The EU has published proposals to boost security of supply for its energy transition as part of its Green Deal Industrial Plan. These include plans to support domestic hydrogen production via its Hydrogen Bank, slashing permitting timelines for electrolyser and fuel cell manufacturing facilities, and establishing diversified supply chains for critical minerals.

The EU plans to award a fixed premium per kilogram of hydrogen produced over a ten-year period in its upcoming auction for domestic renewable hydrogen projects this autumn, according to details unveiled in the bloc’s Green Deal Industrial Plan. Payment will be based on delivery of verified and certified volumes with no payment before entry into operation.

The €800mn ($853mn) pilot auction will draw on the EU Innovation Fund. The European Commission is consulting on the design and mechanism of the auction, with a final workshop on terms and conditions to be held in May this year.

“The Hydrogen Bank will aim to close the current investment gap on the development of renewable hydrogen and ensure the EU maintains its global lead in this critical technology” Timmermans, European Commission

The Commission plans to extend the Innovation Fund auctions to run ‘auctions-as-a-service’ for member states from a central platform. This would use both the Innovation Fund and member state resources to fund renewable hydrogen projects without prejudice to state aid rules.

The Commission estimates that importing hydrogen and its derivatives by ship would require a market premium of €3–5/kg. It notes that “after 2025, the market premium is expected to decline due to decreasing production costs and increased demand for green products produced with renewable hydrogen” amid a tightening of the EU Emissions Trading Scheme and proposed European Taxation Directive.

The Commission adds that a budget of €1bn would enable 40,000–60,000t/yr of renewable hydrogen production capacity to come online. Based on expectations of declining production costs and rising demand, the Commission expects a total green premium of €90–115bn to meet its 20mn t/yr hydrogen production and import target by 2030.

“The sooner the production of renewable hydrogen is scaled up, the smaller this green premium is likely to be,” warns the Commission.

Supply chains

The Commission has also unveiled its proposed Net Zero Industry Act, which seeks to increase supply security for energy transition technologies. The proposal includes electrolysers and fuel cells as one of eight strategic technology segments, which must install enough manufacturing capacity in Europe to meet 40pc of domestic deployment by 2030. European electrolyser manufacturers will have to deploy at least 100GW of capacity by then.

The proposal introduces time limits on permit-granting for net-zero manufacturing projects based on size and status. For any net-zero technology manufacturing project, permitting must take place within 12 months if the yearly manufacturing capacity is lower than 1GW and 18 months if higher than 1GW. For strategic projects, this is cut to nine months if under 1GW and 12 months if more than 1GW.

“Net-zero technologies and renewable energy are crucial to reaching climate neutrality,” says Frans Timmermans, executive vice-president for the European Green Deal at the Commission. “Clean tech is a booming market, and the more we enhance our competitive advantage, the more quality jobs can be created in Europe.”

“The Hydrogen Bank will aim to close the current investment gap on the development of renewable hydrogen and ensure the EU maintains its global lead in this critical technology,” he adds. “In the global race to net zero, we want to put EU industry in the best possible position to compete. Today’s proposals do just that.”

The Commission has also included platinum group metals, battery-grade nickel and copper in its list of strategic raw materials covered by its proposed Critical Raw Materials Act. The act aims to ramp up domestic production and processing. It also requires no more than 65pc of the EU's annual consumption of each strategic raw material at any relevant stage of processing from a single third country, in an effort to diversify supply chains.

“Critical raw materials are the foundations for the green revolution, and we warmly welcome this timely and relevant proposal. We must ensure a sustainable and secure supply of these materials to our manufacturers, as well as an increased focus on circularity to manage their demand; today’s proposal is the first step towards that,” says Daniel Fraile, chief policy officer at Hydrogen Europe.

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Author: Polly Martin