The National Council passed the “Federal Act on the Funding of the Production of Renewable Hydrogen of Non-Biogenic Origin (Hydrogen Funding Act - WFöG)” and published it in Article 1 of Federal Law Gazette I No. 69/2024. The WFöG, with which a funding volume of EUR 820 million was provided, thus came into force on July 5, 2024.

The WFöG lays down provisions for funding the construction and operation of new production plants for the production of renewable hydrogen of non-biogenic origin in order to support the goal of climate neutrality and the objectives of the Austrian hydrogen strategy and to increase the share of renewable hydrogen in Austria. The subsidies will be awarded in competitive auctions in the years 2024 to 2026 and comprise a maximum total volume of 820 million euros. They will be granted in the form of a fixed premium as a supplement per unit of renewable hydrogen of non-biogenic origin produced for a period of ten years. The plants must be located on Austrian territory.

Investors should note that the payment of the annual subsidies for the produced hydrogen requires the actual commissioning of the plant or the start of production. Competitive auctions must be held in advance and a funding agreement concluded. The corresponding lead and construction times must be taken into account in the financing plan. Austria Wirtschaftsservice GmbH (aws) acts as the processing office, concludes the funding agreements, checks verifications and makes payments. According to § 7 WFöG, the Minister for climate protection and Finance Minister are responsible for defining the procedural and payment modalities in separate guidelines.

Germany, France, Italy, the Netherlands, Poland, Portugal and Slovakia have recently taken a strong initiative in the expansion of hydrogen infrastructure by jointly preparing a third “Important Project of Common European Interest” (“IPCEI Hy2Infra”) and submitting it to the EU Commission for approval under state aid law. These member states intend to provide up to 6.9 billion euros in public funds, which should mobilize additional private investment of 5.4 billion euros. Under this IPCEI, 32 companies operating in one or more Member States, including small and medium-sized enterprises (SMEs), will participate in 33 projects. The projects are expected to be fully completed in 2029, with the specific timing varying depending on the project and company.

The IPCEI Hy2Infra will cover a large part of the hydrogen value chain. Funding will be provided for the

• Installation of large-scale electrolysers with a capacity of 3.2 gigawatts for the production of renewable hydrogen;
• Construction of new and repurposed long-distance and distribution pipelines for hydrogen with a length of around 2,700 kilometers;
• Development of large hydrogen storage facilities with a capacity of at least 370 gigawatt hours; and the
• construction of transshipment terminals and the associated port infrastructure for liquid organic hydrogen carriers for the transshipment of 6,000 tons of hydrogen per year.

The IPCEI Hy2Infra complements the first (“Hy2Tech”, focus: development of hydrogen technologies) and the second (“Hy2Use”, focus: hydrogen applications in industry) IPCEI on the hydrogen value chain.

From a state aid perspective, with regard to the finding that the project is compatible with EU state aid rules, the EU Commission addressed, among other things, the fact that the IPCEI Hy2Infra is necessary to create investment incentives for companies and that a repayment mechanism for part of the aid received is provided for projects that are particularly successful under the IPCEI and generate additional net income.

The Austrian WFöG is therefore not only pursuing the national climate targets, but Austria is also following the European energy trend of investing in the expansion of new hydrogen production plants and the necessary infrastructure at an early stage in order to create a competitive market position.

Conclusion

Although some time will pass before the necessary infrastructure is developed and a sustainable and competitive energy system based on renewable energies – such as hydrogen production – is realized, the resolution of the Hydrogen Promotion Act has given the necessary go-ahead and financially secured the Austrian funding offer. Now it is up to the responsible ministers to create the further regulations/guidelines for the awarding and implementation of the planned funding. The expansion of the hydrogen infrastructure is also being accelerated in the European surroundings with investments in the billions.

However, numerous legal issues will still need to be resolved with regard to the requirements of European law and state aid law, the approval procedures and the conclusion and execution of the necessary (funding) contracts.