EC starts working on a pilot mechanism for the development of the hydrogen market

The European Commission (EC) has announced the launch of a pilot mechanism for the development of the hydrogen market. This is stated in the report of the institution.

The mechanism is aimed at increasing the transparency of supply and demand in the EU hydrogen market.

“Hydrogen will play an important role in the EU’s transition to climate neutrality by 2050 and in achieving the goal of becoming independent of Russian fossil fuels by 2030,” the EC said in a statement.

The EU’s 2030 targets for the consumption of renewable hydrogen in industry and transportation will ensure that demand is met. However, on the supply side, only a small number of hydrogen projects have reached final investment decisions. In addition, few producers and consumers have managed to conclude agreements despite mutual interest.

The EC aims to help expand the market by collecting and processing data on the supply and demand for renewable low-carbon hydrogen, and connecting European buyers with local and international suppliers. The pilot mechanism will operate under the auspices of the European Hydrogen Bank, launched in 2022, and will be in place for 5 years.

The mechanism will be based on an appropriate IT platform. The EC has started searching for a service provider to develop it and plans to sign a contract by the end of this year to start work by mid-2025.

The pilot mechanism will also make relevant non-commercial confidential information available to the public to increase market transparency and support investment. It also aims to create synergies with other EU initiatives and support schemes.

According to the EC, Montel writes, there are currently 254 renewable hydrogen projects in the EU, of which 170 are in operation and 84 are under construction. Together, they amount to almost 3 GW of capacity.

An additional 8 GW is expected to be commissioned after the renewable hydrogen projects selected to receive €720 million in the European Hydrogen Bank’s pilot auction in 2023 are launched. The condition for receiving funds is that they must be launched by 2030. The second auction is scheduled to be held by the end of this year, with funding coming from the sale of EU ETS allowances.

The German government has approved two bills aimed at accelerating the integration of hydrogen and carbon capture technologies into the country’s energy and industrial systems. Both technologies have been identified as critical components of the country’s ambition to become carbon neutral by 2045, while preserving its heavy industry.