The European Commission has awarded financing of up to 370 million euros ($402 million) to set up a 'Green Hydrogen Valley' in Italy's Puglia region, the energy groups involved said.

Edison (EDNn.MI), opens new tab, Saipem (SPMI.MI), opens new tab and financial group Generali's (GASI.MI), opens new tab green transition investment manager Sosteneo SGR said that the Commission had included the green hydrogen initiative among its important projects of common European interest (IPCEI), unlocking European Union funds.

Green hydrogen, which is produced using renewable forms of energy, is due to replace fossil fuels in some energy-intensive industries in the EU as the bloc moves to cut carbon emissions.

The plan will provide 260 megawatts (MW) of solar photovoltaic (PV) generation capacity and 160 MW of electrolysis capacity to produce green hydrogen around the cities of Brindisi and Taranto, the groups said in a statement on Monday.

The fuel will be used in a production process known as direct reduced iron (DRI) to decarbonise the steel-making process in Italy's largest steel plant in Taranto, and a consortium of other Italian steel mills.

Italy's grid operator Snam (SRG.MI), opens new tab said in a separate statement that Brussels had also included in its IPCEI list the group's project to renovate existing pipelines and install new ones for the hydrogen project in the southern Italian region.

Snam's project, whose operational phase is expected in 2028, involves total investments of around 100 million euros.