EU Releases Terms and Conditions for Second Hydrogen Bank Auction

The European Commission (EC) has announced the final terms and conditions for its second renewable hydrogen auction (IF24 Auction), facilitated through the Innovation Fund. This auction is a crucial component of the European Hydrogen Bank (EHB), which aims to financially support producers of renewable hydrogen classified as renewable fuel of non-biological origin (RFNBO). Scheduled to open on December 3, 2024, the auction will allocate up to €1.2 billion to renewable hydrogen producers within the European Economic Area (EEA). Successful bidders will receive a fixed premium in euros per kilogram of hydrogen produced, with support available for up to ten years.

The European Commission highlighted that support from the Innovation Fund will bridge the gap between the production costs of renewable hydrogen and the prices off-takers are willing to pay. The new terms include enhanced resilience requirements and a fresh evaluation criterion focused on ensuring the security of essential goods and bolstering Europe’s industrial leadership and competitiveness. Additionally, the EC is committed to supporting safe production processes in Europe, implementing necessary safety and cybersecurity protocols.

Key aspects of the new T&Cs include increased maturity level requirements for applications, a revised price ceiling, and a dedicated budget of €200 million for projects aimed at supplying production to the maritime sector. The first auction under the EHB, launched in November 2023, attracted 132 bids from 17 European nations. Of these, 119 proposals were deemed eligible, and the European Climate, Infrastructure and Environment Executive Agency (CINEA) ranked and evaluated them based on bid price. As a result, seven renewable hydrogen projects were selected from this inaugural competitive bidding process in April 2024.

Furthermore, the EC has initiated a four-week consultation period to gather feedback on a draft delegated act. This act clarifies the methodology for assessing emission savings of low-carbon hydrogen and fuels, in accordance with the revised EU hydrogen and gas market legislation that came into effect in summer 2024. The draft aims to complement existing rules for renewable hydrogen and RFNBOs while aligning with the life cycle assessment methodology for evaluating the total greenhouse gas emissions of these fuels. The feedback collected will influence the final text of the delegated act, which will then be submitted to the European Parliament and the Council of Ministers for a two-month review. If no objections arise, the act will be officially published and enforced. The EC acknowledges that low-carbon fuels are vital to the energy transition, producing fewer emissions than traditional fossil fuels and facilitating the adoption of renewable fuels.