In recent years, industrial policy has once again assumed a central role in the European debate. The European Union faces the simultaneous need to accelerate the energy transition, strengthen its strategic autonomy and close the competitiveness gap with the world's leading economies. In this context, its ability to promote innovative investment in strategic sectors has become increasingly important to strengthen the competitiveness of the European productive system, reduce technological and energy dependencies and support the decarbonisation process.

 

However, the market is not always able to mobilise the necessary resources on its own for projects involving high initial costs, technological uncertainty and particularly long payback periods. Moreover, some of the benefits generated by innovation extend beyond those directly involved in the investment. Under these circumstances, positive externalities, knowledge spillovers and coordination problems may lead to investment levels below those considered socially desirable. Public intervention can therefore play an important role in supporting activities regarded as strategic for economic and technological development and in facilitating investments that would otherwise be undertaken on a smaller scale or under different conditions.

 

Important Projects of Common European Interest (IPCEIs) fit within this framework. They allow Member States to jointly support industrial and technological projects of strategic relevance to the Union and characterised by substantial innovative content, within the specific framework established by EU State aid rules for projects of common European interest. Unlike traditional policy instruments, IPCEIs are designed to support integrated and transnational projects across strategic European value chains, combining research and development, first industrial deployment and cross-border cooperation. Their relevance therefore lies not only in the financial resources mobilised, but also in their capacity to coordinate public and private actors across different Member States.

 

This thesis investigates to what extent Hydrogen IPCEIs are capable of addressing the market failures that hinder the development of the European hydrogen value chain and which constraints limit their effectiveness during the implementation phase. To answer this question, the research first examines the theoretical foundations of public intervention and the main market failures associated with innovative industrial transformations. Particular attention is devoted to positive externalities and knowledge spillovers, high fixed and sunk costs, technological and market uncertainty, and coordination failures. The analysis also considers the potential limitations of public intervention itself, including information asymmetries, risks of overcompensation and differences in the administrative and financial capacities of Member States.

 

Within this framework, the thesis analyses the functioning of IPCEIs, from their economic and regulatory rationale to their operational implementation. Particular attention is paid to the funding gap methodology, which is used to determine the amount of public support necessary to enable the investment, based on a comparison between the aided project and the counterfactual scenario that would occur in the absence of public support. This mechanism reflects the principle that public support should remain limited to what is strictly necessary to enable the project, while avoiding undue distortions of competition.

 

The analysis then focuses on hydrogen as a strategic technology for both European competitiveness and industrial decarbonisation. Hydrogen can contribute to reducing emissions in hard-to-abate sectors where direct electrification remains technically difficult, while supporting greater energy security and the development of new industrial value chains. Its deployment on an industrial scale, however, continues to face structural barriers, including high production costs, uncertainty surrounding future demand and the limited availability of appropriate transport and storage infrastructure. The difficulties affecting the hydrogen value chain therefore do not depend solely on the availability of hydrogen supply, but on the need to develop competitive production capacity, industrial demand, transport infrastructure and supply networks simultaneously.

 

Against this background, the thesis investigates the four Hydrogen IPCEIs, Hy2Tech, Hy2Use, Hy2Infra and Hy2Move, which together address different and complementary segments of the emerging European hydrogen value chain. The analysis considers their role in supporting technological development, industrial applications, infrastructure and mobility, as well as their contribution to the creation of an integrated European hydrogen ecosystem. This perspective makes it possible to assess IPCEIs not simply as financial instruments, but as a form of industrial policy aimed at coordinating investments and technological capabilities across national borders.

 

The research nevertheless identifies a significant gap between the formal approval of projects and their effective implementation. As of June 2025, only around 22% of the approved projects included in the Hydrogen IPCEIs had reached Final Investment Decision. The procedures required for European assessment and subsequent national implementation can exceed 24 months, during which the economic conditions underlying the initial investment decision may change. Inflation and rising interest rates, and therefore a higher weighted average cost of capital, can reduce the real value of aid amounts that remain fixed in nominal terms, potentially increasing the financing requirements of projects compared with those initially estimated.

