The European Commission will roll out carbon contracts for difference (CfD) for hydrogen projects via the EU Innovation Fund, according to the official RepowerEU proposal published today.

The Innovation Fund is one of the world's largest funding programmes for low-carbon technologies and is financed by the sale of allowances from the EU emissions trading system (ETS).

The Commission will double the funding for this year’s Innovation Fund call for large-scale projects to around €3bn ($3.2bn), financed by higher-than-expected ETS revenues ancitipated in 2022 and 2023. The call will for the first time feature a section for industrial hydrogen applications.

As part of the same package, a newly created EU Energy Platform will enable common purchases of hydrogen as well as gas by pooling demand, optimising infrastructure use and coordinating outreach to suppliers.

The Commission will also consider the development of a joint purchasing mechanism that will negotiate and contract hydrogen and gas purchases on behalf of participating member states.

10mn t/yr – 2030 hydrogen production target

“As part of our RepowerEU plan, we propose an operational way forward, with a joint procurement mechanism and a joint outreach to supplying countries,” says Commission president Ursula von der Leyen.

“This way, we can secure the energy imports we need without competition between our member states.”

Corridors of certainty

As the Commission has previously outlined, the plan sets a 2030 target to produce 10mn t/yr of hydrogen from within the EU and import a further 10mn t/yr.

Major hydrogen import corridors will be developed in the Mediterranean, the North Sea and, eventually, Ukraine.

The Commission will this week publish two draft legal acts to define and boost the production and market development of renewable hydrogen within Europe. Work will also accelerate with industry on technical hydrogen standards and the expedition of authorisation procedures for hydrogen infrastructure.

Hydrogen production will be boosted by accelerating the adoption of state-aid decisions on Important Projects of Common European Interest, for which a complete assessment will be finalised by the summer. And Horizon Europe investments in the Hydrogen and Fuel Cell Joint Undertaking will be topped up to €200mn in an attempt to double the number of ‘hydrogen valleys’—the EU term for hydrogen clusters—from 23 to 46 by 2025.

The Commission says it will also implement its recent declaration with electrolyser manufacturers to address bottlenecks in the value chain by putting in place an enabling regulatory framework, facilitating access to finance and promoting efficient supply chains.

Building infrastructure

The Commission has also proposed the next steps in the development of dedicated hydrogen infrastructure—laying out plans for internal pipelines and storage, and further defining its ambition to develop shipping transport capacity for hydrogen.

Financial support for these infrastructure developments will be provided by unlocking new financing streams under the Trans-European Networks for Energy regulation and mobilising further EU funding from the Connecting Europe Facility, the Cohesion Policy, the Common Agricultural Policy, and the Recovery and Resilience Fund.

500TWh – Additional power generation required by 2030

A regular progress report on the production, transport and uptake of hydrogen in different sectors will be prepared, starting in 2025, in close cooperation with member states and strengthening collaboration within the EU’s Hydrogen Energy Network, the Commission says.

Stepping up domestic renewable hydrogen ambition requires additional investments in renewable energy production. Around 500TWh of additional power generation will be required in 2030, according to the Commission. It has issued separate legislation to increase the renewables rollout and raise the EU’s 2030 target for renewables in final energy consumption from 40pc to 45pc.

The RepowerEU package still needs to be agreed by MEPs and member state representatives in the Council of the EU before it becomes law.

---

Author: Tom Young