The European Commission quietly waved through France’s latest low-carbon hydrogen subsidy plans with a low-key announcement in late March, as the energy shock sparked by the escalating conflict in the Middle East threatened to tip global economies into recession.

Under the plans, the French government will use public funds to subsidise the deployment of 1GW of electrolysis capacity through a series competitive tenders. As a first step, developers will be invited to bid for about €800b ($927b) of subsidies to support the deployment development of 200MW of capacity. The subsidies will be in the form of fixed payments of a 15-year period.

Nothing remarkable here. The scheme is broadly in line with those of other European governments and is designed to help deliver against a 2030 capacity target of 4.5GW, rising to 8GW by 2035.

However, the French government has an ace up its sleeve in the form of a cheap, carbon-free generation source that has started to look more attractive the longer the crisis in the Middle East drags on: nuclear power.

France relies on nuclear for roughly 70% of its power, making it the world’s leading generator. The government is committed to building new reactors and extending the life of some existing plants.

For electrolytic hydrogen production, nuclear offers round-the-clock baseload power without the need for storage or back-up from flexible gas-fired generators, as is the case with renewable-powered production.

The French government is aware of the opportunity and is understood to be keen on developing nuclear-powered, or ‘pink’, hydrogen production at scale, assuming it can square ‘pink’ with the EU’s overly-complex definitions of ‘green’.  Green hydrogen is still very much on the agenda, with the government pursuing ambitious expansion targets for wind and solar power.

The nuclear strategy is not risk free. Hydrogen projects face fierce competition for nuclear power from multiple other offtakers as France pushes ahead with widespread electrification of its economy, while a sizeable chunk of the nuclear output is exported to European neighbours.

In addition, datacentres are driving up power demand in most developed economies, including France.

The performance of France’s ageing reactors is also a concern, with protracted outages often lowering the nuclear fleet’s output significantly. The government is also pursuing ambitious expansion targets for wind and solar power.

Nuclear renaissance

Still, France’s nuclear legacy can potentially give it an advantage over rival hydrogen producers. Pink hydrogen may well gain serious traction in the wake of the Middle East crisis as nuclear enjoys a post-war renaissance while governments redouble their efforts to move away from fossil fuels.

Even before the war in Iran, investment in nuclear—especially small modular reactors—as gathering pace as hyperscalers seek access to carbon-free baseload power.

Contrast the French position with that of neighbouring Germany. The German government started phasing out nuclear power in response to the Fukushima disaster in Japan in 2011, a decision that is increasingly being questioned as crude and gas prices surge. The country has built out its renewables capacity rapidly but still relies on imported gas for about a quarter of its power generation, a setup that left it seriously exposed to the 2022 Ukraine energy crisis. In response, it turned to imported LNG, a solution that looks significantly more expensive than it did just a month ago thanks to the second major energy crisis in four years.