COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the European Hydrogen Bank
Date: 2023-03-16
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, EU financing, auction sale, carbon neutrality, clean technology, energy cooperation, hydrogen, hydrogen production, import (EU), renewable energy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.3.2023  COM(2023) 156 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the European Hydrogen Bank       
 
 
1.  INTRODUCTION 

Hydrogen will play an important role in the EU’s transition to climate neutrality by 2050 and 
in the objective to become independent from Russian fossil fuels well before 2030. Hydrogen 
is also one of the strategic areas of the Commission’s New Industrial Strategy, with significant 
potential  for  quality  job  creation.  The  European  Hydrogen  Strategy1  from  2020  set  out  the 
objective to produce up to 10 million tonnes of renewable hydrogen in the EU. The REPowerEU 
plan2 proposes to complement this goal by facilitating 10 million tonnes of renewable hydrogen 
imports by 2030.  

The European Commission proposed a fully-fledged legislative framework for the production, 
consumption, infrastructure development and market rules for a future hydrogen market, as well 
as binding quotas for renewable hydrogen consumption in industry and transport. Whilst several 
legislative  proposals  are  still  in  inter-institutional  negotiations,  it  is  clear  that  the  European 
Union will be the world’s most advanced region to set up a forward looking, predictable and 
comprehensive  regulatory  framework  to  promote  the  rapid  take  off  of  renewable  and  low-
carbon  hydrogen  at  continental  scale.  At  international  level,  the  EU  is  developing  win-win 
partnerships  with  third  countries,  including  through  its  free  trade  agreements  and  in  the 
framework of its Global Gateway strategy, to create opportunities for hydrogen in their green 
energy transition as well as to support their efforts to develop local value addition. 

In December 2022, a political agreement was reached on the revision of the EU ETS Directive, 
establishing free  allowances for  electrolysers producing hydrogen, increasing the number of 
allowances earmarked to the Innovation Fund and enabling EU-wide auctions to be carried out 
under the Innovation Fund.  

In parallel to the legislative progress, European industry has already developed a strong project 
pipeline of hydrogen projects. The European Clean Hydrogen Alliance identified 840 hydrogen 
projects across all parts of the value chain3 and Europe is home to the world’s first hydrogen-
based steel production projects. 16 EU Member States adopted national hydrogen strategies, 
which collectively amount to 40 GW of electrolyser capacity targeted for 2030, or 5.6 million 
tonnes of renewable hydrogen.  As regards the need for  infrastructure, the first  Union list of 
projects  of  common  interest  and  of  projects  of  mutual  interest  including  on  hydrogen  and 
electrolysers  is  under  preparation  through  the  implementation  of  the  trans-European  energy 
networks policy4.  

Europe is also a global leader in the manufacturing of electrolysers, and a joint declaration5 to 
scale  up  electrolyser  manufacturing  capacity  testifies  to  EU  industry’s  readiness  to  deliver. 
These competitive advantages and the early development of regulatory frameworks have led to 

1   COM/2020/301 final 
2   COM/2022/230 final 
3 

https://single-market-economy.ec.europa.eu/industry/strategy/industrial-alliances/european-clean-hydrogen-
alliance/project-pipeline_en 
https://energy.ec.europa.eu/consultations/consultation-list-candidate-projects-common-interest-all-
infrastructure-categories_en 
https://ec.europa.eu/docsroom/documents/50357  

4 

5 

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many hydrogen project developers planning investments in Europe. Today Europe hosts over 
30% of proposed hydrogen investments globally6.  

The first  final  investment  decisions  (FIDs) took  place in  2022. However, a vast  majority of 
hydrogen investments in Europe are still at the planning stage. For investments to be unlocked 
on production side, more demand visibility is needed. Hydrogen production via electrolysis is 
currently  hardly  produced  at  scale  and  is  not  competitive  with  conventional  hydrogen. 
Internationally, the International Energy Agency (IEA) estimates7 that 2.4 million tonnes per 
year  of  export-oriented  renewable  and  low-carbon  hydrogen  projects  will  come  online  and 
around 10 million tonnes per year by 20308. According to the IEA, only 0.9 million tonnes per 
year are designated for export to the European Union so far.  

In her State of the European Union address on 14 September Commission President von der 
Leyen  announced  the  establishment  of  the  European  Hydrogen  Bank9.  The  objective  of  the 
Bank is to close the investment gap and connect future supply of renewable hydrogen with our 
demand objective of 20 million tonnes of renewable hydrogen. The European Hydrogen Bank 
will facilitate both renewable hydrogen production within the EU and imports, contributing to 
the RepowerEU objectives and to the transition to climate-neutrality.  

The Hydrogen Bank supports the objectives of the Green Deal Industrial Plan10 and the Net-
Zero  Industry  Act.  The  scaling  up  of  electrolyser  manufacturing  for  renewable  hydrogen 
production will contribute to the competitiveness and resilience of European industry, including 
steel  and  fertiliser  production11  and  shipping  industry.  Scaling  up  the  European  hydrogen 
market  will  also  allow  European  companies  to  play  a  leading  role  in  the  emerging  global 
hydrogen  market,  which  offers  new  growth  opportunities  and  quality  job  creation.  This 
Hydrogen Bank Communication accompanies a legislative proposal for a Net-Zero Industrial 
Act. 

The  European  Hydrogen  Bank  will  be  an  instrument  implemented  by  the  European 
Commission,  consisting  of  two  new  financing  mechanisms  to  support  renewable  hydrogen 
production within the EU and internationally.  It  will also provide increased transparency on 
hydrogen demand, supply, flows and prices and play a coordination role and facilitate blending 
with the existing financial instruments to support hydrogen projects.  

