The European Commission has approved approximately 3 billion euros ($3.2 billion) in planned German state aid for the construction of a system of hydrogen pipelines known as the Hydrogen Core Network (HCN).
The financial support will come in the form of government guarantees to help companies that build and operate the 20 billion euro network obtain more favorable loans to cover initial losses during the ramp-up phase from 2025.
The Commission determined that the benefits of encouraging the uptake of hydrogen, which can be generated from renewable energy sources like wind and solar, outweigh any potential distortions to EU competition and trade that may arise from the scheme.
Germany’s ruling coalition agreed in April to the financing mechanism and extended the construction deadline by five years to 2037, while also offering protection for investors in case of bankruptcy.
Hydrogen is widely seen as a crucial energy source for decarbonizing hard-to-abate sectors, such as heavy industry, where electrification may not be a feasible option. The German pipeline network aims to connect wind power parks in the north to industrial centers in the south, allowing for the distribution of this green hydrogen.
The planned network will encompass more than 9,700 km (6,000 miles) of hydrogen pipelines, with existing natural gas transmission infrastructure making up 60% of the system. Future private sector network operators will seek to recover their investment through user fees.
This EU-approved support for Germany’s hydrogen infrastructure development is a significant step in the continent’s efforts to transition towards a more sustainable energy future and meet its ambitious climate goals.