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EU intends to provide subsidies for renewable energy-produced hydrogen


The European Commission will present its ideas for a hydrogen subsidy program that would increase the competitiveness of clean versions of the fuel compared to hydrogen derived from fossil fuels. Almost 8 million tonnes of hydrogen are used in EU industries, but the vast majority of that is generated using gas in a process that releases CO2 that warms the earth. To reduce industry emissions, the EU intends to transition to CO2-free hydrogen generated from renewable electricity.

The European Union will start a “bank” for funding hydrogen that will use auctions to give producers of the fuel a set price per kilogram of hydrogen for up to ten years. Over 800 million euros would be up for grabs at the first auction of the year. Once the hydrogen is created, the payments will be made. In order to be considered, projects would need to demonstrate that they have a willing buyer and a sustainable energy source to power the production facility. The bank wants to close the cost disparity to a point where private off-takers will and can pay the difference.

Governments will also be able to enhance the budget for projects in their own nations by contributing national cash to the EU auctions, ensuring that projects still receive state aid even if they don’t receive EU funding. By 2030, the EU hopes to import an additional 10 million tonnes of renewable hydrogen and produce 10 million tonnes of its own. Less than 0.3 million tonnes of hydrogen are now produced from energy. Increasing Europe’s meager fleet of electrolysers, which are used to create hydrogen from electricity, as well as installing 150 to 210 GW of new renewable energy capacity would be necessary to reach those goals. The investment may cost as much as 471 billion euros ($500 billion), with the majority of the funding anticipated from the private sector.

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