EU Aims to Switch Grey Hydrogen Projects to Green

The European Commission will set out a new initiative under the REPowerEU plan to support making all hydrogen production green. To that end, the Commission will roll out carbon contracts for difference (CCfD) subsidies for green hydrogen using cash from its “Innovation Fund”.

The REPowerEU plan aims to produce ten million tonnes of green hydrogen within the bloc by 2030, and import another 10 million tonnes. The combined 20 million tonnes would require approximately 600GW of renewable power, and 200GW of electrolyzers.

The Commission plans to roll out CCfD to support and encourage the industry in the uptake of green hydrogen and specific financing for REPowerEU under the Innovation Fund, using emission trading revenues to further support the switch away from Russian fossil fuel dependencies.

The EU plans show that the bloc is not willing to support blue hydrogen as there are repeated mentions of “renewable and fossil-free hydrogen”. The Commission says it will consider a joint purchasing mechanism to buy in renewable H2 at scale at a low price.

According to the bloc’s executive body, hydrogen imports will be overlooked by a new work stream under the EU Energy Platform. It would operationalize the European Global Hydrogen Facility and support Green hydrogen partnerships to kick-start the global renewable hydrogen market.

The Commission wants to utilize”important projects of common European interest” (IPCEI) for domestic production. A complete assessment will be finalized by the summer. The bloc also wants to use the Horizon Europe investments in the Hydrogen Joint Undertaking (€200 million) to double the number of Hydrogen Valleys, such as industrial hubs.

The Commission will also support the development of three major hydrogen import corridors via the Mediterranean, the North Sea area and, as soon as conditions allow, with Ukraine.

More money will also be made available for the transportation of hydrogen.

Meanwhile, the Commission also proposes the next steps in the development of dedicated hydrogen infrastructure and towards a European Hydrogen Backbone. These will include electrolyzers for hydrogen production, EU-internal pipelines and storage.

In addition, the bloc thinks shipping transport capacity for hydrogen also needs to be developed. Financial support will be provided by unlocking new financing options for renewable hydrogen projects under the TEN-E regulation and mobilizing EU funding under the Connecting Europe Facility, Cohesion Policy, the Common Agricultural Policy, and the Recovery and Resilience Fund.

To avoid the risk that investments in renewable energy may be diverted from the energy transition in partner countries to the production of renewable hydrogen as export commodity, strict standards will ensure that renewable hydrogen imports to the EU can only be produced from additional renewable energy sources.

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