capacity, with aid awarded through a competitive bidding process across three tender rounds. The first round, covering 200 MW, has an estimated budget of €797 million. Hydrogen produced under the scheme will be sold exclusively for direct industrial use, targeting sectors where electrification is not economically viable.

Aid will take the form of a fixed premium, with contracts valid for 15 years. Beneficiaries must comply with EU criteria for renewable fuels of non-biological origin (RFNBO) and low-carbon fuels. The scheme offsets the higher electricity costs of renewable hydrogen compared with fossil-based hydrogen.

The initiative forms part of France’s plan to achieve 4.5 GW of electrolyser capacity by 2030 and 8 GW by 2035, and is expected to avoid up to 1,100 kilotons of CO₂ emissions annually, contributing to France’s EU climate commitments.

The European Commission assessed the scheme under Article 107(3)(c) of the Treaty on the Functioning of the EU and the 2022 Guidelines on State Aid for Climate, Environmental Protection, and Energy (CEEAG). The Commission concluded that the aid is necessary, has a clear incentive effect, and is limited to the minimum required, while generating positive environmental impacts that outweigh potential competition distortions.

The scheme is also aligned with the revised 2023 Renewable Energy Directive, which sets an EU-wide binding renewable energy target of at least 42.5% by 2030, aiming for 45%, and establishes strict criteria for renewable hydrogen to ensure significant emission reductions across its value chain.

The approval reflects France’s commitment to scaling up clean hydrogen production, supporting industrial decarbonisation, and accelerating the EU’s transition to a low-carbon energy system.