(Brussels/Berlin) – The Federal Ministry for Economic Affairs and Climate Protection (BMWi) has approved 900 million euros to finance the “H2Global” funding program. H2Global was founded in June 2021 by 16 companies and serves as a trading platform for green hydrogen and its derivatives.
Hydrogen is purchased in non-EU countries on the basis of long-term purchase contracts and marketed in Germany via annual auctions. These are managed and carried out by the Hydrogen Intermediary Network Company (HINT.CO) Foundation, which was founded in November and is based in Leipzig. It balances the existing difference between supply and demand prices using a support mechanism based on the “Contracts for Difference” (CfD) approach.
“Since the production price of green hydrogen is still relatively high in the current market ramp-up phase, HINT.CO is expected to pay more in purchasing than it can earn through sales. The resulting losses will be offset by federal funding for a maximum of ten years,” says the BMWi. Over time, the losses would reduce as the willingness to pay for sustainable energy sources increases in the foreseeable future.
EU approves H2Global under state aid law
A few days before the BMWi's financial commitment, the European Commission had approved the German funding scheme in terms of state aid. The H2Global project aims to meet the EU's demand for renewable hydrogen, "which is expected to increase significantly in the coming years, by supporting the development of the untapped potential of renewable resources outside the EU," says the Commission's decision.
Commission Executive Vice-President Margrethe Vestager, in charge of competition policy, said the German scheme would support projects "that are in line with the EU's environmental and climate objectives set out in the Green Deal and lead to a significant reduction in greenhouse gas emissions." The design would only support the most efficient projects, “thereby reducing costs for taxpayers and keeping possible distortions of competition to a minimum,” as a large number of potential companies could take part in the tenders. The aid is therefore granted “by way of competitive tenders”.
“Producers of renewable hydrogen and hydrogen derivatives such as green ammonia, green methanol and e-kerosene wishing to participate in the tenders must comply with the sustainability criteria for the production of renewable hydrogen and its derivatives set out in the revised Renewable Energy Directive (RED II). They must also “contribute to the use or financing of the additional electricity from renewable sources that is required to supply the electrolyzers that produce the hydrogen.”
First deliveries planned for 2024
The first offtake contracts under H2Global are scheduled to be concluded in 2022. The first deliveries of sustainable hydrogen-based energy sources to Europe are planned for 2024.
The H2Global funding program is designed as part of the Federal Government’s National Hydrogen Strategy. It was developed by the German Society for International Cooperation (GIZ) GmbH with an interdisciplinary team of experts and in cooperation with the private sector, associations and the German Hydrogen and Fuel Cell Association (DWV).
deep link
https://germany.representation.ec.europa.eu/news/eu-kommission-genehmigt-deutsche-beihilferegelung-fur-erzeugung-von-erneuerbarem-wasserstoff-2021-12-20_de
https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2021/12/20211223-900-millionen-euro-fuer-wasserstoffprojekt-h2global.html
https://h2-global.de
Photos
EU approval granted: Hydrogen can be produced in non-EU countries via a funding mechanism and sold in the EU. © H2Global
