IPCEI Hy2Infra Wins Seven Billion Euro Subsidy to Accelerate EU’s Hydrogen Infrastructure
The EUR 6.9 billion State aid as public funding was approved by the European Commission to support the development of an integrated renewable hydrogen infrastructure across Europe, under project “IPCEI Hy2Infra”. This funding is intended to help investors overcome financial risks to develop large-scale infrastructure projects, leverage private investment, and promote knowledge sharing and innovation in the hydrogen sector.
IPCEI Hy2Infra, endorsed by seven Member States: France, Germany, Italy, the Netherlands, Poland, Portugal, and Slovakia, encompassed 33 projects by 32 companies, including five small and medium-sized enterprises (SMEs). The participating Member States will pledge up to EUR 6.9 billion in public support, of the total scheme worth slightly over EUR 12 billion.
The initiative aims to enhance Europe's hydrogen infrastructure by establishing regional clusters and setting standards for future connections. It supplements what is not covered in the first two IPCEIs Hydrogen, namely “IPCEI Hy2Tech”, focusing on hydrogen technologies for end users, and “IPCEI Hy2Use”, supporting hydrogen applications in the industrial sector.
Key development areas of IPCEI Hy2Infra include scaling up large electrolysers and constructing hydrogen pipelines and storage facilities. Furthermore, it contains the development of terminal and port infrastructure for liquid organic hydrogen carriers (LOHC).
The overall completion of the IPCEI Hy2Infra scheme is scheduled for 2029, with various components phased differently. While some projects are planned to be executed shortly, large-scale electrolysers are expected to be operational between 2026 and 2028. The construction of hydrogen transmission and distribution pipelines is slated for 2027 to 2029 with timelines varying by region.
Market Impact
The EUR 6.9 billion in public funding approved by the Commission would help to lower the financial risks for investors associated with pioneering, highly interconnected hydrogen projects. It will also help ease some of the inflationary pressure, observed over the last few years, for developing hydrogen-related projects. The state aid for such projects as IPCEI Hy2Infra would attract additional investments from the private sector. The commission has anticipated this initiative would encourage up to EUR 5.4 billion in private investments. Significantly, the scheme will boost investments in essential, capital-intensive EU-wide hydrogen infrastructure.
The Commission's evaluation emphasises the importance of ensuring open and non-discriminatory access, given that participants are required to collaborate on interoperability and common standards to eliminate barriers and promote future market integration. Consequently, this approach will encourage broader stakeholder engagement, advance the development of cross-border operational rules and standardisation, and facilitate knowledge sharing, ultimately benefiting the wider European hydrogen market.
While public funding can accelerate the development of crucial infrastructure projects, reliance on public funding for project developers could lead to inefficiencies and reduce the incentive for projects to become economically viable. In addition, State aid might distort the market by offering certain projects or technologies an undue advantage over competitors.
In addition, one of the key hurdles for the hydrogen economy lies on the demand side, where the current consumption of renewable hydrogen is emerging slowly and remains concentrated within specific industries. The effectiveness of initiatives like IPCEI Hy2Infra relies on the government's ability to both stimulate demand for renewable hydrogen and ensure producers, suppliers, and consumers have efficient access to the necessary infrastructure.