The European Commission has approved a €200 million German state aid scheme to support the production of renewable hydrogen and its derivatives, known as renewable fuels of non-biological origin (RFNBOs), in Canada. The fuels will be imported to Germany and sold across the EU, contributing to the Clean Industrial Deal, EU Hydrogen Strategy, and REPowerEU Plan.

The German scheme will fund up to 300 MW of electrolysis capacity in Canada and will be implemented through a competitive bidding process, expected to conclude in 2027. Germany expects the programme to prevent up to 2.47 million tonnes of CO2 equivalent emissions, helping the country meet EU climate targets.

The scheme uses a double auction system, matching Canadian producers with EU buyers. State funding will bridge the gap between the lowest selling price and the highest buying price, with beneficiaries required to comply with EU RFNBO production standards.

The European Commission assessed the measure under EU State aid rules and the 2022 Climate, Energy and Environmental Aid Guidelines (CEEAG). The Commission found that the scheme is necessary to support RFNBO production, includes safeguards to limit competition distortions, and provides a clear incentive for investment.

This scheme follows similar German programmes approved in December 2021 and December 2024, which also supported renewable hydrogen production outside the EU for import into the bloc.

Teresa Ribera, EU Executive Vice-President for Clean, Just and Competitive Transition, said: “This German scheme will help to meet growing demand for renewable fuels in the EU and support the development of renewable fuel production in our valued trade partner Canada. It builds on the success of the EU-Canada Comprehensive and Economic Trade Agreement, the Strategic Partnership on Raw Materials, and the EU-Canada Industrial Policy Dialogue. The design of the scheme will enable only the most cost-effective projects to be supported, thereby reducing costs for taxpayers and minimising possible distortions of competition.”