The European Commission has initiated efforts to bolster the burgeoning hydrogen market with the launch of a pilot mechanism aimed at linking suppliers and buyers. This mechanism, established under the recently-adopted decarbonised gases and hydrogen package, is slated to operate for a duration of five years and will be integrated into the European Hydrogen Bank.
In a move to kickstart this initiative, the Commission has commenced a procurement process to appoint a developer for an IT platform to oversee the pilot mechanism's operations. A contract is anticipated to be finalized by year-end, with the platform expected to commence operations by mid-2025.
The scope of the pilot mechanism encompasses renewable and low-carbon hydrogen, along with its derivatives, facilitating connections between European off-takers and suppliers both within and outside the EU.
According to the Commission, the European Union currently boasts 254 renewable hydrogen projects, comprising 170 operational and 84 under construction, with a combined capacity nearing 3 GW. Furthermore, an additional 8 GW is projected to be added through electrolyser projects following the inaugural pilot auction under the European Hydrogen Bank.
Despite these promising figures, global statistics reveal a shortfall in final investment decisions for renewable and low-carbon hydrogen projects, with only 4% reaching this stage. Additionally, just 12% of the anticipated clean hydrogen supply by 2030 has secured off-takers.
Commissioner for Energy, Kadri Simson, emphasized the significance of the pilot mechanism in addressing these challenges, stating, “There are still too few projects moving towards final investment decisions, and too few off-takers signing contracts to switch to hydrogen.” Simson further highlighted the mechanism's role in identifying emerging hydrogen demand and supply, fostering connections between European off-takers and suppliers, and laying the groundwork for future auctions under the European Hydrogen Bank.
The pilot hydrogen mechanism forms part of the Commission's broader strategy to establish a European platform for the joint procurement of strategic commodities, aiming to stimulate the development of the renewable and low-carbon hydrogen sector.
