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.
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 not be allowed to increase their production capacity more than 2%.
The Italian plan comes after the EU finally signed off its flagship Renewable Energy Directive III (RED III) last year, which will force member states to ensure that at least 42.5% of the hydrogen used in industrial processes is renewable by 2030.
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.
“The measure will also help Italy to reduce its dependence on imported fossil fuels, in line with the REPowerEU Plan, and ensure a full switch to hydrogen by 2036 in all supported investments.”