On Thursday, May 7, the European Commission selected nine winning projects of the European Hydrogen Bank’s third auction, the institution responsible for supporting the production and import of hydrogen derived from clean energy sources. The projects, located in seven countries of the European Economic Area – Spain, Germany, Greece, Denmark, Austria, Finland, and Norway (which is not part of the Union) – will receive a total of 1 billion euros and are expected to ensure a capacity of nearly 1.1 gigawatts and production of over 1.3 million tons in the first ten years of operation.
THE ROLE OF THE ETS
The funding will come from the ETS, the EU system for trading carbon dioxide emission allowances, that is, the mechanism underlying the market for buying and selling CO2 emission “permits” among companies, aimed at discouraging the use of fossil fuels and promoting low-carbon alternatives.
THE HYDROGEN PROBLEM
Hydrogen is an energy carrier, that is, a “container” of the energy used to produce it. It theoretically has the right characteristics to replace fossil fuels in all those applications difficult to electrify, such as steelmaking, aviation, or maritime transport: it does not release CO2 when burned, can store energy for a long time, and can be transported over long distances, for example.
The European Union has heavily invested in hydrogen – the May 7 statement reads that it can contribute “to the clean transition, energy independence, and EU security” – particularly in the so-called “green” variant, that is, derived from electricity generated from clean sources, such as renewables or nuclear. However, hydrogen can also be obtained from methane, at lower prices but with higher emissions: the most polluting variant is called “grey,” while the “blue” variant involves the use of CO2 capture technologies.
The problem with hydrogen is not so much theoretical as practical: “green” hydrogen, in particular, is quite expensive and for this reason struggles to find buyers. Beyond costs, there is also an infrastructure problem, largely absent to date: hydrogen is complicated to store both because the risk of leaks is high and because it requires very low temperatures and high-pressure tanks.
– For further reading: Why the hydrogen market is collapsing
A FIXED EUROPEAN PRIZE (AND GERMAN AND SPANISH NATIONAL FUNDS)
The nine hydrogen projects selected by the European Commission will receive a fixed premium ranging from 0.4 to 3.4 euros for each kilogram produced – whose “clean” origin will be certified and verified – for a maximum period of ten years.
In addition, Spain and Germany will support their projects – one each – with another 1.7 billion in total, coming from national funds: the German contribution will reach up to 1.3 billion, while the Spanish one up to 440 million. The two countries participated in the auction through the Auctions-as-a-Service function, a model which, the statement reads, “is open to all member states, allowing them to benefit from the EU-level auction platform and to allocate national funding to additional projects with a simplified procedure.”
DEMANDS DECLINE
The European Hydrogen Bank’s third auction was closed on February 19 and attracted 58 bids from eleven countries. As noted by the specialized site HydroNews, “the number of participants shows a decline compared to previous auctions: for the first, closed in February 2024, there were as many as 132 bids, while for the second – closed in February 2025 – the number was already more than halved to 61.”