 

A further limitation concerns the nature of the support itself. Hydrogen IPCEIs mainly address initial investment requirements and the most innovative phases of projects but do not eliminate the operational risks that remain after the investment decision. Producers continue to face high operating costs and uncertainty regarding the availability of long-term offtake agreements, while industrial users may be unable or unwilling to absorb the additional cost of renewable hydrogen compared with conventional alternatives, commonly referred to as the “green premium”. This creates a coordination problem between supply and demand: insufficient commercial demand discourages investment in production capacity, while limited production volumes prevent the economies of scale required to reduce costs.

 

The research therefore shows that financial support for initial investment is important, but is not sufficient on its own to create a functioning European hydrogen market. Complementary measures capable of supporting demand, reducing revenue uncertainty and facilitating the development of hydrogen infrastructure remain necessary to translate authorised investments into operating industrial projects.

 

The final part of the thesis applies this framework to the HYDRA project, promoted by RINA Consulting - Centro Sviluppo Materiali within the framework of the Hydrogen IPCEIs. HYDRA provides a practical case through which to observe how industrial policy instruments are translated into research, testing and development activities supporting the decarbonisation of the steel industry. The project brings together different equipment, materials, monitoring systems and specialised expertise within an integrated experimental platform designed to test hydrogen applications under conditions close to industrial operation.

 

The HYDRA case provides important evidence on the additionality of IPCEI support. In the absence of IPCEI support, RINA would have continued to conduct research on the decarbonisation of steelmaking through hydrogen, but would not have developed an experimental platform of the same scale and configuration. The contribution of the IPCEI therefore lies not simply in initiating research that would otherwise not have taken place, but in expanding the scope of the investment, enabling the physical development of an integrated infrastructure, increasing experimental capacity and supporting the development of the skills required for its operation.

At the same time, the case demonstrates that financial support alone does not remove all the difficulties associated with the implementation of a complex innovative investment. The development of HYDRA required continuous coordination between technical disciplines, suppliers, public authorities, contractual responsibilities and project objectives. Permitting procedures concerning urban planning, environmental requirements and fire safety also affected project planning and required progressive adaptation during implementation. These findings demonstrate that some of the coordination difficulties identified at theoretical level can persist even after public support has been granted.

HYDRA may also generate knowledge externalities extending beyond the individual project. The joint testing of technologies and materials, the development of specialised expertise and the potential involvement of external industrial operators can contribute to the dissemination of knowledge throughout the hydrogen and steel value chains. Contacts have also been initiated with mining companies and major European and non-European steel groups interested in conducting tests on materials and processes. Its potential applications may extend beyond steelmaking to sectors such as cement, glass and ceramics, as well as to the testing and qualification of hydrogen transport and storage infrastructure. However, these spillovers cannot be considered automatically achieved solely on the basis of the development of the experimental infrastructure. Their actual scale will depend on the future use of the platform and on its ability to transfer experimental results towards industrial applications.

 

Overall, the research shows that Hydrogen IPCEIs can contribute significantly to reducing underinvestment associated with positive externalities, knowledge spillovers and coordination failures, while mitigating the financial exposure created by high sunk costs and uncertainty during the early stages of industrial scale-up. Nevertheless, the analysis also demonstrates that IPCEI support represents an important but not sufficient condition for the effective development of a European hydrogen market.

 

In conclusion, the effectiveness of Hydrogen IPCEIs should not be assessed solely on the basis of the investments they enable. The development of infrastructure represents a first outcome of public intervention, but the broader objectives of industrial policy depend on whether these investments subsequently generate knowledge, technological capabilities, industrial collaboration and market development. A broader and more flexible policy mix is therefore required, combining support for initial investment with complementary instruments capable of stabilising operating revenues, stimulating final demand and reducing administrative rigidities. In the case of HYDRA, the long-term value of the project will ultimately depend on the platform's capacity to remain operational beyond the initial programme, attract further experimental activities, develop specialised skills and facilitate the transfer of technological results towards industrial applications.