Denmark: European Commission greenlights two Danish Schemes supporting sustainability technologies

The European Commission has recently approved two Danish state aid schemes:

• A €170 million scheme to support the production of renewable hydrogen through Power-to-X technologies (“The PtX Scheme”); and
• A €1.1 billion scheme to support the roll-out of carbon capture and storage technologies (“The CSS Scheme”).

The approvals by the European Commission are in line with the objectives targeted in the European Green Deal and the 2022 Guidelines on State aid for climate, environmental protection and energy (“CEEAG”). For further information on the CEEAG and the European Green Deal please refer to our previous article on State aid and sustainability.

The PtX Scheme

The purpose of the PtX Scheme is to support the upscaling of the production of renewable hydrogen in Denmark. It is estimated that the scheme will support the construction of up to 100-200 MW of electrolysis capacity and thereby reduce greenhouse gas emissions by approximately 70,000 tonnes of carbon dioxide (“CO2”) annually.

The aid will be awarded through a bidding process in 2023. This process will be open to all companies planning to construct new electrolysers in Denmark.

The CCS Scheme

The CCS Scheme aims to promote the roll-out of CCS technologies used to reduce CO2 emissions by financially supporting CCS, thus increasing the confidence of investors in CCS technology, reduce costs for future application of CCS technologies, and ultimately facilitate the development of a commercial CCS market in Denmark.

The aid will be awarded through a competitive tendering procedure in 2023, which will be open to companies active in any industrial sector. The beneficiary will be awarded a 20-year contract, requiring the beneficiary to capture and store an annual minimum of 0.4 million tonnes of CO2 as of from 2026.

The European Commission’s assessment

The schemes were both assessed, and subsequently approved, under Article 107(3)(c) TFEU, which enables Member States to support development of certain economic activities under certain conditions, including those set out in the CEEAG.

In its review, the European Commission considered that both schemes were both necessary and appropriate to, respectively, facilitate the production of renewable hydrogen and support the reduction of greenhouse gas emissions.

Further, the European Commission considered that the measures have incentive effects, as the beneficiaries would not carry out the relevant investments without such public support.

Finally, the European Commission found that the schemes would have a limited impact on competition and trade within the EU and that the positive effects arising from these schemes (in particular those on the environment) would outweigh any possible negative effects on competition.

For more information, please contact Morten Nissen, Alexander Brøchner or Nanna Sofie Krabbe

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