For the European Hydrogen Bank to be successful, the regulatory framework for the production 
and  consumption  of  hydrogen  must  be  finalised  as  a  matter  of  priority.  The  Commission 
therefore calls on the European Parliament and the Council to facilitate a swift entry into force 

6 Hydrogen Council (2022) Hydrogen Insights 2022. 

7 International Energy Agency: Global Hydrogen Review 2022. 

8 Excluding 2 million tonnes of cross-border trade within the EU. 

9 https://ec.europa.eu/commission/presscorner/detail/en/speech_22_5493 

10 COM(2023) 62 final 

11 Commission Communication: Ensuring availability and affordability of fertilisers, COM/2022/590 final/2 

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of  the  delegated  acts  clarifying  how  hydrogen  and  hydrogen-based  fuels  can  qualify  as 
renewable and to conclude negotiations and to swiftly adopt the proposed Renewable Energy 
Directive and the future rules for efficient hydrogen markets, including the definition for low-
carbon hydrogen12. 

While the Commission is mobilising all efforts to increase the ramp-up of renewable hydrogen, 
RePowerEU  also  acknowledged  that  other  forms  of  fossil-free  hydrogen,  notably  nuclear-
based, play a role in substituting natural gas. Compliance with the Water Framework Directive 
is of key importance to address the additional fresh water needs at those locations where the 
roll-out of additional renewable and low-carbon hydrogen production capacities takes place.  

Financing needs 

The  European  hydrogen  market  faces  four  investment  challenges:  scaling  up  manufacturing 
capacities  for  electrolysers,  scaling  up  new  hydrogen  production  capabilities,  opening  new 
demand sectors for renewable and low-carbon hydrogen and developing dedicated hydrogen 
infrastructure. This also requires additional skilled workers, calling for significant investment 
in re-skilling and upskilling the needed workforce13. 

Today, around 8 million tonnes of hydrogen are consumed within the EU, primarily produced 
from  natural  gas14.  Currently,  less  than  0.3  million  tonnes  of  electricity-based  hydrogen  are 
produced in the EU. Around 160 MW electrolyser output capacity15 is currently installed within 
the EU, whilst a production target of 10 million tonnes of renewable hydrogen would require 
between 80-100 GW. This will require roughly 150-210 GW of additional renewable capacity 
generating  electricity  at  low  cost  to  make  renewable  hydrogen  competitive  with  its  fossil 
alternatives.  

All in all, the total investment needs to produce, transport and consume 10 million tonnes of 
renewable hydrogen are expected to be in the range of EUR 335-471 billion, with EUR 200-
300  billion  needed  for  additional  renewable  electricity  production.  The  investments  for  key 
hydrogen infrastructure categories by 2030 are estimated at EUR 50-75 billion for electrolysers, 
EUR 28-38 billion for EU-internal pipelines and EUR 6-11 billion for storage. The upscaling 
of the  electrolyser manufacturing  capacities will  require investments  estimated at  maximum 
EUR 1.2 billion. An additional EUR 500 billion of investments will be needed in international 
value chains to enable the import of 10 million tonnes of renewable hydrogen, including in the 
form of derivatives.  

The bulk of the investment in the hydrogen sector will have to be covered by private capital. 
The climate taxonomy delegated act already  channels private funding to activities related to 

12  COM(2021) 803 final; COM(2021) 804 final 
13  As identified in the European Hydrogen Skills Alliance “Green skills for hydrogen” initiative 

https://greenskillsforhydrogen.eu/  

14  Without CCS 
15  Throughout the document, electrolyser capacity refers to output, i.e. the hydrogen production capacity 

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manufacturing  of  equipment  for  the  production  and  use  of  hydrogen,  the  production  of 
hydrogen and its storage.  

At the same time, all relevant EU funds are being mobilised to support an accelerated scale-up 
of  the  hydrogen  market  in  Europe.  To  support  the  scale-up  of  electrolysers,  Horizon  2020 
supported the development of the first 100 MW scale electrolysers, complementing the research 
and demonstration projects financed under the Clean Hydrogen Joint Undertaking. To support 
bringing hydrogen technology to the market, eight large scale projects have been awarded by 
the EU ETS Innovation Fund for hydrogen production or consumption. The full project pipeline 
of the Innovation Fund seen under the 2021 large-scale call would lead to construction of some 
2.6 GW of electrolyser capacity. In addition, the 2022 Large Scale call for proposal closing on 
16 March dedicates a EUR 1 billion call to hydrogen and industry electrification as well as EUR 
700 million to clean tech manufacturing, including electrolysers.  

State-aid financing was approved for two rounds of Important Projects of Common European 
Interest (IPCEIs) to support the production and use of renewable and electricity-based hydrogen 
for a total amount of EUR 10.6 billion in funding, expected to unlock an additional EUR 15.8 
billion in private investments. In addition, several Member States are setting-up competitive 
bidding  schemes  to  enable  renewable  hydrogen  projects  to  be  developed  at  least  cost.  Over 
EUR 10 billion have been assigned under the Recovery and Resilience Plans, with EUR 4.9 
billion  going  through  IPCEIs.  As  regards  infrastructure,  the  Connecting  Europe  Facility  for 
Energy has  a remaining  budget  of EUR 3.3 billion to  support selected  energy infrastructure 
categories, such as hydrogen, up to 2027.   

