First hydrogen bank auction will help gauge market, EU Commission says

The first auction to support green hydrogen production in Europe will help understand supply and demand on the emerging EU market when it takes place at the end of the year, according to the European Commission.

The European Commission outlined plans to create a Hydrogen Bank in March 2023, aiming to bridge the cost gap between clean hydrogen and current hydrogen production based on carbon-emitting fossil fuels.

“This is the first time we do such an auction, and we really, truly hope that it will also give clarity on the market and the market price,” said Alexandre Paquot from the European Commission’s climate department who spoke at a EURACTIV event on 25 May.

Renewable hydrogen produced from water electrolysis is considered a possible low-carbon feedstock for industry, a fuel for hard-to-electrify industrial sectors and an energy storage solution.

The EU aims to reach 20 million tonnes of renewable hydrogen production by 2030, half of which should be met by domestic supplies. But production still costs more than fossil hydrogen processes, and there are only 40 gigawatts of electrolyser capacity currently in the pipeline, compared to the 160 gigawatts needed across the EU.

“There needs to be support, and this is why we came up very clearly with this Hydrogen Bank,” said Paquot, adding that this is accompanied by further support from EU countries, including state aid and money from the EU COVID recovery fund.

cover photo:Exterior view of an electrolyser supposed to generate clean, green hydrogen at Air Liquide company in Germany [Fabian Strauch / EPA-EFE]