Italy to spend €550m to help industrial giants switch from fossil fuels to green hydrogen
Direct grants aim to slash industrial emissions by at least 40% compared to today
Italy has been cleared to hand out up to €550m ($596m) of direct grants to help its industrial giants switch to green hydrogen — as both a chemical feedstock and energy source — instead of using polluting fossil fuels.
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The EU yesterday (Tuesday) gave state-aid approval to the programme, which envisages the Italian government handing out direct grants of up to €200m per beneficiary in the industrial sector, including the production of chemicals, fertiliser and steel, and oil refining.
The cash, which will be distributed as part of Italy’s EU-funded €194bn National Recovery and Resilience Plan, must be used to shift the use of fossil fuel-based feedstocks or energy sources to renewable hydrogen.
However, the grants can be combined with wider electrification of industrial assets, along with energy efficiency improvements.
This means that, for example, a steel plant will be able to use the funds to invest both in hydrogen-based direct-reduced iron (DRI) production and electric arc furnaces.
Grants will be delivered no later than the end of 2025, must also achieve greenhouse gas emissions reductions of at least 40%, or energy efficiency improvements of 20%, compared to current levels.
Furthermore, beneficiaries will have to ensure that the plant is using 40% renewable hydrogen (calculated in terms of energy value rather than volume) as either energy or feedstock from the outset, rising to 75% by 2032 and 100% by 2036. They will also not be allowed to increase their production capacity more than 2%.
This figure rises sharply to 60% by 2035.
“This €550m Italian scheme will help industries to significantly decarbonise industrial processes that depend on a switch to hydrogen for their green transition,” said Margrethe Vestager, the EC’s executive vice-president in charge of competition policy.