EU approves €700 million in hydrogen aid across Italy, Finland and Lithuania

The European Commission has approved more than €700 million in hydrogen investments from the governments of Italy, Finland and Lithuania.

The approval, which came as part of wide raging approvals for different countries' energy initiatives, including natural gas purchase and port construction, includes €400 million in Italian state aid and €200 million in Finnish funds that aim to support investments in decarbonization of industrial production processes, and €122 million for Lithuania to decarbonize a fertilizer company's production by setting up a electrolyzer to produce green hydrogen for use in making ammonia.

Italy is offering direct grants and subsidized loans to companies that undertake investments for switching to renewable hydrogen; or renewable hydrogen-derived fuels; or electrify their industrial processes to reduce consumption of fossil fuels; or undertake investments that lead to significant improvements in energy efficiency.

The Finnish scheme supports the production of renewable fuels of non-biological origin and promotes deployment of energy storage to support the country's transition towards a net zero economy.

The purpose of the scheme is to accelerate investments in the production of renewable fuels of non-biological origin and in the deployment of energy storage facilities, with a view to support the clean energy transition and reduce dependence on Russian fossil fuels.

Finland too is offering direct grants to applicants. The funds will be open to all sectors except the financial sector, although aid is capped at 45 percent of the investment cost of the project.

From Lithuania, the commission approved a measure to offer €122 million in state aid to fertilizer company AB Achema for decarbonizing its production.

Lithuania's government is helping the company switch its fertilizer production processes from fossil-based hydrogen to green or renewable and low-carbon hydrogen.

The aid will take form of a direct grant that will support the installation a 171 MW alkaline electrolyzer at AB Achema's production site in the Kaunas region of Lithuania. Currently, the company uses natural gas-based hydrogen to produce ammonia, a key input in the production of fertilizers. The electrolyzer it installs will produce renewable and low-carbon hydrogen that will be used to produce ammonia, thus decarbonizing the production process.

"The hydrogen produced by the electrolyzer will replace 30 percent of the hydrogen currently produced from natural gas, thereby reducing carbon dioxide (CO2) emissions and demand for natural gas," the commission noted in its release, adding: "The electrolyzer is envisaged to start operating in 2026. Once completed, the project is expected to avoid the release of at least 5.8 million tonnes of CO2 over the 19 years of expected operation of the electrolyzer."