European Hydrogen Bank auction provides €720 million for renewable hydrogen production in Europe
The Commission is awarding nearly €720 million to seven renewable hydrogen projects in Europe, selected through the first competitive bidding process under the European Hydrogen Bank, according to EU's release. The funds for this auction come from the revenues of the EU Emissions Trading System.
The winning bidders will produce renewable hydrogen in Europe and will receive a subsidy to bridge the price difference between their production costs and the market price for hydrogen, which is currently driven by non-renewable producers.
The European Hydrogen Bank is therefore contributing to the scale-up of cleaner fuels which will contribute to the decarbonisation of European industry. The renewable hydrogen they produce will be used in sectors such as steel, chemicals, maritime transport and fertilisers.
The 7 selected projects were the winners of an oversubscribed auction which attracted 132 bids in total. Together, the winning bidders plan to produce 1.58 million tonnes of renewable hydrogen over ten years, avoiding more than 10 million tonnes of CO2 emissions. The selected projects are located in 4 European countries. They submitted bids between €0.37 and €0.48 per kilogram of renewable hydrogen produced, and also met the other qualification requirements. The subsidy the 7 projects will receive ranges from €8 million to €245 million.
In addition, through the new “Auctions-as-a-service” mechanism, €350 million in national funding has been made available by Germany for the highest ranked projects in Germany which did not qualify for EU-level support, but which do meet the eligibility criteria. The German authorities will select and communicate the winning projects. The “Auctions-as-a-service” scheme is open to all Member States, enabling them to benefit from the EU-level auction platform and award national funding to additional projects. The Commission invites other Member States to take advantage of this service for future auctions.
The seven selected projects will now start preparing their individual grant agreements with the European Climate, Infrastructure and Environment Executive Agency (CINEA). These agreements are expected to be signed by November 2024 at the latest.
Selected projects will have to start producing renewable hydrogen within a maximum of 5 years after signing the grant agreement. They will receive the awarded fixed premium subsidy for up to 10 years for certified and verified renewable hydrogen production.
The Commission plans to launch a second European Hydrogen Bank auction by the end of this year. It will draw on the lessons learned from this pilot auction and also further consult stakeholders before launching the next auction.
The Innovation Fund is the EU's largest funding programme for the deployment of innovative net-zero technologies, with an estimated budget of €40 billion from the revenues of auctioning allowances under the EU Emissions Trading System between 2020 and 2030.
The European Hydrogen Bank, announced by President von der Leyen in her State of the European Union address in 2022, is an initiative to facilitate the EU's domestic production and imports of renewable hydrogen. It aims to unlock private investment in the EU and in third countries by addressing investment challenges, closing the funding gap and connecting future renewable hydrogen supply to consumers.
The first auction of the European Hydrogen Bank received 132 bids from 17 European countries requesting over 15 times the available €800 million budget. 119 proposals were found to be eligible and admissible, and were then ranked according to their bid price, and evaluated by the European Climate, Infrastructure and Environment Executive Agency (CINEA). The bids submitted ranged from €0.37 to €4.5 per kilogram of renewable hydrogen produced.
