Commission approves €144 million French State aid to support HyforSeeds in the production of hydrogen

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The European Commission has approved, under EU State aid rules, a €144 million French measure to support HyforSeeds to produce renewable and low-carbon hydrogen for the fertiliser sector. The measure will contribute to achieving the targets of the EU Hydrogen Strategy and the Renewable Energy Directive for the use of hydrogen in industry.

The French measure

France notified to the Commission a €144 million measure to support HyforSeeds, a subsidiary of hydrogen production firm Hynamics. HyforSeeds’ project will install and operate a 50 MW renewable and low-carbon hydrogen production unit on the site of fertiliser and industrial chemicals producer LAT Nitrogen in the Ottmarsheim-Chalampé industrial zone, in Haut Rhin, France.

The project will contribute to the decarbonisation of the ammonia production process in the EU by replacing up to 15% of the hydrogen currently produced from fossil fuels by renewable and low-carbon hydrogen. The project is expected to reduce greenhouse gas emissions by at least 70% compared to traditional fossil-based hydrogen production methods, which will avoid the release of over 46,000 tonnes of CO₂ per year. The aid will take the form of a direct grant and will cover part of the investment costs related to the project, including the construction of the electrolyser and other necessary infrastructure.

The Commission’s assessment

The Commission assessed the French measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU, which enables Member States to grant aid to facilitate the development of certain economic activities subject to certain conditions, and the Guidelines on State aid for climate, environmental protection and energy.

The Commission found that:

• the measure will promote the development of a strategic economic activity, namely the production of renewable and low-carbon hydrogen, a key component of the EU’s energy transition and climate objectives;
• the aid has an ‘incentive effect’, as the beneficiary would not carry out these investments without public support;
• the measure has a limited impact on competition and trade within the EU. It is necessary and appropriate because it generates significant environmental benefits, including the reduction of greenhouse gas emissions. In addition, it is aligned with the EU’s energy and climate policies, including the Renewable Energy Directive and the EU’s hydrogen strategy;
• the aid is proportionate and limited to the minimum necessary to achieve the desired environmental and climate benefits, based on a proven funding.
• HyforSeeds has agreed to share with France potential project-related profits beyond current expectations.

Background

The EU has set ambitious climate and environmental objectives, including becoming climate-neutral by 2050. To achieve these objectives, the EU needs to support the development of new, innovative technologies, such as renewable and low-carbon hydrogen production.

The EU Climate and Energy Framework sets out a range of targets and policies to reduce greenhouse gas emissions and to increase the use of renewable energy.

The Commission’s hydrogen strategy aims to support the development of a comprehensive hydrogen economy in Europe and to reduce greenhouse gas emissions in the energy, transportation, and industry sectors hydrogen economy in Europe.

The Renewable Energy Directive sets targets for the uptake of renewable fuels of non-biological origin in transport and industry. By 2030, they are expected to account for at least 1% of total energy supplied to the transport sector, and at least 42% of all hydrogen used in industry, increasing to 60% in 2035.

For more information

The non-confidential version of the decision will be made available under the case number SA.102874 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.