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On November 23, 2023, the European Hydrogen Bank (EHB) marked a significant milestone with the launch of its first auction. It set the stage for a second auction scheduled for spring. This strategic move aligns with the European Union’s broader plan, the REPowerEU initiative. It fortifies energy security and diversifies sources after the sanctions imposed on Russia following the Ukraine invasion.

The EHB was funded with an initial budget of €800 million from the Emissions Trading Scheme via the Innovation Fund. It stresses the EU’s commitment to encouraging a robust market for clean hydrogen. Besides, the Innovation Fund is concurrently launching a fund call for 2023 with a substantial budget of €1.4 billion. It emphasizes the financial backing for innovative hydrogen projects.

Since the beginning of the European Green Deal in 2019, the hydrogen sector has seen considerable growth. European Commission President Ursula von der Leyen noted this growth during her commencement address at the European Hydrogen Week 2023. She also revealed the European Commission’s authorization of over 17 billion euros in state aid. It supports approximately 80 hydrogen projects across the EU.

European Hydrogen Bank (EHB)
Source: European Commission

Looking ahead, von der Leyen outlined the next steps for the EHB. She revealed plans for a subsequent auction in spring 2024, with an augmented budget of 2.2 billion euros. Additionally, efforts are underway to establish international collaborations to secure diversified imports of renewable hydrogen from sources outside the EU.

Von der Leyen illuminated the strides made in deploying clean hydrogen technologies. She cited examples like hydrogen-fueled buses in European cities, the initiation of construction for a vast hydrogen network in the Port of Rotterdam, and the maiden flight of the world’s first plane powered by liquid hydrogen over Slovenia.

Moreover, the auction mechanism is designed to encourage hydrogen producers to vie for EU support through fixed-price premiums. It capped at €4.5 per kilogram of hydrogen produced over a decade. Stringent guidelines mandate project commissioning within five years and limit individual projects to a third of the total auction budget. Thus they ensure diversity and fair distribution.

Introducing an innovative concept, the EHB offers an “Auctions-as-a-Service” mechanism. It streamlines the financing of projects that may miss out on Innovation Fund support due to budget constraints. This pioneering approach enables member states to allocate national funding within the EHB framework. Therefore, they eliminate the need for separate state-level auction mechanisms, thereby reducing costs and simplifying hydrogen-related subsidies across the EU. The dawn of the clean hydrogen era is not merely a proclamation but a tangible shift backed by strategic auctions and visionary policies.

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