Today, the European Commission has unveiled ambitious plans to bolster and incentivize investment in sustainable hydrogen production by establishing a European Hydrogen Bank (EHB). Recognizing hydrogen as a pivotal element in achieving the EU’s goals of reducing reliance on Russian fossil fuels and attaining climate neutrality by 2050, this initiative aims to accelerate investment and bridge the financial gap necessary for the EU to reach its ambitious REPowerEU targets.
Key Highlights of the European Hydrogen Bank (EHB):
- Driving Investment: The EHB responds to the need for substantial investments to enable the production of 10 million tonnes (mt) of renewable hydrogen domestically by 2030, in conjunction with 10 mt of imports. Given that many projects are still in the planning stage, the EHB will address initial financial challenges and help stimulate the emerging renewable hydrogen market.
- International Dimension: The EHB will possess an international dimension, facilitating the import of renewable hydrogen into the EU. It recognizes the importance of international collaboration in realizing sustainable hydrogen supply chains.
- Four Pillars: The EHB will rest on four fundamental pillars that aim for operationalization by the end of 2023. These encompass financing mechanisms for the EU domestic market and international imports, transparency and coordination, and the streamlining of existing financial instruments.
- Lowering Cost Gap: The Commission intends for the EHB to reduce the cost gap between renewable hydrogen and fossil fuels for early projects. It will achieve this through an auction system that offers fixed price payments per kilogram of hydrogen produced, supporting producers for up to 10 years of operation. The initial pilot auctions, backed by €800 million from the Innovation Fund, are scheduled to launch in autumn 2023.
- Funding Requirements: To meet the target of 10 mt of domestic renewable hydrogen production, estimated investment needs range from €335-471 billion, including €200-300 billion for additional renewable energy production. Private funding will comprise the majority, with public funding playing a crucial role in attracting private investment, particularly in the initial stages of the hydrogen market.
- EU Cohesion Policy: EU cohesion policy funding, including support from the European Regional Development Fund and the Just Transition Fund, will assist Member States and regions in their hydrogen supply chain investments.
- International Cooperation: On an international level, the EHB will collaborate with EU partner countries, assisting them in green transition and renewable energy endeavors. It will also support Member States and companies in establishing reliable supply chains and rules-based international hydrogen markets.
This comprehensive approach, in tandem with the Net-Zero Industry Act, is a significant stride toward realizing the EU’s vision of a hydrogen-powered, sustainable future.