Cohesion  policy  funding,  especially  through  the  European  Regional  Development  Fund 
(ERDF) and the Just Transition Fund (JTF), as well as the InvestEU Fund will also provide 
significant  support  to  Member  States  and  regions  for  their  investments  across  the  whole 
hydrogen  supply  chain,  from  the  innovation  to  the  piloting  and  initial  deployment  aspects. 
Under  InvestEU  such  investments  may  be  financed  for  example  under  the  EIB’s  Thematic 
Green Transition Financial Product or by other Implementing Partners like the European Bank 
of Reconstruction and Development or the Nordic Investment Bank. The InvestEU provides a 
flexible  framework  for  efficient  top-ups  or  blending  with  other  EU  Instruments  such  as  the 
Innovation Fund. Finally, the Joint undertaking on Clean Hydrogen is investing in increasing 
efficiency and reducing the cost of producing, storing and distributing renewable hydrogen, to 
make  it  more  competitive  with  the  hydrogen  produced  from  fossil  fuel  and  to  accelerate  its 
replacement by renewable hydrogen. 

Also, the European Investment Bank (EIB), as the EU’s climate bank, has committed to exceed 
50%  of  its  overall  lending  by  2025  for  climate  action  and  environmental  sustainability, 
including  through  its  own  resources.  In  the  past  decade,  the  EIB  has  provided  over  EUR  1 
billion in financing directly linked to hydrogen projects. This was recently complemented by 
EIB’s REPowerEU EUR 30 billion package which aims to mobilise up to EUR 115 billion by 
2027 of investments leading to decarbonisation of the EU industry. 

However, there remains a green premium in terms of higher costs for those off-takers willing 
to  choose  hydrogen  over  fossil  fuels.  Targeted  use  of  public  resources  to  finance  the  green 

4 

 
premium can leverage private sector investments by de-risking renewable hydrogen production. 
Estimates suggest that hydrogen imports by ship (where hydrogen needs to be imported in the 
form of ammonia, methanol, liquid organic hydrogen carriers or e-fuels) would require a market 
premium  in  the  order  of  EUR  3-5/kg  (including  transport,  storage  and  delivery  to  the  end-
consumer). Since renewable hydrogen is not available on the global market yet, this means that 
the  green  premium  will need  to  be  used  to  secure  production  capacity.  A  budget  of  EUR  1 
billion  is  estimated  to  enable  0.04-0.06  million  tonnes  of  renewable  hydrogen  production 
capacity per  year. After  2025, the market  premium  is  expected to  decline due to  decreasing 
production costs and increased demand for green products produced with renewable hydrogen. 
Furthermore, the EU Emissions Trading Scheme and the proposed European Taxation Directive 
will  make  renewable  and  low-carbon  hydrogen  more  attractive  compared  to  its  fossil  fuel 
alternative.  

Based on the expected decline in production costs and the increasing demand for renewable 
hydrogen, estimates suggest a total green premium of around EUR 90-115 billion for both the 
domestic production and import  of a total  of  20 million  tonnes of renewable  hydrogen. The 
sooner the production of renewable hydrogen is scaled up, the smaller this green premium is 
likely to be. 

In the short term, to strengthen efforts at EU level to deploy hydrogen and support the scaling 
up of the manufacturing of other strategic net-zero technologies, additional resources will be 
required at EU level. The Innovation Fund’s legal basis, in particular the new provisions for 
EU-level competitive bidding auctions, provide a very promising and cost efficient avenue to 
support  the  scaling  up  of  manufacturing  and  deployment  of  renewable  hydrogen  and  other 
strategic net-zero technologies in Europe, and thus reinforcing Europe’s sovereignty in the key 
technologies for climate action and energy security. The Net-Zero Industry Act provides a first 
basis  for  organising  strategic  projects.  There  is  a  large  scope  for  increasing  the  financial 
leverage  of  the  Innovation  Fund,  also  taking  into  account  the  higher  ETS  revenues  and  the 
agreement  on  the  ETS  Directive  that  Member  States  shall  invest  all  their  ETS  revenues  in 
climate and energy objectives. We will consider this when designing the Sovereignty Fund in 
the context of the mid-term MFF review. 

2.  THE EUROPEAN HYDROGEN BANK – CONCEPT, TASKS AND STRUCTURE  

The European Hydrogen Bank aims to unlock private investments in hydrogen value chains in 
the  EU  and  in  third  countries  by  connecting  renewable  hydrogen  supply  with  the  emerging 
demand by European off-takers and thus to establish an initial market for renewable hydrogen. 
The Bank will promote the production of renewable hydrogen domestically as well as imports 
from international producers to European consumers.  

In the absence of a sufficient green market premium for early projects, the strategy behind the 
European  Hydrogen  Bank  is  to  cover  and,  eventually  also  to  lower,  the  cost  gap  between 
renewable hydrogen and the fossil fuels it can replace.  

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The  European  Hydrogen  Bank  is  based  on  four  pillars,  which  will  be  implemented  by  the 
European Commission. It will consist of two new financing mechanisms to support renewable 
hydrogen  production  within  the  EU  and  internationally.  Furthermore,  the  Bank  provides 
increased demand visibility by linking with off-takers, parallel Member State initiatives and 
existing data centres. Finally, the Bank will also play a coordination role and facilitate blending 
with the existing financial instruments to support hydrogen projects (Figure 1).  

Figure 1. The four pillars of activities related to the European Hydrogen Bank 

The Bank will have an important role, as it will unlock private sector investment and contribute 
to early market creation and price discovery by creating competition for financing, as well as 
increasing investor confidence and project-finance learnings in the private financing sector.  

