Germany’s €900mn ($1bn) H2Global support scheme for green hydrogen projects outside the EU is in line with EU state-aid rules and can go ahead, the European Commission says.

H2Global is designed to help secure EU green hydrogen imports to meet demand as it rises over the next decade.

Germany is expected to rely on imports for about half of its clean hydrogen needs, despite the buildout of domestic production. H2Global was originally proposed by the previous German government but the country’s recently installed coalition of the Social Democratic Party, the Free Democratic Party and the Greens has also pledged to back the scheme as part of its hydrogen strategy.

“The design of the scheme will enable only the most cost-effective projects to be supported” Vestager, European Commission

“This €900mn German scheme will support projects leading to substantial reductions in greenhouse emissions, in line the EU's environmental and climate objectives set out in the Green Deal,” says the Commission’s head of competition Margrethe Vestager. “It will contribute to addressing the increasing demand for renewable hydrogen in the Union, by supporting the development of this important energy source in areas of the world where it is currently not exploited with a view to importing it and selling it in the EU.”

Under the scheme, a German government-backed entity will buy green hydrogen from non-EU projects under long-term offtake agreements, giving the project developers and their financiers certainty over future revenue. The hydrogen will then be sold within the EU under short-term resale contracts.

Contracts will be awarded via competitive tenders using a double auction model to determine the lowest bid price for hydrogen production and the highest selling price for hydrogen consumption. The scheme is expected to run for ten years from the first contract award.

Germany’s new coalition government aims to accelerate the country’s clean hydrogen strategy with a target of 10GW of electrolyser capacity by 2030—doubling the goal set out last year by the previous administration—according to a joint policy statement.

“The design of the scheme will enable only the most cost-effective projects to be supported, reducing costs for taxpayers and minimising possible distortions of competition,” says Vestager.

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Author: Stuart Penson