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May 10, 2024

EU To Fund Seven New Renewable Hydrogen Projects

The EU is investing more than £620 million across seven renewable energy projects

The European Union has allocated over £620 million to fund seven renewable hydrogen projects across Europe. These projects were chosen through the first competitive bidding process under the European Hydrogen Bank, with funding obtained from the EU Emissions Trading System. The successful bidders will manufacture renewable hydrogen within Europe and will receive subsidies to make up for the difference between their production costs and the current market rate for hydrogen, which is influenced by non-renewable producers.

These seven projects were selected out of a total of 132 submissions. They aim to produce 1.58 million tonnes of renewable hydrogen over 10 years, which could reduce over 10 million tonnes of CO2 emissions. The sites for these projects are located in Finland, Spain, Portugal, and Norway. The winning bidders are now responsible for drafting their respective grant agreements with the European Climate, Infrastructure, and Environment Executive Agency (CINEA), which are expected to be finalized no later than November 2024.

The selected projects must begin renewable hydrogen production within five years of signing the grant agreement. They will be entitled to the fixed premium subsidy for up to 10 years for certified and verified renewable hydrogen production. The Commission plans to launch a second European Hydrogen Bank auction by the end of the year, building on the insights gained from this pilot auction and engaging stakeholders further before its launch.

The inaugural auction of the European Hydrogen Bank received 132 bids from 17 European nations, exceeding the available €800 million budget by over 15 times. Out of these, 119 proposals met eligibility criteria and were ranked based on the bid price, subsequently evaluated by the European Climate, Infrastructure, and Environment Executive Agency (CINEA). Bid submissions ranged from €0.37 to €4.5 per kilogram of renewable hydrogen produced.

This development coincides with the EU's recent adoption of a new law aimed at boosting the production of key decarbonisation technologies. The Net Zero Industry Act (NZIA) introduced legislation to support a suite of 19 specific renewable technologies, including solar and thermal technologies, batteries, and heating pumps. The legislation also outlines a series of targeted measures to facilitate their development within the EU, including streamlining permitting processes, setting a target of achieving 50 million tonnes of annual CO2 storage by 2030, and incorporating sustainability and resilience criteria into public procurement and auctions.

Christian Ehler, the lead MEP for NZIA, commented:

"This vote heralds positive outcomes for European industry and establishes a precedent for the forthcoming term. To realize our economic, climate, and energy aspirations, we require a robust industrial sector in Europe. This Act represents the initial stride toward aligning our market with this objective."
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