Over time, the goal of the bank is to reduce the cost gap to a level that private off-takers are 
willing  and  able  to  cover.  The  European  Hydrogen  Bank  will  operate  in  compliance  with 
international commitments, at bilateral or multilateral level, both under the domestic and the 
international legs. 

2.1.  DOMESTIC MARKET CREATION: FIXED PREMIUM AUCTIONS TO SUPPORT EU-BASED 

PRODUCTION 

As announced in the Green Deal Industrial Plan and with the view to implement the domestic 
leg of the European Hydrogen Bank, the Commission is advancing swiftly in the design of the 
first pilot auctions on renewable hydrogen production. The auctions will be launched under the 

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Innovation Fund in the autumn 2023 under the new competitive bidding mechanism, in line 
with the rules set out in the financial regulation and the revised EU ETS Directive.  

The auctions are being designed to achieve the following key objectives: 

  Connecting EU domestic16 renewable hydrogen supply and demand.  
  Bridging and reducing the cost gap in the EU between renewable and fossil hydrogen 
as effectively as possible. Auctions have been a major success story in the power sector, 
bringing  down  the  required  funding  for  renewable  power  generation  through 
competition on price.  

  Allowing for price discovery and market formation in the EU: competitive auctions with 
a simple and transparent set-up reveal private costs, and create valuable and comparable 
price points that can serve to kick-start a European hydrogen market.  

  De-risking  European  hydrogen  projects,  bringing  capital  costs  down  and  leveraging 
private capital. Given the size of the investment challenge, support from the Innovation 
Fund should be seen as the seed funding for increased private and corporate investments.  
  Ensuring  a  fast  roll  out  and  simple  implementation,  thereby  significantly  reducing 
administrative burden and costs thanks to short, lean and transparent procedures. This 
will support the EU to lead in the development of this new market, taking into account 
support mechanisms provided by third countries.   

The  auction  design  for  the  2023  pilot  auctions  on  renewable  hydrogen  production  is  being 
developed by the Commission with inputs from all relevant stakeholder groups: Member States, 
utilities,  project  developers,  industrial  and  other  hydrogen  off-takers,  banks,  infrastructure 
funds, academia, and others. A final workshop on the terms and conditions of the full design 
will be held in May 2023 to ensure a precise fit of the first EU-wide auction with private sector 
needs and practices.  

The first pilot auction will support the production of renewable hydrogen, as defined according 
to the final versions of Delegated Acts of the Renewable Energy Directive17. The auction will 
award  a subsidy to  hydrogen producers in the form of a fixed premium  per kg of hydrogen 
produced for a maximum  of  10  years of operation. By bridging the  cost  gap and increasing 
revenue stability, this will increase the bankability of projects and bring overall capital costs 
down. Payments will be based on outputs, i.e., upon delivery of certified and verified volumes 
of renewable hydrogen.  

The indicative budget for the first auction will be EUR 800 million considering the results of 
market testing already performed and the need to create the right level of competition. Learning 
from the first pilot auction will help to size the future auction rounds. 

In terms of auction design, simplicity, transparency and speed to implementation are priorities. 
The key design parameters of the auction being considered at this stage by the Commission are 

16   Projects in Norway and Iceland are also eligible as they are eligible for Innovation Fund in general. 

17   Directive  (EU)  2018/2001  of  the  European  Parliament  and  of  the  Council  of  11 December  2018  on  the 

promotion of the use of energy from renewable sources (recast) 

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summarized in Annex I. They concern in particular the pre-qualification requirements, the bid 
ranking / award criteria and the pricing rules. In order to discover true costs, safeguard a level-
playing  field  as  well  as  to  reduce  complexity,  the  Commission  also  intends  to  exclude 
cumulation of support awarded through the auction with State Aid, to avoid that the same costs 
are covered twice and that the auction is distorted.  

The  Commission  will  further  consult  stakeholders  on  other  elements  such  as  use  of  bid  or 
completion bonds18 in line with the legal framework defined in the amended ETS Directive, the 
ceiling price and maximum realisation periods.  

Following the consultation, the Commission will finalise the auction’s Terms & Conditions on 
eligibility, auction clearing and payments  (as well as termination and penalties) and publish 
them in summer 2023. Additional info-days on how to prepare a bid will be held in late summer 
2023. This timeline allows bidders sufficient time to familiarise themselves with the auction 
concept and to prepare their bids. The Commission intends to delegate the execution of the full 
auctions  project  cycle  to  the  European  Climate,  Infrastructure  and  Environment  Executive 
Agency (CINEA).  

2.2. EU Auction Platform: Auctions-as-a-Service for Member States 

Competitive  bidding  on  the  EU  level  presents  a  noteworthy  financial  innovation  and  could 
become  an  important  tool  to  foster  the  cost-effective  and  early  deployment  of  innovative 
renewable and low-carbon solutions. As new markets form, it is important to prevent market 
fragmentation  between  EU  Member  States.  Although  the  Hydrogen  Delegated  Acts19  will 
provide  a  uniform  basis  for  the  certification  of  renewable  hydrogen  across  Europe,  support 
schemes and the fiscal space to provide those can vary significantly between Member States. 
Price signals that are based on different support schemes can become impossible to compare, 
delaying the formation of a European hydrogen market.  

