European Hydrogen Industry Seeks €800 Million Support Amid Soaring Demand
The total support requested for renewable hydrogen projects is much higher than the available budget of €800 million from the Innovation Fund. Kurt Vandenberghe, Director-General for Climate Action, noted the strong interest from the European hydrogen industry in a pilot auction. He emphasized the importance of renewable hydrogen for achieving climate neutrality in Europe by 2050. The successful auction reflects solid engagement with stakeholders and provides a stable regulatory framework for investors.
The bids submitted aim for an electrolyser capacity of 8.5 gigawatts. This capacity would produce 8.8 million tonnes of renewable hydrogen over ten years. Annually, this would contribute nearly 10% of the EU’s renewable hydrogen production goal for 2030.
Producers are seeking support through a fixed premium per kilogram of renewable hydrogen produced. This premium helps offset production costs. The European Commission offers an “Auctions-as-a-service” option, allowing Member States to use an EU-level platform for additional funding, respecting State aid regulations. Germany is leading by committing €350 million from its budget for projects that may not qualify for Innovation Fund support due to budget constraints.
Next, the European Executive Agency for Climate, Infrastructure and Environment (CINEA) will assess the bids. They will rank them based on price. Applicants will learn the results by April or May 2024, and successful ones will sign Grant Agreements by November 2024. Selected projects must start production within five years and will receive the premium subsidy for up to ten years after verification of production.
The Commission will also gather insights from this pilot auction to prepare for a second round, scheduled to launch later in the year.
Interview with Kurt Vandenberghe, Director-General for Climate Action
News Directory 3: Thank you for joining us today, Mr. Vandenberghe. There has been significant interest in the recent pilot auction for renewable hydrogen projects. Can you explain why the total support requested exceeds the €800 million budget from the Innovation Fund?
Kurt Vandenberghe: Absolutely.The renewable hydrogen sector is witnessing an unprecedented surge in interest as countries prioritize climate neutrality by 2050. The requests reflect not just the ambition of these projects but also the scale of investment needed to realise our shared goals in the EU. While the €800 million is substantial, it is just the beginning in terms of the funding required to meet the proposed electrolyser capacity of 8.5 gigawatts, which aims to produce approximately 8.8 million tonnes of renewable hydrogen over ten years.
News Directory 3: What role dose the fixed premium for hydrogen producers play in making these projects viable?
Kurt Vandenberghe: The fixed premium is critical as it acts to mitigate the production costs that can hinder market entry for many potential producers. By providing financial certainty, we create an surroundings that encourages investment and accelerates the deployment of technology to meet our EU goals. It’s a mechanism designed to stimulate growth in the sector while ensuring that we remain aligned with our climate objectives.
News Directory 3: Germany has committed €350 million from it’s own budget for hydrogen projects. How does this commitment impact the broader European landscape for hydrogen production?
Kurt Vandenberghe: Germany’s commitment indeed sets a precedent and shows leadership in this sector. It demonstrates the willingness of member States to pioneer solutions and fill gaps in funding, notably for projects that might not qualify under the Innovation Fund’s constraints. This collaborative approach is vital for the EU as a whole, reinforcing the political will needed to boost our renewable hydrogen initiatives and ensure we meet our collective targets.
News Directory 3: What is the next step for applicants after the bids are submitted?
Kurt Vandenberghe: The European Executive Agency for Climate, Infrastructure and Environment (CINEA) will assess and rank the bids based on price. Prosperous applicants can expect to hear results by April or May 2024. Once selected, they will enter Grant Agreements by November 2024, and projects must commence production within five years to receive the premium subsidies. This structured timeline is crucial for maintaining momentum in achieving the EU’s renewable hydrogen goals.
News Directory 3: The pilot auction is just the first round,correct? What insights will be gathered for future auctions?
Kurt vandenberghe: Yes,that’s right. we will be closely observing the outcomes of this pilot auction,particularly in terms of engagement,pricing,and project viability. The insights gained will be pivotal as we prepare for a second auction later in the year, allowing us to refine processes, enhance stakeholder engagement, and ultimately drive more effective support for the renewable hydrogen sector moving forward.
News directory 3: Thank you, Mr. Vandenberghe, for your insights on this crucial development in the renewable hydrogen space.
Kurt Vandenberghe: Thank you for having me. The road to climate neutrality is a collective effort, and I’m encouraged by the strong interest and commitment we see in this sector. Together, we can make it happen.
Background: The Innovation Fund has an estimated budget of €40 billion from the auctioning of allowances under the EU Emissions Trading System, supporting innovative net-zero technologies. The European Hydrogen Bank aims to boost the EU’s production and import of renewable hydrogen. It seeks to attract private investment and close the funding gap, targeting 20 million tonnes of hydrogen by 2030.
Additionally, the Innovation Fund’s 2023 call for proposals is open until April 9, 2024, offering €4 billion for low-carbon technologies in various sectors.
For more information, refer to the auction FAQ, the press release on the EU Hydrogen Bank auction, and the Innovation Fund 2023 Auction Info Day.