The European Commission has inaugurated the inaugural auction under the European Hydrogen Bank, earmarking EUR 800 million (USD 873 million) in financial backing for the production of renewable hydrogen. This marks a significant milestone in the EU's commitment to fostering sustainable energy solutions.
Producers of renewable hydrogen are invited to participate in the auction, where they can bid for subsidies structured as a fixed premium per kilogram of hydrogen produced, with a maximum cap of EUR 4.5 per kg. Proposals meeting the criteria within this limit will be assessed based on bid prices until the allocated budget of EUR 800 million is fully utilized.
Successful producers are required to commence renewable hydrogen production within five years of signing grant agreements, with the support extending for a maximum duration of 10 years.
A noteworthy feature of this initiative is the introduction of the “Auctions-as-a-service” mechanism under the Hydrogen Bank. Member states are granted the flexibility to finance projects that did not secure success in the auction, streamlining the approval process for state aid and reducing administrative complexities. This mechanism aims to foster efficiency, minimize market segmentation, and enhance incentive schemes.
The deadline for submitting bids is set for February 8, 2024, with evaluation results anticipated by April 2024. Grant agreements will be finalized within nine months following the close of the call.
The European Commission envisions that this pilot auction will provide valuable insights into the EU's renewable hydrogen project pipeline, hydrogen production costs, and the overall appetite for such subsidies. A subsequent round is scheduled for launch in 2024.
Funding for the auction is derived from the Innovation Fund, endowed with an estimated budget of EUR 40 billion sourced from the EU Emissions Trading System spanning 2020 to 2030. Simultaneously, the European Commission has unveiled a EUR 4 billion call for proposals for decarbonization technologies under the Innovation Fund.
Aligned with the REPowerEU Plan, the EU aspires to domestically produce 10 million tonnes of hydrogen by 2030. Wopke Hoekstra, Commissioner for Climate Action, emphasized, “Today's first EU-wide auction for renewable hydrogen production sends a clear signal that Europe is the place to invest in renewable hydrogen production and hydrogen-based industries.” Hoekstra added that developing a robust hydrogen market in the EU is expected to enhance competitiveness, stimulate industry growth, and create quality jobs for European companies and citizens.
