Commission endorses French 68 million R&D aid to hydrogen energy programme "H2E"
The European Commission has endorsed under EC Treaty state aid rules a 68 million aid that France plans to grant to Air Liquide, its subsidiary Axane and other partners for the development of a hydrogen energy chain (programme "H2E"). The programme, selected by the French Industrial Innovation Agency, aims at promoting sustainable and diversified sources of energy, in line with EU objectives. Indeed, the EU supports the development of hydrogen energy through the European Hydrogen & Fuel Cell Technology Platform and the Joint Technology Initiative on Hydrogen. The proposed aid would entail important positive effects in terms of knowledge dissemination and environmental externalities while at the same time having a limited impact on competition.
EU Competition Commissioner Neelie Kroes said: The Commission consistently promotes alternative and less polluting energies. H2E fits in with our approach and the proposed subsidy does not unduly distort competition. Such aid schemes are fully consistent with the Commission's own support programmes on hydrogen energy."
France plans to grant 68 million aid to Air Liquide, its subsidiary Axane and 17 other public and private partners in the form of grants and repayable advances. The eligible costs for the purpose of calculating the permissible aid ceiling amount to 190 million. The programme is within the framework of the French Industrial Innovation Agency aid scheme, which the Commission approved on 19 July 2006 (see IP/06/1020). It had to be notified to the Commission for individual assessment because of the high aid amount involved.
H2E aims at integrating all the elements necessary to build a hydrogen energy market. The programme only targets early markets (such as isolated sites, back up power supply, special vehicles and mobile electric equipment), where hydrogen energy may be more suitable than current solutions. It complements other on-going research programmes in the EU. The European Commission has for instance set up a Fuel Cells and Hydrogen Joint Technology Initiative (see IP/07/1468).
The most important innovations envisaged are the production of hydrogen through electrolysis of water, instead of natural gas, using decentralised small plants, the higher storage capacity of hydrogen containers and the development of a new generation of fuel cells, which will be considerably improved. The programme also aims at improving the security and user friendliness of these technologies.
Market failures exist in every segment of the hydrogen energy chain (production, storage and distribution), where companies are reluctant to invest because of the high risks in a yet undeveloped market. When the market is unable to trigger R&D activity, well targeted state aid can create the right incentives for companies. In the case of H2E, the Commission found that the planned aid will give the beneficiaries the incentive to launch the programme, which they would not have undertaken without public support. Moreover, the Commission found that the aid is proportionate and that it will not distort competition in way that is contrary to common interest. Given the limited size of the targeted markets, the penetration rate foreseen by Air Liquide and their development perspectives, there is no risk of crowding out competitors.
The non-confidential version of the decision will be made available under the case number N 1/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
Published on: 2008-10-08
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