Germany to provide 3.5 billion euros for green hydrogen import auction scheme

Germany will provide up to 3.53 billion euros in the period 2027 to 2036 to procure hydrogen and hydrogen-based derivatives from different regions, said the economy ministry in a press release. Through the so-called H2 Global mechanism, and closely linked to the European Hydrogen Bank, Germany will continue to use a “double auction model.” This means hydrogen is purchased through a first auction on global markets, with suppliers offering the lowest price entering long-term contracts. The hydrogen or its derivatives are then sold on through a second auction at lower prices to regional buyers in Europe, which will provide planning security that facilitates the ramp-up of a regional hydrogen infrastructure. The government provides funds to pay the price difference. It had launched the auction scheme in 2022 with an initial 900 million euros, already announcing the additional 3.5 billion euros in later auctions. The economy ministry said it is currently discussing with the European Commission how exactly to use these funds.

The ministry estimates that demand for the fuel will reach between 95 and 130 terawatt hours (TWh) by 2030, primarily to decarbonise industry production. Researchers from Fraunhofer ISE earlier this month said that Germany should form a joint hydrogen alliance with other EU countries to use their market power as future importers of hydrogen derivatives. The EU also has  set up a scheme to support domestic renewable hydrogen production that allows states to give monetary support to projects that did not previously secure EU funding in a wider auction.