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EU Approves $3.2 Billion German Aid for Hydrogen Pipeline Network

The European Commission has allowed Germany to grant $3.2 billion (3 billion euros) in state aid to support the construction of a pipeline system for hydrogen transportation.

The European Commission said on Friday that it had approved, under EU State aid rules, the German scheme to support the construction of the Hydrogen Core Network (HCN). The network is expected to be the backbone of long-distance transport pipelines for hydrogen in Germany and part of the European hydrogen backbone connecting several EU member states.

The German state aid is set to contribute to the achievement of the objectives of the EU Hydrogen Strategy and 'Fit for 55' package, by enabling the creation of hydrogen transmission infrastructure that is needed to foster the use of renewable hydrogen in industry and transport by 2030, the Commission said.

The investment will include the repurposing of existing gas pipelines to transport hydrogen, and building new hydrogen pipelines and compressor stations.

The construction and operation of the HCN will be financed by hydrogen transmission system operators (TSOs), who will be selected by the German federal network agency, Bundesnetzagentur. The aid will take the form of a State guarantee which will allow the TSOs to obtain more favorable loans to cover initial losses in the ramp-up phase of the HCN.

The first major pipeline of the network is set to be operational in 2025, while the completion of the entire HCN is expected in 2032.

Germany bets on hydrogen to decarbonize its economy, and Germany’s state-controlled firm Securing Energy for Europe (Sefe) said earlier this year that it plans to invest around $534 million (500 million euros) in repurposing some of its underground gas storage sites and gas pipelines into infrastructure fit for storing and transporting green hydrogen.

In December, Sefe and Equinor signed one of the biggest-ever natural supply deals for Norway’s energy giant worth an estimated $54 billion (50 billion euros). The agreement also included a non-binding letter of intent with the intention that Sefe will become a long-term off-taker of giga-scale, low-carbon hydrogen supplies from Equinor starting in 2029 and continuing towards 2060.

By Tsvetana Paraskova for Oilprice.com

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