EIB spells out hydrogen investment roadmap

The European Investment Bank (EIB) has said investors are recognising the opportunities created by the move to a hydrogen-led net zero economy but challenges remain.

The organisation has published a report on investors’ views on how the public sector can help to address the risks and challenges of the move towards a more hydrogen-fuelled economy.

Its findings are based on consultations by the EIB’s Advisory Services with nearly 50 market participants, at the request of the European Commission under the InnovFin Advisory programme.

The report found that the international investment community recognises both the large market opportunity hydrogen represents as a zero-carbon-emission fuel and the current challenges to its large-scale deployment.

“Improvements in the economic and regulatory conditions of hydrogen-based projects will be required, to reduce the risks they face and their cost of capital, to mobilise the financing needed to meet the European Union’s ambitious targets,” The EIB added. “The interconnected nature of the hydrogen sector also calls for a more coherent value chain-based approach to ensure that the various components of such projects develop in an optimal way and to support the broader development of the hydrogen-based ecosystem.”

To address these challenges, the report highlighted some of the solutions to emerge from the market consultation: the introduction of new credit enhancement and risk-sharing mechanisms to facilitate bank financing of hydrogen projects; initiatives focused on ecosystem development and the coordination of market participants; and advisory services to prepare hydrogen projects for investment.

Jean-Christophe Laloux, director general, head of operations at the EIB said: “Hydrogen is among the technologies with the greatest potential to reduce global carbon emissions, especially in hard-to-abate industrial sectors. As the EU climate bank, we acknowledge both the potential of hydrogen and the many challenges in front of us. This new report provides important findings and recommendations for investors and policymakers to help them overcome some of the challenges and scale up financing for hydrogen projects. At the EIB, including through our Advisory Services, we will continue to work with our partners at the European Commission and project promoters to make hydrogen happen.”

Jean-Eric Paquet, director general for research and Innovation at the European Commission added: “This report carried out by the European Investment Bank in partnership with the European Commission represents an important step to take forward the European Union’s hydrogen agenda. It will better equip policymakers in their efforts to strengthen and expand a sector of such strategic importance for Europe’s decarbonisation, technological sovereignty and energy autonomy in the years to come.”

Since 2014, the EU bank has provided over €550 million in direct financial support to hydrogen-based technologies, which has helped generate total investment of over €1.2 billion.

In addition, the bank has recently or is currently providing advisory support to over 20 hydrogen projects across Europe representing over €1 billion in potential investment.

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