In order to prevent fragmentation at the early stage of hydrogen market formation in Europe, 
and to save administrative costs in developing a number of different hydrogen support schemes 
by different Member States, the Commission proposes to extend the Innovation Fund auctions 
as a platform to Member States, without prejudice to EU State aid rules. This would enable 
Member States to use own resources for projects on their territory by relying on an EU-wide 
auction mechanism.  

By offering an “auctions-as-a-service”, the Commission would run a single auction. The supply 
curve of projects would first clear the Innovation Fund budget, independently of where projects 
come from. After the Innovation Fund budget is exhausted, the remainder of the supply curve 
could be supported by Member States, following the ranking of the EU auction platform, until 

18   Bid  completion  bonds  are  in  essence  deposits.  Those  can  be  implemented  e.g.  through  a  bank  or  mother 

company guarantee 

19   https://ec.europa.eu/commission/presscorner/api/files/document/print/en/qanda_23_595/QANDA_23_595_EN.pdf 

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the Member States’ respective budget is exhausted without prejudice to Article 107 and 108 
TFEU  and  provided  sufficient  national  projects  participate  in  relation  to  the  respective 
committed  national  resources  (see  Figure  2  as  an  illustration  on  auction  clearing).  Member 
States would be awarding and executing payments for those additional projects. Any measure 
that constitutes State Aid, unless block exempted, is subject to the notification obligation.  The 
Commission will verify and – if necessary – ensure that there is sufficient competition in the 
allocation of Member States’ contributions to the auction. 

Figure 2. Illustrative design for the development of a EU Auction Platform pooling Member 
State financing. 

If  successful,  the  concept  laid  out  in  the  preceding  paragraph  could  be  extended  beyond 
hydrogen  production  to  auctions  in  other  areas  such  as  Carbon  Contracts  for  Difference  for 
industry  decarbonisation,  in  line  with  the  legal  framework  defined  in  the  amended  ETS 
Directive.  The  concept  to  pull  in  EU  Member  State  resources  to  organise  European-wide 
auctions could  also  be considered to  support  international  auctions for renewable hydrogen. 
These possible extensions of the EU auction platform would similarly be subject to State Aid 
rules. 

2.3 SUPPORTING INTERNATIONAL HYDROGEN PRODUCTION 

The EU is strongly committed to international cooperation to accelerate the green transition, 
including  hydrogen  market  development  in  the  EU  and  globally.  In  this  context,  the 
development of renewable hydrogen economies in EU Partner countries will help accelerate 
their  transition  towards  climate  neutrality  and  contribute  to  broader  social  and  economic 
development.  Investments  in  renewable  energy  and  hydrogen  can  also  improve  the 
attractiveness of investments in countries with high investment costs, low share of renewables 
and  underdeveloped  energy  infrastructure  and  create  export  diversification  opportunities.  In 
parallel,  attention  will  also  need  to  be  paid  to  the  sustainability  of  renewable  hydrogen 

9 

IF budget clears lowest bids until exhausted, independent of MS of the bids (“best in Europe”)EUR/kg_H2-Member State (MS) budgets clear lowest bids from their own MS only (“best in MS”), until national budget is exhausted. Award subject to State Aid control.-MS who contribute no own budget can not award any national bids. kg_H2MS 1MS 2MS 3MS 4MS 5Bid cleared (if in 2, subject to State Aid control)Bid not clearedclearing priceclearing priceclearing priceIF clearing priceillustrative2 
 
 
production, avoiding increasing water stress and potentially negative impact to accessibility to 
electricity  and  water20.  Domestic  decarbonisation  efforts  in  partner  countries  will  be 
additionally supported by the recent agreement between the co-legislators on a future Carbon 
Border Adjustment Mechanism (CBAM), which includes imports of hydrogen within the scope 
of the mechanism. From 2026, imports of hydrogen into the EU will be subject to an adjustment 
based on their carbon content.  

The REPowerEU Communication proposes to import 10 million tonnes of renewable hydrogen 
by 2030, on top of the 10 million tonnes of renewable hydrogen production in the EU, making 
the EU the largest aspiring renewable hydrogen market in the world. The majority of export 
projects  plan  to  deliver  hydrogen  and  its  derivatives  via  ship,  creating  a  need  for  expanded 
shipping and port infrastructure in Europe. International hydrogen trade through pipelines is 
expected to occur nearer to the end of this decade21.  

Early  market  analysis  and  stakeholder  feedback  suggest  that  there  is  a  need  for  a  dedicated 
instrument that can support hydrogen flows from third countries. In the absence of a market, 
there is a role for EU Member States to support European off-takers to enable the still missing 
off-take  agreements  with  producers  in  third  countries.  This  instrument  should  work  hand  in 
hand with energy diplomacy and trade policy efforts to ensure that the EU does not create new 
strategic dependencies.  

Integration of the Sustainable Development Goals in the design of the EU support for imported 
renewable hydrogen would provide access to the European market and promote sustainability 
of local production and consumption of renewable electricity and hydrogen, as well as social, 
economic  and  environmental  needs,  for  the  benefit  of  the  EU  partner  countries  and  their 
citizens.  

Several Member States have developed strategies to support the import of hydrogen from third 
countries. Therefore, the Commission is further exploring how to design the international leg 
of the European Hydrogen Bank to promote a coordinated EU strategy for renewable hydrogen 
imports. The intention also here is to cover the cost gap between renewable hydrogen produced 
in third countries and transported to the EU and the fossil fuels it can replace within the EU.  

