European Commission okays €1.5bn French biomethane scheme
The European Commission has approved a €1.5bn ($1.63bn) French scheme to support the production of sustainable biomethane, the Commission announced on July 25. The scheme was approved under the State Aid Temporary Crisis and Transition Framework (TCTF), adopted on March 2023, and amended on November 2023, and May 2024.
France notified the Commission of a scheme under the TCTF to support sustainable biomethane production for injection into the natural gas grid. The measure will be open to new installations with a projected annual biomethane production of more than 25 GWh. Beneficiaries will be selected through a bidding process based on the strike price per MWh of biomethane offered. The installations must be completed and operational within 36 months of receiving the aid. The measure is expected to support the production of 1.6 TWh/year of sustainable biomethane.
Under the scheme, aid will be granted in the form of two-way contracts for difference (CfD), concluded for a duration of 15 years. The amount of aid corresponds to the difference between the strike price, determined in the beneficiary’s tender offer ('pay as bid'), and the market price of natural gas. If the market price of natural gas exceeds the strike price, the difference will be paid back to the State.
The Commission found the French scheme aligns with the TCTF's conditions. Specifically, the aid will be granted based on a scheme with an estimated capacity volume and budget, will take the form of a two-way contract for difference, and will be granted no later than December 31, 2025. Additionally, the aid will be subject to conditions to limit undue distortions of competition, including safeguards to ensure a competitive bidding procedure.
The Commission concluded that the French scheme is "necessary, appropriate, and proportionate" to accelerate the green transition and facilitate the development of certain economic activities crucial for implementing the REPowerEU Plan and the Green Deal Industrial Plan, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Crisis and Transition Framework.