Germany joins EU hydrogen auction scheme in bid to ramp up domestic production

Germany has become the first member state to join an EU scheme to support domestic renewable hydrogen production through the European Hydrogen Bank. Under the "Auctions-as-a-Service” scheme, Germany will be able to give monetary support to projects within the country that did not previously secure EU funding in a wider auction. The government will thus be able to select the most competitive projects without the need to hold a separate national auction. The economy ministry announced it would provide 350 million euros for electrolyser projects in Germany, on top of the 800 million already foreseen for European projects. Public subsidies would then cover the cost difference between producing green hydrogen and the price the market is willing to pay. "Renewable hydrogen will play a key role in the process of global decarbonisation," Germany's economy minister Robert Habeck said. "For policymakers and market participants in Germany and beyond, this auction represents a big step, increasing the availability of renewable hydrogen and supporting the nascent value chain for renewable hydrogen." State aid approval procedures, which are necessary when projects are supported by public money, will be streamlined as part of the scheme.

Hydrogen made from renewable sources (green hydrogen) is seen as essential for the path to climate neutrality by 2045, especially for decarbonising the steel, chemical and aviation industries. However, green hydrogen remains more expensive to produce than hydrogen made from fossil gas, so Germany and other EU governments aim to support the build-up of the market to bring down prices. With its National Hydrogen Strategy, Germany aims to increase domestic electrolyser capacity to produce green hydrogen to at least 10 GW by 2030.