The Commission will continue to explore possible sources of funding within EU budget or in 
partnership with  the EIB to  finance the  green premium, taking into account  that the current 
Neighbourhood,  Development  and  International  Cooperation  Instrument  –  Global  Europe 
(NDICI-GE)  cannot  be  used  for  paying  for  commodities  used  in  the  EU,  thus  for  green 
premiums to producers of renewable hydrogen in third countries.  

Regarding the specific design of the auctions, the Commission is assessing the feasibility of 
creating a similar scheme of green premium for which suppliers from third countries or EU off-

20  The new demand would need to be strongly framed in a water resilience policy, which is the agenda that the 

Commission is advocating at the upcoming UN Water Conference in New York. 

21  Hydrogen Council: Global Hydrogen Flows. Hydrogen trade as a key enabler for efficient decarbonisation, 

October 2022.  

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takers contracting with third country producers can apply (see Figure 3). The operation, design 
and institutional  set-up of the support scheme  for renewable hydrogen imports could  mirror 
fixed premium auctions, which are proposed for EU-based production of renewable hydrogen. 
A symmetric approach for international and domestic production could allow for timely and 
cost-effective implementation profiting from operational and institutional synergies and the use 
of existing structures, such as CINEA.  

Figure  3.  Conceptual  design  for  a  fixed  premium  auction  for  international  suppliers  to  EU 
consumers.  

In  light  of  the  progress  made,  the  Commission  will  explore  by  the  end  of  the  year  a  Team 
Europe initiative to pool Member State resources and to facilitate synergies with existing EU 
funds and the Global Gateway Strategy. To that end, the Commission will study the possibility 
to include a mechanism for demand aggregation and joint auctioning of renewable hydrogen in 
the future within the scope of activities of the European Hydrogen Bank, using the experience 
gained under the EU Energy Platform and AggregateEU and subject to EU competition and 
State Aid rules. 

At  the  same  time,  the  different  risk  profiles  for  supporting  renewable  hydrogen  production 
facilities outside of the EU have to be considered, taking into account the overall regulatory and 
investment framework in the country concerned, as well as any geopolitical risks and the degree 
of commitments taken by the country towards the EU.   

This  will  impact  the  design  options.  Stability,  predictability  and  reliability  of  the  enabling 
framework  for  additional  renewable  energy  and  hydrogen  projects  in  a  specific  potential 
supplier country is a key factor for future hydrogen consumers taking large scale investment 
decisions  and  securing  long-term  financing  today.  Geopolitical  risks  related  to  economic 
relations  and  trade,  as  well  as  social-  and  environmental  policy  in  third  countries  are  of 
particular  importance  for  ensuring  security  of  hydrogen  supply,  sustainability  and  the  EU 
development policy coherence. 

Over time, the initial concept of green premium auctions could be extended to further reduce 
the risk stemming from the uncertainty of off-take agreements by establishing an intermediary 
executing double-sided auctions. Such an intermediary would sign agreements both with the 
producer  and  the  off-taker.  Such  an  approach  is  already  implemented  through  the  German 
H2Global foundation.  

11 

 
 
The EU will continue to support partner countries in accelerating their green energy transition 
through, inter  alia, technical  assistance  and support to  establishing  a conducive  governance, 
legislative and business  environment, as well as mobilising investment needed in renewable 
energy  and  energy  efficiency.  The  NDICI-GE  and  IPA  III  instruments,  including  European 
Fund for Sustainable Development Plus (EFSD+), will remain instrumental in this regard, in 
line with existing NDICI-GE and IPA III regulations and practice. 

2.4 COORDINATION AND TRANSPARENCY 

Through its activities, the European Hydrogen Bank will increase transparency on hydrogen 
flows,  transactions  and  prices.  More  specifically,  the  Commission  will  coordinate  such 
information to strengthen confidence in the developing hydrogen market. The Commission can 
also use information gathered from European and international off-take agreements to provide 
transparent price information and develop price benchmarks. 

There is a growing amount of information available on renewable hydrogen demand and supply 
in  the  EU  and  worldwide.  The  Bank  will  provide  added  value  by  bringing  together  and 
complementing such information, building on existing sources and structures, e.g., information 
available via the Commission, especially the development of data collection on hydrogen led 
by Eurostat22, via Commission led initiatives such as the European Clean Hydrogen Alliance, 
Renewable and Low-Carbon Fuels Alliance and Zero Emission Aviation Alliance, via existing 
project financing mechanisms23 and industry monitoring. Furthermore, the Bank will benefit 
from the Fuel Cells and Hydrogen Observatory under the Clean Hydrogen Joint Undertaking, 
which already provides a public portal for European Hydrogen data. In addition, the Bank will 
liaise for information with the IEA and IRENA. The Bank will be well placed to assess EU 
demand for domestic and imported renewable hydrogen, e.g., by organising a “call for interest” 
as a voluntary, non-binding expression of interest by EU off-takers.  

The rapid development of dedicated hydrogen infrastructure in and to the EU connecting supply 
and demand is crucial to reach our decarbonisation objectives. The revised TEN-E Regulation 
is a unique instrument for European energy infrastructure planning. The European Hydrogen 
Bank will support infrastructure planning with information on hydrogen flows it will gather 
through its activities (e.g., information on delivery points).  

The  Bank  will  also  support  the  coordination  of  both  Member  State  and  company  level 
Memoranda of Understanding with third countries and foreign hydrogen producers and provide 
support  for  the  establishment  of  dedicated  provisions  within  the  Energy  and  Raw  Materials 

22  The European Commission (Eurostat) is leading the development of the data collection for hydrogen and is 
guiding  the  harmonization  in  methodology  with  partners  such  as  the  IEA  and  APEC,  to  ensure  the 
comparability of data at international level. Data will be collected from Member States from reporting year 
2022 on a voluntary basis and from reporting year 2024 on a mandatory basis. Data will cover a wide spectrum 
of areas including production, trade, transformation, storage and final consumption.    

