For the existing and future hydrogen users in Europe, the start of the first €900 million tranche of the H2 Global auction program represents a significant milestone.
The foundation has 4.4 billion euros in endowment. Companies that meet the requirements today may submit specific proposals for the production and supply of green hydrogen beginning in early 2023 and running until the end of 2033. One requirement is that the hydrogen is made outside of the EU.
And the process goes like this: On the one hand, the foundation carries out long-term purchasing agreements to provide planning and financial certainty to hydrogen producers. H2 Global, on the other hand, completes sales agreements to meet the need for green hydrogen. The company “H2 Global” purchases the goods at the lowest prices imaginable before selling them to the customer who offers the highest price. The foundation should make up the difference from the subsidies provided by the Federal Ministry of Economics if there is a loss between the acquisition and sale, as is currently anticipated.
According to the offer, the Federal Ministry of Economics wants to promote initiatives in nations where green hydrogen can be produced at a reasonable cost. More specifically, “green technologies are to be built there and a contribution is to be made to cover the growing need for green hydrogen” in Germany and the EU
One of the Federal Government’s most crucial tools for enabling the provision of green hydrogen to the industry is “H2 Global.” Green hydrogen is viewed as the solution to decarbonizing industrial processes, such as those in the chemical and steel industries. The businesses are concentrating on harnessing green hydrogen to make carbon-dioxide-intensive operations climate neutral.
Although in high demand, green hydrogen is difficult to find.
The issue is that there is currently only a very tiny volume of green hydrogen available. To meet its requirements to reduce greenhouse gas emissions, the industry will need enormous amounts of green hydrogen in the coming years.
Due to Germany’s low capacity for producing power from renewable sources, the majority of experts believe that the country can only create a portion of the hydrogen that is needed there. Thus, a sizable portion of the green hydrogen will be generated in the global south’s wind and solar-rich nations. “Hydrogen partnerships” are being developed by the German government. Robert Habeck, the federal minister of economics and a Greens member, is currently traveling in southern Africa to do this.
In recent months, businesses like the steel producers Thyssen-Krupp and Salzgitter have made the decision to invest billions in the conversion of their production to hydrogen-based processes. The traditional blast furnace pathway is being superseded in the steel industry by the so-called direct reduction technique. The steel produced has no effect on the environment if green hydrogen is used. However, the initial costs of the new process will be much higher than those of the traditional production method.
