Brussels backs ‘crucial’ €5.4bn hydrogen project

Brussels has approved €5.4bn to fund a hydrogen project of “common European interest” as it seeks to diversify its energy sources amid fears of supply pressures and possible fuel rationing this winter.

The research and innovation project, jointly funded by 15 member states including France and Germany, was approved under state aid rules and is expected to unlock an extra €8bn in private investment, the European Commission said in a statement.

Margrethe Vestager, the EU’s executive vice-president in charge of competition policy, said the energy crisis and the war in Ukraine had focused minds, “making it really important that we accelerate what was planned already”.

Speaking to reporters on Friday, she said the project was “crucial because hydrogen technology has the potential to replace some of the fossil fuels that we see today”.

Thirty-five companies with activities in one or more member states, including Italy’s Fincantieri, France’s Alstom and Germany’s Daimler Truck, will take part in 41 schemes across the bloc.

“Today’s project is an example of truly ambitious European co-operation for a key common objective. It also shows how competition policy works hand in hand with breakthrough innovation,” Vestager said.

Given the sizeable amount of taxpayers’ money that will into these projects, regulators will make sure that the candidates for funding are developing “breakthrough innovation, that it is necessary, that’s proportional to the private investment and that it is the only way to make this happen”, she added.

Thierry Breton, the French commissioner for the internal market, said the boosting of hydrogen would lead to the creation of jobs and growth in the bloc. The new projects are expected to create in the region of 20,000 jobs, according to the EU executive.

He said: “We are not only supporting hydrogen through funding,” highlighting the development of “EU-wide rules for enabling the hydrogen market and creating dedicated infrastructure”.

Máximo Miccinilli, head of energy and climate at the consultancy FleishmanHillard, said the announcement would help kick off the massive investment needed for the EU to hit its green hydrogen targets.

“That said, even if significant, the future regulation and the impacts of the war and energy crisis in general will shape the appetite of investors to do it in Europe or elsewhere,” he said. “The road ahead is long, bumpy and very dependent on global macroeconomic conditions and how the eurozone will cope with it.”

The move by Brussels comes as Europe is seeking to secure enough energy supplies for the winter and to wean itself off Russian gas. However, the chief executive of Shell, Ben van Beurden, warned this week that Europe may have to ration energy during this winter, while French president Emmanuel Macron urged businesses, government agencies and households in France to do more to save energy.

Additional reporting by Neil Hume in London