Nearly €1 billion awarded to boost renewable hydrogen development.

Last May 20, the Commission announced the selection of 15 renewable hydrogen production projects for public funding across the European Economic Area (EEA). The projects, located across five countries, are expected to produce nearly 2.2 million tonnes of renewable hydrogen over ten years, avoiding more than 15 million tonnes of CO₂ emissions. The hydrogen will be produced in sectors such as transportation, the chemical industry, or the production of methanol and ammonia. They will receive a total of €992 million in EU funding, from the Innovation Fund sourced from the EU Emissions Trading System (ETS).

The winning bidders, awarded after the second European Hydrogen Bank (EHB) auction, will produce the renewable hydrogen in Europe with a subsidy that will help to close the price difference between their production costs and the market price and accelerate the deployment of cleaner fuels.

The auctions of the European Hydrogen Bank contribute to scaling up renewable hydrogen, which in turn will help replace natural gas, coal and oil in hard-to-decarbonise industries and transport sectors. Producing more renewable hydrogen will decrease the use of fossil fuels on our continent and increase the EU’s energy independence and positively impact security, jobs and the decarbonisation of European industry.

Of the selected projects, 12 are committed to producing renewable hydrogen with fixed premium support between €0.20 and €0.60 per kilogramme. For the first time, the auction provided a dedicated budget for hydrogen producers with off-takers in the maritime sector, which are entities using the hydrogen produced by the project for carrying out or making use of bunkering activities. This has resulted in the selection of three bids receiving €96.7 million in grants. These projects will require between €0.45 and €1.88 per kilogramme. Each subsidy for the 15 projects ranges from €8 million and €246 million over a period up to 10 years.

In parallel, Spain, Lithuania, and Austria are allocating up to €836 million in national funding for projects in their countries through the ‘Auctions-as-a-Service’ feature. This allows Member States to identify and fund eligible projects in their territories that meet the auction’s qualification criteria but cannot be funded by the Innovation Fund due to budgetary limitations. ‘Auctions-as-a-service’ is open to all Member States, enabling them to benefit from the EU-level auction platform and award national funding to additional projects with simplified procedure.

Next Steps

The selected projects will now be invited to prepare their grant agreement with the European Climate, Infrastructure and Environment Executive Agency (CINEA). Agreements are expected to be signed by September/October 2025.

Signed projects are required to reach financial close within a maximum of two and a half years after signature and to start producing renewable hydrogen within a period of 5 years. They will receive the fixed premium subsidy for a period of up to ten years for certified and verified renewable hydrogen production. As announced in the Clean Industrial Deal, a third European Hydrogen Bank auction is planned for end 2025 with a budget of up to €1 billion.

The Commission will soon also launch the Hydrogen Mechanism under the European Hydrogen Bank. This online platform will bring together buyers and sellers and enable market participants to share information and find potential commercial partners.

Background

With an estimated total budget of €40 billion from the EU Emissions Trading System for the period from 2020 to 2030, the Innovation Fund creates financial incentives for companies and public authorities to invest in cutting-edge net-zero technologies and support Europe’s transition to climate neutrality.

The European Hydrogen Bank facilitates the EU’s domestic production and imports of renewable hydrogen that qualifies as Renewable Fuels of Non-Biological Origin (RFNBO), meaning it is generated using renewable electricity and meets the EU’s sustainability criteria.  It supports the EU target to produce 10 million tonnes of domestic renewable hydrogen by 2030, as set out in the REPowerEU plan. It aims to unlock private investment in the EU and in third countries by addressing investment challenges, closing the funding gap, and connecting future renewable hydrogen supply to consumers. In its first auction in 2023, the Innovation Fund awarded nearly €700 million in grants to support 6 projects.

More information: European Commission