The European Commission has approved a €3 billion German scheme to support the construction of the Hydrogen Core Network (HCN) under EU State aid rules. This initiative aligns with the objectives of the EU Hydrogen Strategy and the ‘Fit for 55’ package, aiming to establish a hydrogen transmission infrastructure to boost the use of renewable hydrogen in industry and transport by 2030.
The scheme involves a dual approach: repurposing existing gas pipelines for hydrogen transport and constructing new hydrogen pipelines and compressor stations. The Hydrogen Core Network, as a pivotal element of the European hydrogen backbone, will connect Germany to several EU Member States, enhancing long-distance hydrogen transport.
Financing for the HCN construction and operation will come from hydrogen transmission system operators (TSOs), selected by the German federal network agency, Bundesnetzagentur. These operators will benefit from state guarantees, allowing them to secure favorable loans from the Kreditanstalt für Wiederaufbau (KfW) at below-market rates, covering initial operational losses during the ramp-up phase.
The Commission assessed this aid under the EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the European Union, which permits Member States to support certain economic activities under specific conditions. The aid measure was found to be necessary, appropriate, and proportionate, facilitating the development of an essential economic activity without unduly distorting competition.
The aid’s positive effects are deemed to outweigh any potential negative impacts, supporting the EU’s broader goals outlined in the European Green Deal and contributing significantly to the region’s climate targets. The full implementation of the HCN by 2032 is set to play a critical role in the EU’s transition to a sustainable energy future.
The Commission found that:
- The measure facilitates the development of an economic activity, in particular the construction and operation of the hydrogen transmission network. In addition, the scheme is necessary and appropriate to speed up investments in hydrogen transmission infrastructure. At the same time, it supports the objectives of key EU policy initiatives such as the European Green Deal and the ‘Fit for 55′ package.
- The scheme is proportionate, as the level of the aid corresponds to the effective financing needs while safeguards limit the aid to the minimum.
- The aid has an incentive effect, as the supported infrastructure would not be financially viable without the public support, in particular in view of the uncertainty about the prospects of the future market for hydrogen.
- The aid brings about positive effects which outweigh any potential distortion to competition and trade in the EU.
“A core network of pipelines to transport hydrogen is crucial to trigger investments in hydrogen production and consumption, and can help accelerate the green transition. The German scheme approved today will significantly contribute to the development of a European hydrogen market while minimising any potential distortions to competition.”
Margrethe Vestager, Executive Vice-President in charge of competition policy
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