- The referred scheme is part of the Net Zero Hydrogen Fund (NZHF), designed to support low carbon hydrogen production in the 2020s. The goal is to decarbonise difficult-to-electrify sectors of the economy. The scheme relates to Strand 4 which focuses on providing capital expenditure (CAPEX) funding for new hydrogen production facilities equipped with Carbon Capture Use and Storage (CCUS) technology. This technology captures and stores CO2 emissions through a transport and storage network.
- Strand 4 of the NZHF has a budget of up to £600 million. The funding is allocated to build new CCUS-enabled hydrogen production plants.
- Our key takeaways are that assessments against the subsidy control principles should:
- Provide a clear conclusion on the counterfactual scenario and clearly set out the change in economic behaviour brought about by the Scheme.
- Consider if other subsidies to the same beneficiary could affect the proportionality of this subsidy.
- Identify more explicitly affected markets and discuss potential distortions comprehensively whilst also considering potential impacts on competition.
- Explain reasonings for not assessing Principle H (Energy & Environment principles) and where appropriate consider third-party comments specifically as they relate to the potential for decarbonisation and greenhouse gas emissions.
Department for Energy Security and Net Zero (DESNZ), Strand 4 of the Net Zero Hydrogen Fund (NZHF Strand 4)
Posted in Subsidy Advice Report Tracker.