EC clears EUR 3bn of German state aid for hydrogen transmission

The European Commission (EC) on Friday said it has cleared a EUR-3-billion (USD 3.21bn) German state aid scheme to support the establishment by 2030 of infrastructure for the transmission of renewable hydrogen.

The so-called Hydrogen Core Network (HCN) is planned as the backbone of long-distance hydrogen transport pipelines in Germany and part of the backbone connecting several EU member states. The funds will be used to repurpose existing gas pipelines and build new ones along with compressor stations.

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The first major pipeline is set to be operational as of 2025. the entire HCN project is expected to be completed in 2032

The financial package will be allocated in the form of a state guarantee that will be provided to hydrogen transmission system operators (TSOs) which will be involved in the construction and operation of the HCN. The TSOs, to be selected by the German state, will enjoy more favourable loans to cover initial losses in the ramp-up phase of the HCN.

The funds will be distributed by national promotional bank Kreditanstalt für Wiederaufbau (KfW), at its own refinancing cost and below market rates. The allocated amount corresponds to the additional financing costs that the TSOs would have had to bear without the state guarantee. It will be paid back over a period ending in 2055.

The measure will contribute to the achievement of the objectives of the EU Hydrogen Strategy and the Fit for 55 package.

(EUR 1 = USD 1.072)