European Commission gives German $1 billion hydrogen scheme green light

A EUR900 million ($1 billion) plan to subsidise green hydrogen production in non-EU countries for use in Germany has been approved by the European Commission.

Berlin launched the H2Global scheme earlier this year because it believes that Germany will not be able to produce enough affordable green hydrogen from renewable energy inside its own borders.

The European Commission ruled that the state aid provided by Germany is “necessary and has an incentive effect, as the projects would not take place in the absence of public support”.

“This €900m German scheme will support projects leading to substantial reductions in greenhouse gas emissions, in line [with] the EU’s environmental and climate objectives set out in the Green Deal,” said Competition Commissioner Margrethe Vestager.

“It will contribute to addressing the increasing demand for renewable hydrogen in the Union, by supporting the development of this important energy source in areas of the world where it is currently not exploited with a view to importing it and selling it in the EU. The design of the scheme will enable only the most cost effective projects to be supported, reducing costs for taxpayers and minimising possible distortions of competition.”

Under the H2Global scheme, a new Hydrogen Intermediary Network Company (branded Hint.Co) would buy and sell the imported green hydrogen.

It would issue requests for proposals for the production of renewable hydrogen, or derivatives such as green ammonia, green methanol and e-kerosene, with individual projects outside the EU then bidding into tenders, with Hint.Co awarding ten-year hydrogen purchase agreements to the winners.

All the bidders would need to contribute to the construction of new renewables projects, as hydrogen made from existing energy supplies is not allowed under the scheme.

The company would also act as a guarantor for both the supply and demand of green hydrogen, to help enable cheap finance for the projects.

The European Commission’s Hydrogen Strategy, announced this summer, says it wants to see 40GW of renewables-powered electrolysers installed in the EU by 2030, with a further 40GW in the bloc’s “neighbourhood” — nearby non-EU countries such as Ukraine — by the same date.

Follow us on twitter: @risksEmerging

Twitter feed is not available at the moment.