The European Commission has turned to Germany to help ramp up hydrogen imports in the face of growing global competition for supplies.

Germany has agreed to open its state-backed H2Global platform, which launched its first auctions last year, to all EU member states under an agreement reached with the Commission at the end of May.

It will also launch joint auctions with the European Hydrogen Bank (EHB), according to European Commissioner for Energy Kadri Simson and Germany’s federal minister for economic affairs and climate action, Robert Habeck.

“Germany is the first mover in setting up an international auction” Simson, EU energy commissioner

“Germany is set to invest more than €5bn ($5.4bn) towards international hydrogen purchases in the forthcoming years. The first auctions are already taking place,” Habeck says. “This encouraging model is open to international partners. I therefore strongly welcome the idea of joining forces and making H2Global an integral part of the EHB.”

The move comes as the EU needs to lock in competitively priced imports to supplement domestic production to meet its goals for deploying hydrogen at scale by the end of the decade. It aims to have in place 10mn t/yr of domestic production and 10mn t/yr of imports by 2030.

The growth of the EU’s domestic hydrogen supply base depends on the bloc’s ability to attract investment amid competition from other regions, especially the US, which is offering highly competitive incentives under the Inflation Reduction Act.

Total hydrogen consumption in Europe is on track to rise by 60pc by 2030 and more than threefold by 2040 compared with 2023, according to UK-based consultancy Aurora Energy Research.

“We definitely need this step forward in order to remain credible with the implementation of the EU Hydrogen Strategy,” says Jorgo Chatzimarkakis, CEO of industry group Hydrogen Europe. “We will need more renewable hydrogen than we can produce inside the EU in the required timeframe, particularly for the hardest-to-abate sectors. And we also need it at a competitive price.”

Germany’s H2Global, which offers term long-term contracts to suppliers outside the EU and then auctions the product to end-users in its home market, has set the pace with a €900mn first round aimed at buying up derivative products including green ammonia, green methanol and sustainable aviation fuel.

Proactive Germany

The German government’s active approach to hydrogen procurement, which also involves multiple bilateral deals with various international suppliers, has been driven by the twin needs of shoring up energy security after the loss of Russian gas and accelerating its push to decarbonise the economy.

The government’s invitation to all EU member states to use the platform comes after the Dutch government in April agreed to fund a €300mn auction window through H2Global to import green hydrogen derivatives. The Austrian and Belgian governments are also in talks to join the initiative, H2Global CEO Timo Bollerhey told Hydrogen Economist in April.

“Germany is the first mover in setting up an international auction,” says Simson. “We are ready to build on this experience and develop the first European auction with the EHB, open to all EU countries.”

The EU’s auction system, to be operated by the EHB, is not expected to start trials until the end of this year. Critics argue its initial €800mn budget is insufficient for the scale of imports and domestic supply targeted by the EU. “That does not buy you an awful lot of hydrogen—potentially as little as 20,000t, when the EU is looking to procure 20mn t by 2030. That is not really moving the needle too far,” Andrew Doyle, Emea energy project finance specialist at Japanese bank MUFG, told Hydrogen Economist in a recent interview.

Daniel Fraile, chief policy officer at Hydrogen Europe, adds: “We need speed, determination and a strong EU policy to kickstart the European hydrogen industry. Otherwise, we will fall behind and the competitive and abundant renewable hydrogen will flow to other industrial regions.”

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Author: Stuart Penson