The Dutch government is in discussions to contribute financially to a €4.5bn ($4.3bn) German initiative to attract green hydrogen imports, the continent’s first attempt at organising a traded hydrogen market.

The H2Global initiative received an initial German government backing of €900mn late last year to set up an auction system for sellers and buyers of green hydrogen. While spearheaded by Germany, the initiative is intended to become a Europe-wide instrument for attracting green hydrogen imports to the continent.

The Netherlands is now the first governmental partner to join the initiative.

“Discussions will start shortly with H2Global and the German [Federal Ministry for Economic Affairs and Climate Action] on how the Netherlands can participate in and contribute to the tenders of H2Global,” the Dutch government tells Hydrogen Economist.

“For now, the most important thing is that we align, because we have the same target” Rosing, European Commission

“The aim is to be involved in the second round of tenders—so not the first three tenders that have been announced. There has been no decision yet on the exact amount of funding,” he adds.

H2Global is set to launch its first auction “in the next couple of weeks”, pending approval from the German government, said Timo Bollerhey, managing director of H2Global, on the sidelines of the World Hydrogen Congress in Rotterdam. The initiative has 54 founding members among which are German energy firm Uniper, German utility RWE, France’s Engie and oil major BP.

Dutch trading window

The Dutch will be able to define import regions and other demand requirements from within the scheme. “Last week, the Dutch prime minister and the German chancellor announced the Netherlands will join the [Hydrogen Intermediary Network Company: Hintco] and the H2Global model to create their own windows under the instrument,” Bollerhey says.

Through Hintco, the initiative will conclude long-term purchase contracts on the supply side and short-term sales contracts on the demand side. Based on a contracts-for-difference mechanism, the price gap between suppliers and buyers will then be covered by Hintco using government funding. The products being considered for the first auctions are green fuels such as hydrogen, ammonia and methanol.

Germany and the Netherlands both have ambitious hydrogen strategies, counting on the sustainably produced version of the fuel to help decarbonise hard-to-abate industries and act as a replacement for Russian gas, which both nations have relied on heavily in the past.

The Netherlands wants to make use of its high-tech port infrastructure, including Europe’s largest port at Rotterdam, and its extensive gas network to become a hub for European hydrogen trading.

“Participation in H2Global will help the Netherlands to be part of the first international supply chains. It will also be useful for the government to learn firsthand how this market is developing and what is needed to further facilitate the international market development,” the Dutch government says.

The German government has earmarked another €3.6bn to inject into H2Global next year, but its 2023 budget remains to be approved by the legislature.

EU hydrogen bank

In parallel to the H2Global initiative, the European Commission has announced the creation of a €3bn hydrogen bank that aims to close the price gap between offers made by buyers and sellers.

Justin Rosing, policy officer at the European Commission’s Directorate-General for Energy, says the institution is considering auctions as a mechanism to provide the best pricing signals.

“We also have to look at the international dimension and make sure we align with existing instruments like, for example, the German H2Global. For now, the most important thing is that we align, because we have the same target,” Rosing says.

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Author: Karolin Schaps