23  This can include information via RRF, InvestEU, Innovation Fund, Cohesion policy funds, EFSD+ 

12 

 
 
                                                           
trade  chapters  in  free  trade  agreements,  or  sustainable  investment  facilitation  agreements 
(SIFA).  

Green  Hydrogen  Partnerships  and  Memoranda  of  Understanding  (MoUs)  signed  by  the 
European Commission, Member States and European companies, including ports, can provide 
information  on  potential  hydrogen  flows  from  third  countries  which,  coordinated  by  the 
European Hydrogen Bank, will provide visibility on where and when hydrogen infrastructure 
will be necessary.   

On behalf of the  EU, the European Commission has signed MoUs  and/or Partnerships with 
Egypt, Japan, Kazakhstan, Morocco, Namibia and Ukraine. Dedicated provisions on hydrogen 
cooperation have also been included in the modernised EU-Chile Association Agreement and 
are  considered  in  ongoing  negotiations  for  free  trade  agreements  with  India  and  Australia. 
Cooperation  under  these  MoUs/Partnerships  and  Free  Trade  Agreements  aim  to  support  the 
green  transition  in  partner  countries,  including  through  the  development  of  the  renewable 
energy  sector  and  industrial  supply  chains,  as  well  as  to  strengthen  the  regulatory  and 
investment  framework,  technology  deployment  and  sustainable  production  of  renewable 
hydrogen.  In  these  MoUs  both  sides  recognise  the  natural  resources  constrains  and  express 
political  commitment  to  environmental,  social  and  economic  sustainability  standards.  
Diplomatic  outreach  is  also  ongoing  with  the  Kingdom  of  Saudi  Arabia  with  a  view  to 
establishing a partnership on hydrogen. 

The modernised EU-Chile Association Agreement is the first such agreement which provides 
dedicated  attention  to  hydrogen,  considering  the  significant  potential  of  Chile  for  hydrogen 
exports  to  the  EU  and  the  on-going  cooperation  project  enabled  through  a  Team  Europe 
approach. The EU is leading the work also in international fora such as in the framework of the 
Clean Energy Ministerial Hydrogen Initiative, Mission Innovation on clean hydrogen and the 
International Partnership for Hydrogen in the Economy.  

Publicly available information indicates that in 2021-2022 EU Member States and companies 
have  signed  hydrogen  cooperation  MoUs  with  at  least  30  countries  around  the  world.  To 
explore synergies between multiple bilateral  initiatives, the European Hydrogen Bank could 
enhance transparency and coordination of renewable hydrogen transactions and negotiations 
within the EU and with third countries as it is important for increasing efficiency and reducing 
efforts needed on both sides, i.e., in the EU and in partner countries.  

To  ensure  diversification  of  renewable  hydrogen  sources  over  time,  the  Commission  is 
exploring the option of an instrument inspired by the transparency provisions of the EU Energy 
Platform24 under Council Regulation (EU) 2002/257625. It could be a positive contribution to 
the  incipient  renewable  hydrogen  market  to  provide  intelligence,  and  possibly  provide  the 

24  https://energy.ec.europa.eu/topics/energy-security/eu-energy-platform_en  

25  COUNCIL  REGULATION  (EU)  2022/2576  of  19  December  2022  enhancing  solidarity  through  better 

coordination of gas purchases, reliable price benchmarks and exchanges of gas across borders 

13 

 
                                                           
Commission  the  possibility  to  issue  recommendations  on  coordination  of  hydrogen 
investments.  

2.5 COORDINATION OF EXISTING PROJECT FINANCING 

Several financing instruments exist at EU and Member State level to support hydrogen project 
development.  The  Hydrogen  Public  Funding  Compass  of  the  European  Clean  Hydrogen 
Alliance helps to navigate interested stakeholders through the project financing programmes in 
the EU, including at Member State level.  

At EU level, there are the InvestEU and cohesion policy programmes, that, through risk-sharing 
and blending operations, can mobilise financing for investments in hydrogen projects, as well 
as direct project support through the EU ETS Innovation Fund, support for Hydrogen Valleys 
and for other parts of the hydrogen value chain under Horizon Europe, the European Regional 
Development Fund and the Connecting Europe Facility. Under the Connecting Europe Facility 
for  Transport,  the  Commission  has  established  the  Alternative  Fuel  Infrastructure  Facility 
(AFIF), which provides EUR 1.5 billion grant support (combined with financial support from 
financial institutions to achieve a higher impact) for the deployment of alternative fuel supply 
infrastructure  for  all  transport  modes,  such  as  hydrogen  fuelling  stations.  Several  national 
instruments exist, notably the funding of IPCEI hydrogen projects, instruments included in the 
Recovery and Resilience Plans (RRPs) and further hydrogen national support schemes under 
the  General  Block  Exemption  Regulation,  as  well  as  measures  that  can  be  approved  by  the 
Commission if they fulfil the conditions set out in the Climate, Environmental protection and 
Energy  Aid  Guidelines,  the  Research,  Development  and  Innovation  Framework  or  the 
Temporary Crisis and Transition Framework.  

