September 14 will remain a memorable date for hydrogen. During her State of the Union address, European Commission President Ursula von der Leyen announced the creation of the European Hydrogen Bank, for which €3 billion will be allocated from the Innovation Fund.
The European Hydrogen Bank is part of a strengthened EU energy strategy
In early July, we reported on the call by the Committee on Industry, Research and Energy to update the RED II Directive and increase the share of renewables in the EU’s total energy mix to 45% by 2030. This is yet another strengthening, this time to the Fit for 55 climate package proposed just a year earlier. In a September plenary vote, this goal was adopted, with a call for a simplified regulatory framework conducive to investment in member states.
The strengthening of the RED II is closely linked to the development of the European hydrogen market. This one is becoming a key element of the EU’s energy and climate strategy, responding to the current crisis in the EU, resulting from the cutting off of Russian imports as a result of its aggression against Ukraine.
According to the EU’s REPower plan, the European Union aims to transform the economy to increase the use of renewable hydrogen, and thus meet the projected demand for the fuel, estimated at 20 million tons per year by 2030. Of this, 10 million tons are to come from production within the EU, and the remaining 10 million tons will be imported. Along with strengthening production volumes, the plan also indicates more ambitious targets for specific sectors:
- Transportation – to reduce GHG emissions by at least 16% by 2030, and to increase the share of non-biological renewable fuels (RFNBO) to 5.7% of all fuels by 2030. This includes 1.2% in maritime transport, which is seen as one of the most difficult decarbonization targets to achieve.
- Industry – by 2030. 50% of the industry should switch to renewable hydrogen, with 70% by 2035.
European Hydrogen Bank – €3 billion for investment in renewable hydrogen production
The RED II update, particularly about mobility and industry, requires the provision of production capacity to meet growing demand. To implement investments in renewable hydrogen production as soon as possible, the European Hydrogen Bank is to provide an initial budget of €3 billion from the existing Innovation Fund. The funds are to support the European Commission’s main objectives, including:
- accelerating the economies of scale of Europe’s hydrogen economy to meet a doubled production target by 2030 (the prior target indicated production of 5 million tons of renewable hydrogen per year),
- Fill the current investment gap in the growing market to combine future demand and supply for the new fuel,
- to create a strong and modern economy in Europe that is sustainable and energy independent.
The European Hydrogen Bank is expected to become an animator of the transition and hydrogen a true “game changer” in the process of decoupling from fossil fuels.
Positive market reaction
The European hydrogen market has received the news of the creation of a new source of financial support for hydrogen projects with exceptional optimism. Following the address by the President of the European Commission, among others, representatives of the Portuguese and Spanish governments stressed that investments in hydrogen will make it possible to achieve energy autonomy and build interconnections that will contribute to the creation of a united Europe in the field of energy and hydrogen distribution. Such projects are already being planned in the Iberian Peninsula area and France.
The initiative has also been well received by companies in Poland. The domestic market is developing slowly and is still hampered by the lack of a unified hydrogen law and adequate public and private funding. Due to the innovativeness of the technology and the limited number of suppliers, as well as the complicated situation of RES in Poland, investments in renewable hydrogen require relatively high capital expenditures, which is an undeniable barrier to its massification.
This one, according to the announcement, is to be minimized by the European Hydrogen Bank, but for a full assessment, it is necessary to know the detailed assumptions for the initiative. The coming months will be crucial in terms of finalizing the position, and we, as a producer of clean hydrogen production technologies, will follow further information on the European Hydrogen Bank with our hand on the pulse.
