Commission allocates €720m to seven renewable hydrogen projects
In a significant move towards fostering sustainable energy practices, the European Commission has allocated nearly €720 million to seven groundbreaking renewable hydrogen projects across Europe. These projects, selected through the inaugural competitive bidding process under the European Hydrogen Bank, mark a pivotal step in the continent’s transition towards cleaner fuels and the decarbonisation of key industries.
The funds for this landmark auction stem from the revenues generated by the EU Emissions Trading System, reflecting a commitment to leveraging economic mechanisms to drive environmental progress. Through the competitive bidding process, the winning projects will receive subsidies aimed at bridging the price disparity between their renewable hydrogen production costs and the market price, which is currently influenced by non-renewable sources.
Renewable hydrogen holds immense potential as a clean energy source and is poised to revolutionize sectors such as steel, chemicals, maritime transport, and fertilizers. By supporting the production of renewable hydrogen within Europe, the European Hydrogen Bank seeks to catalyze the widespread adoption of cleaner fuels and significantly reduce CO2 emissions.
The seven selected projects emerged victorious from a fiercely contested auction that attracted a total of 132 bids. Together, these projects aim to produce 1.58 million tonnes of renewable hydrogen over the next decade, resulting in a substantial reduction of over 10 million tonnes of CO2 emissions. Spanning four European countries, the winning bids ranged from €0.37 to €0.48 per kilogram of renewable hydrogen produced, meeting stringent qualification criteria.
Additionally, Germany has made €350 million in national funding available through the innovative “Auctions-as-a-service” mechanism. This funding will support projects in Germany that did not qualify for EU-level support but meet eligibility criteria, further enhancing the reach and impact of renewable hydrogen initiatives.
Moving forward, the selected projects will embark on the process of finalizing grant agreements with the European Climate, Infrastructure, and Environment Executive Agency (CINEA), with agreements expected to be signed by November 2024. These projects are required to commence renewable hydrogen production within five years of signing the grant agreement and will receive fixed premium subsidies for up to a decade.
Looking ahead, the Commission plans to launch a second European Hydrogen Bank auction later this year, building upon insights gained from the pilot auction and engaging stakeholders for continued collaboration and innovation.
The European Hydrogen Bank represents a cornerstone of the EU’s commitment to fostering sustainable innovation and driving the transition towards a carbon-neutral future. With ambitious targets and robust support mechanisms in place, Europe is poised to lead the global charge towards renewable energy adoption and environmental stewardship.