The European Commission has given the go-ahead to a €1.5 billion French scheme designed to stimulate the production of sustainable biomethane, aligning with the bloc’s ambition to transition towards a net-zero economy.
The approval is granted under the State Aid Temporary Crisis and Transition Framework (TCTF), which was adopted in March 2023 and subsequently amended in November 2023 and May 2024.
The TCTF, adopted on 9 March 2023, enables Member States to implement support measures in sectors vital for the transition to a net-zero economy until 31 December 2025. These measures include accelerating renewable energy rollout, facilitating industrial process decarbonisation, and boosting investments in key sectors for the net-zero transition.
The French Measure
The French government submitted the scheme under the TCTF to support the production of sustainable biomethane for injection into the natural gas grid. The measure is targeted at new installations with an annual production capacity exceeding 25 GWh. Beneficiaries will be selected through a competitive and transparent bidding process based on the strike price per MWh of biomethane offered. The selected installations must be operational within 36 months of aid granting, with an expected annual production of 1.6 TWh of sustainable biomethane.
The aid will be disbursed through two-way contracts for difference (CfD) over 15 years. The aid amount will correspond to the difference between the strike price determined in the tender and the market price of natural gas. Conversely, if the market price exceeds the strike price, the difference will be reimbursed to the State.
Commission’s Assessment
The Commission deemed the French scheme compliant with the TCTF conditions. Specifically, the aid will be granted based on a scheme with an estimated capacity volume and budget in the form of two-way CfDs no later than 31 December 2025. Moreover, the aid includes safeguards to limit competition distortions and ensure the competitiveness of the bidding procedure.
The Commission concluded that the scheme is necessary, appropriate, and proportionate to expedite the green transition and develop economic activities crucial for the REPowerEU Plan and the Green Deal Industrial Plan. Therefore, the Commission approved the aid measure under EU State aid rules.
Margrethe Vestager, Executive Vice-President in charge of competition policy, stated, “This €1.5 billion scheme will support the production of sustainable biomethane in France. By reducing the reliance on imported fossil fuels, it will contribute to the achievement of the EU’s strategic goals. This measure is an important step in the transition to a net-zero economy, while protecting the level playing field in the Single Market.”
