Europe's First Clean Hydrogen Auction Awards $781 Million

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) has concluded its first auction for renewable hydrogen projects, awarding almost 720 million euro ($781 million) to seven projects.

The projects, located in Spain, Portugal, Norway and Finland, were the winners of an oversubscribed auction which attracted 132 bids in total. Together, the winning bidders plan to produce almost 1.6 million tonnes of renewable hydrogen over 10 years, avoiding more than 10 million tonnes of CO2 emissions, according to the European Commission (EC). The first auction was seen as a way for the Commission to test the water, collecting data about the EU's renewable hydrogen project pipeline, the level of competition for this kind of support, the costs of renewable hydrogen production and its market price. A second, much bigger auction, with up to 3 billion euro ($3.24 billion) in funding, has been promised for next year by Commission president, Ursula von der Leyen.

Industrial Info is tracking more than 940 European green hydrogen-related projects across all sectors worth more than $100 billion in potential investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

Renewable hydrogen producers taking part in the auction, which included those with planned projects, could bid for support in the form of a fixed premium per kilogram (kg) of hydrogen produced--up to a ceiling of 4.5 euro per kilogram ($4.9/kg). 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 European Hydrogen Bank will provide valuable support to the decarbonisation of European industry," said Maroš Šefčovič, Executive Vice-President for European Green Deal. "The high number of bids and the investments awarded today are a clear signal of confidence in the nascent renewable hydrogen market. There is a strong project pipeline in Europe and a competitive industry. These are encouraging signs for the future of this important net-zero technology."

In addition, through the new "Auctions-as-a-service" mechanism, 350 million euro ($380 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 "Auctions-as-a-service" mechanism allows EU Member States to finance projects that have bid in the auction but not been selected for support. Wopke Hoekstra, Commissioner for Climate Action, added: "These innovative auctions, funded by the revenues from emissions trading, are a game-changer when it comes to producing renewable hydrogen in Europe. The high level of interest shows the strong potential for this market, and the need for resources beyond the EU budget. I encourage other Member States to follow Germany's lead, and make use of the "Auctions-as-a-service" to support renewable hydrogen production at national level using our European auction platform."

The EU wants to produce 10 million tonnes and import 10 million tonnes by 2030. In 2022, hydrogen accounted for less than 2% of Europe's energy consumption and was primarily used to produce chemical products, such as plastics and fertilisers. 96% of this hydrogen--gray hydrogen--was produced with natural gas, resulting in significant amounts of CO2 emissions. There is some skepticism within the industry that the EU can achieve its 2030 targets, despite the funding on offer. Industrial Info reported recently on claims by Patrick Pouyanné, chief executive officer of French energy major TotalEnergies SE (NYSE:TTE) (Courbevoie, France), that the targets were "impossible". He cited an eightfold price difference between the cost of green hydrogen and the more common gray hydrogen (made using fossil fuel). He said that concentrating hydrogen projects in niche areas will not achieve the scale needed. He also questioned the relative immaturity of electrolyser technology today and said that a hydrogen-in-transport strategy is needed to scale the use of green hydrogen. For additional information, see May 21, 2024, article--Europe's Green Hydrogen Targets 'Impossible'.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).