At the European Hydrogen Week conference on Tuesday, Executive Vice President of the European Commission Frans Timmermans made the announcement that €3 billion would be set aside from the upcoming large-scale request for the Innovation Fund in November to boost the hydrogen economy.
Since Putin’s invasion of Ukraine, Timmermans said, “hydrogen has to play a significant part in our energy transition, a crucial role in establishing European energy sovereignty, and a key role in weaning us off our dependence on Russian fossil fuels.”
Timmermans mentioned four crucial priorities in order to encourage the expansion of hydrogen:
Reduce the approval procedure for adding new renewable energy to the grid in order to speed up investments in renewables, as doing so is crucial for attaining objectives for renewable hydrogen.
Speed and substance are now necessary, according to regulatory certainty on the definition of renewable hydrogen and the additionality principle.
completing the legal framework for the development of the hydrogen market and its sub-targets
Allocation of funds to help renewable hydrogen compete on price with unrestricted hydrogen production
Funding
While pointing out that 30% of the world’s previously announced renewable hydrogen projects were located in Europe, Timmermans expressed worry that only 10% of these projects had made a final investment decision (FID), prompting him to pledge significant monetary support to help close the gap.
Timmermans stated that in order to improve industrial competitiveness, “we need to dramatically lower the cost of creating renewable hydrogen and diminish the importance of fossil fuels in our energy system.”
The next large-scale call for the Innovation Fund will begin on November 3 with a €3 billion budget, according to Timmermans. The call will focus on three REPowerEU topics that will directly support hydrogen along the entire value chain, including equipment manufacturing, hydrogen production, and use.
The funding breakdown included the following three components:
- 1 billion euros will be used for industrial hydrogen generation and electrification. Timmermans stated that initiatives that both, directly and indirectly, electrify industrial processes as well as those that produce renewable hydrogen are welcome under this window.
- Budgeted for clean technology production of essential components for renewable energy, energy storage, and renewable hydrogen was €700 million.
- €300 million for large-scale prototype projects with significant carbon-reduction potential
H2 Bank
Timmermans spoke on the challenge of reaching the commission’s target of 10 MT of renewable hydrogen production in Europe by 2030 and emphasized that the €3 bn of Innovation Fund allocation would not be sufficient, which is why the commission has committed to creating a European Hydrogen Bank.
According to Timmermans, the bank structure would offer an Innovation Fund contracts for difference (CfD) program that will “cover 100% of the cost gap in comparison to grey [unabated] hydrogen for renewable hydrogen produced in the EU.”
By the third quarter of 2023, according to Timmermans, the hydrogen bank would start its pilot phase, which would “provide more funding…but it should also de-risk the hydrogen market for Europe for both domestically produced and imported hydrogen.”
