Spain’s aspirations to become a green hydrogen powerhouse have received a significant boost with the European Union’s approval of substantial state aid. The European Commission has greenlit €1.2 billion in government support for Spain’s renewable hydrogen industry, a major step toward the country’s goal of leading the production of this environmentally friendly fuel.

The funding, drawn from Madrid’s share of the EU’s post-Covid-19 recovery fund, will be available to manufacturers with a capacity of 100 megawatts or more, supporting the development of “hydrogen valleys” across the country.

Green hydrogen, produced using renewable electricity, aligns perfectly with Spain’s vast untapped solar and wind energy potential. This electricity splits water into oxygen and hydrogen, the latter usable as a clean energy carrier or as a raw material for producing liquid fuels with a near-zero carbon footprint.

The government’s aid, to be disbursed through a competitive bidding process by the end of 2025, highlights the EU’s willingness to deviate from its strict state aid regulations when it aligns with key policy objectives like achieving a carbon-neutral economy, as long as it doesn’t unduly distort the single market.

European Commission VicePresident MargretheVestager, responsible for competition policy, stated that the Spanish scheme would accelerate the construction of green hydrogen production facilities in line with the EU’s strategic goals. Vestager added that the plan would also help Spain reduce its dependence on imported fossil fuels while minimizing potential competition distortions.

In its draft National Energy and Climate Plan for 2030, Spain has set a target of 11 gigawatts of electrolyzer capacity for green hydrogen production, the highest in Europe, with only Germany coming close at 10 gigawatts.