The European Commission has awarded nearly €1 billion ($1.13 billion) in funding to 15 renewable hydrogen production projects across five countries, aiming to scale up the clean energy source and reduce dependency on fossil fuels, it said on Tuesday.

Funded under the EU’s Innovation Fund via revenues from the Emissions Trading System, the selected projects are expected to produce 2.2 million tonnes of renewable hydrogen over the next decade. The Commission estimates this will help avoid more than 15 million tonnes of carbon dioxide emissions.

Accelerating Clean Energy Transition

The projects, selected under the second auction of the European Hydrogen Bank, will receive €992 million in subsidies to bridge the cost gap between renewable hydrogen production and current market prices.

“This funding is a crucial step toward decarbonizing key sectors such as transport, chemicals, methanol, and ammonia production,” the Commission stated.

Twelve of the selected initiatives will receive fixed premium support ranging from €0.20 to €0.60 per kg of hydrogen produced. For the first time, three maritime sector-focused projects have also been selected, receiving €96.7 million in total, with subsidies between €0.45 and €1.88 per kg.

Individual project grants range from €8 million to €246 million, disbursed over a ten-year period.

National Co-Financing Expands Reach

In addition to EU-level support, Spain, Lithuania, and Austria are providing up to €836 million in national funding through the “Auctions-as-a-Service” scheme.

This mechanism allows member states to co-finance high-quality projects that meet EHB criteria but were not awarded EU funding due to budget constraints.

The feature is open to all EU member states and offers a simplified path for national authorities to leverage the EU auction platform to fund local hydrogen initiatives.

Next Steps and Future Auctions

The 15 selected projects will now enter grant agreement negotiations with the European Climate, Infrastructure and Environment Executive Agency. Contracts are expected to be signed by September or October 2025.

Projects must achieve financial close within 2.5 years and begin hydrogen production within five years of contract signature. The fixed premium subsidies will be paid for up to 10 years, contingent on certified renewable hydrogen output.

A third EHB auction, with a budget of up to €1 billion, is scheduled for the end of 2025. The Commission also plans to launch the “Hydrogen Mechanism,” an online marketplace to connect producers and consumers.

Driving Toward 2030 Climate Goals

The Innovation Fund, supported by the ETS and projected to have €40 billion in total funding between 2020 and 2030, is central to the EU’s strategy for reaching climate neutrality.

The European Hydrogen Bank bolsters the EU’s REPowerEU target to produce 10 million tonnes of renewable hydrogen domestically by 2030. It aims to unlock private investment by reducing financial risks and connecting supply with demand across Europe.

In its inaugural 2023 auction, the EHB awarded nearly €700 million to six renewable hydrogen projects.

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