EU approves 6B Italian renewable hydrogen scheme

The European Commission has approved a €6 billion Italian State aid scheme aimed at accelerating the production of renewable hydrogen for transport and industrial use. The measure is designed to boost domestic hydrogen capacity while helping Italy meet broader EU climate and energy targets.

For electronics and energy technology stakeholders, the scheme signals significant new demand for electrolysers, power electronics, and hydrogen infrastructure across Europe’s supply chain. It also highlights how EU policy is increasingly shaping investment in clean energy technologies that depend on advanced semiconductor and power systems.

Italy’s program is expected to support the production of around 200,000 tons of renewable hydrogen per year, targeting sectors where electrification alone may not be sufficient to reduce emissions.

Eligible hydrogen includes both hydrogen generated through electrolysis powered by renewable electricity and hydrogen produced from biogenic sources using biological, bio-thermochemical, and thermochemical processes. The initiative forms part of broader European efforts to scale clean hydrogen production as a substitute for fossil fuels in heavy industry and transport.

To allocate funding, the Italian government will use two-way contracts for difference (CfD). Under this mechanism, a strike price for hydrogen will be determined through a competitive bidding process.

If the market price of the alternative fuel used by hydrogen consumers falls below the agreed strike price, the government will compensate producers for the difference. If the alternative fuel price rises above the strike price, producers must return the difference to the Italian state. The scheme is scheduled to run until 31 December 2029.

The Commission assessed the measure under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the EU and the 2022 Guidelines on State aid for climate, environmental protection and energy (CEEAG).

According to the Commission, the support mechanism is necessary to stimulate renewable hydrogen production, as projects would likely not proceed without public financial backing. The competitive bidding process was also seen as ensuring that funding remains proportionate and cost-effective.

The Commission concluded that the environmental benefits — particularly emissions reductions in high-carbon sectors — outweigh potential competition distortions within the internal market.

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said: “This scheme will support the production of renewable hydrogen in Italy for sectors where it can contribute the most to reducing emissions. The scheme will contribute to the clean, just and competitive transition.”

The approval aligns with the EU’s broader Hydrogen Strategy, introduced in 2020 to accelerate the deployment of clean hydrogen technologies across the region.

The strategy set ambitious goals for hydrogen production and established the European Clean Hydrogen Alliance, which brings together industry, public authorities, and research organizations to develop the emerging hydrogen ecosystem.

For European technology suppliers, Italy’s program is another indicator that public funding mechanisms will play a central role in scaling hydrogen infrastructure and the associated electronics, power conversion, and energy management technologies needed to support it.