Funding for EU’s second hydrogen auction increases to around €2 billion

Spain, Lithuania and Austria will participate in the ‘Auctions-as-a-Service’ scheme as part of the second European Hydrogen Bank auction, which will be launched on December 3, 2024. In addition to the €1.2 billion in EU funding from the Innovation Fund, the three countries will deploy over €700 million in national funds to support renewable hydrogen production projects located in their countries. The total funding mobilized by the auction will therefore be around €2 billion.

Spain is allocating between €280 and €400 million for the scheme, using funds from its Recovery and Resilience Plan (RRP), the European Commission revealed, adding that the total support available will depend on the amount of funds used in the country’s existing State aid scheme for hydrogen clusters and valleys, which is also funded from RRP resources. The exact amount of support is expected to be confirmed by spring 2025.

Lithuania is dedicating around €36 million for the scheme, from their Modernization Fund budget. The Commission said that the participation will help the country reach its national target of 1.3 gigawatts (GW) of electrolysis capacity and 129 kilotonnes of renewable hydrogen production annually by 2030.

Austria is committing €400 million from its national budget to the scheme. As disclosed, hydrogen producers will be eligible for a maximum grant of €200 million per project, with a maximum capacity of 300 megawatts (MW) of production to be supported in this auction.

“The mobilisation of this additional funding under a single European auction platform is an efficient system that increases opportunities and reduces costs for industry. In effect, participating companies in these countries are making one bid for two different sources of funding. The scheme enables Member States to finance additional projects in their country, even after the Innovation Fund’s budget has been fully allocated,” the Commission pointed out, encouraging other Member States to also take part in the scheme in the future.

Maroš Šefčovič, Executive Vice-President for European Green Deal, Interinstitutional Relations and Foresight, commented: “Renewable hydrogen will be crucial for the decarbonisation of our economy, especially in hard to abate industry sectors. European companies need our support to keep up their competitive edge. I am pleased to see that Spain, Lithuania and Austria have decided to contribute to our European efforts to create a hydrogen market with new financial contributions. I can only invite others to follow this good example.”

Sara Aagesen Muñoz, Secretary of State for Energy for Spain, stated that the country’s contribution to the scheme is a big step forward in contributing to European objectives in reaching climate neutrality, and Dainius Kreivys, Energy Minister of the Republic of Lithuania, remarked that by investing in RFNBO hydrogen, Lithuania is not only advancing its energy security but also contributing to a “cleaner, more resilient Europe.”

Leonore Gewessler, Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology of Austria, noted: “To ensure that Austria remains competitive in the areas that need hydrogen for their processes and those which are difficult to electrify – such as energy-intensive industry, shipping and air traffic – it is of utmost importance that Austrian companies are able to participate in the Auctions of the European Hydrogen Bank.”

As mentioned, the Commission plans to launch the second renewable hydrogen auction via the Innovation Fund on December 3, 2024. Published on September 27, 2024, the terms and conditions (T&Cs) for the second auction set out the main elements and requirements to apply.

As part of the pilot hydrogen auction, the European Commission selected 85 net-zero projects to receive €4.8 billion in grants from the Innovation Fund. Among the winners are projects of different scales, covering a wide range of sectors from the following categories: energy-intensive industries, renewable energy, energy storage, industrial carbon management, net-zero mobility (including maritime and aviation) and buildings.

The selected projects are set to enter into operation before 2030 and over their first ten years of operation are expected to reduce emissions by about 476 million tonnes of CO2 equivalent. According to the Commission, this will strengthen European industrial manufacturing capacity, reinforce Europe’s technology leadership and supply chain resilience and contribute to European decarbonization objectives, reducing emissions from the sectors that are particularly difficult to decarbonize.