Improvement  of  cross-sectoral  hydrogen  knowledge  sharing  and  awareness  of  support 
measures  under  the  various  support-  and  financing  instruments  of  the  EU  and  the  Member 
States is one of the areas under exploration for the activities of the European Hydrogen Bank 
aiming to increase transparency and effectiveness of cooperation at institutional level. It can 
support  the  cooperation  and  coordination  where  hydrogen  knowledge  is  not  the  core-
competence  of  experts  involved  in  implementation  and  planning.  The  Commission  should 
streamline the support these instruments provide, especially to ensure that they can mutually 
reinforce each other and facilitate a cost-efficient use of these resources. The Commission will 
seek to exchange information and coordinate with Member States on their plans for hydrogen 
project  financing and is  exploring the possibility of pooling Member State resources  and  of 
increasing  efforts  at  EU  level  to  also  allow  Member  States  with  more  limited  resources  to 
benefit from the European scale and to make a greater impact by establishing a common market 
for hydrogen.  

To  save  resources  and  efforts,  the  full  potential  of  the  existing  information  sharing-  and 
communication  channels  are  intended  to  be  explored  and  used,  including  the  existing 
institutional networks and industry platforms, including Clean Hydrogen Alliance, Hydrogen 
Energy Network, and EU funding information platforms. 

14 

 
Global  Gateway  is  the  framework  under  which  the  EU  supports  investments  in  renewable 
hydrogen  in  partner  countries  as  part  of  their  green  transition.  Grants  and  guarantees  of  the 
European  Fund  for  Sustainable  Development  Plus  (EFSD+)  under  the  Neighbourhood, 
Development  and  International  Cooperation  Instrument26  –  Global  Europe  (NDICI-GE  or 
Instrument) play a key role in supporting investments, in particular projects co-financed by the 
EIB and EU Member States’ development financing institutions as Team Europe. One of the 
key  pre-conditions  for  receiving  NDICI-GE  support  is  project  contribution  to  the  domestic 
green  transition,  including  through,  e.g.,  renewable  energy  production  and  use,  as  well  as 
sustainability and efficient use of resources for renewable hydrogen production, including water 
availability, accessibility and management. Global Gateway actively seeks to mobilise private 
sector finance and expertise and support access to sustainable finance. 

Team Europe Initiatives have been developed jointly by the EU and Member States bundling 
their efforts in fostering development of renewable hydrogen projects in third countries. For 
example, the Team Europe Initiative on Green Hydrogen (GH2) development in Chile brings 
together  the  EU,  EIB  and  8  EU  Member  States  sharing  an  interest  in  supporting  the 
development of the enabling framework, technology, human capital and in renewable hydrogen 
project financing for both domestic use and exports. Furthermore, a renewable hydrogen Global 
Gateway project is being prepared in Namibia. 

However, stakeholder feedback confirms the need for additional measures to reduce the very 
high costs associated to the risks that are not sufficiently addressed by EU financial instruments. 
Enhanced coordination of the EU and EU Member State financial tools, as well as reduction of 
hydrogen supply- and offtake uncertainties can effectively increase the economic feasibility and 
bankability of investments of both, the off-taker in the EU and the producer in a third country. 
It  is  particularly  important  for  investment-  and  energy  intensive  sectors  with  tight  revenue 
margins in the market. 

In the energy sector, EU financing in non-EU countries aims to support energy transition in 
partner countries, including by promoting renewable energy deployment, attracting public and 
private  investment  and  creating  business  opportunities  and  quality  jobs.  This  can  include 
support  for  the  development  of  local  and  global  hydrogen  markets  in  partner  countries  and 
regions, such funding being already within the mandate of NDICI-GE. In addition to support to 
international platforms, such as Mission Innovation and the Clean Energy Ministerial Hydrogen 
Initiative, EU research and innovation projects bring together partners from the EU and non-
EU countries to work together, For example, the EU/African Union cooperative project (LEAP-
RE) of Horizon Europe requires each consortium to involve at least four countries from the two 
continents, with at least 2 consortia members from the EU countries and at least 2 from African 
countries. 

26   Regulation (EU) 2021/947 of 9 June 2021 establishing the Neighbourhood, Development and International 

Cooperation Instrument – Global Europe, OJ L 209/1, 14.6.2021 

15 

 
                                                           
The  ongoing  and  planned  EU  technical  assistance  is  necessary  for  the  development  of  the 
policy,  regulatory  and  investment  framework  in  EU  Partner  countries,  including  for 
development of renewable energy policies, hydrogen strategies and feasibility studies.  

Investment support through the EFSD+ blending and guarantees operations helps to reduce the 
financial  costs  by  lowering  investment  costs  or  reducing  investment  risks.  Technical  and 
investment support also improves the access to project financing of the EIB and the national 
development financing institutions of Member States as the EU grants, EFSD+ guarantees and 
Team Europe Initiatives improve the bankability of projects and the trust of public investors. 

Finally, the Commission supports Member States through the Technical Support Instrument27 
with  tailor-made  expertise  to  design  and  implement  reforms,  including  those  promoting 
investments  in  accelerating  the  green  energy  transition  through  hydrogen.  The  technical 
support, for example, involves strengthening administrative capacity, harmonising legislative 
frameworks, and sharing good practices. 

3.  CONCLUSION 

The  proposed  European  Hydrogen  Bank  complements  the  EU’s  regulatory  and  supportive 
framework for establishing a full hydrogen value chain in Europe and supports the Net-Zero 
Industry Act. It will pro-actively support those industrial stakeholders that make early decisions 
to redirect or to focus on clean tech deployment and set the stage for the required human capital 
investments. It will not only support the development of electrolyser manufacturing but will 
also help industrial actors downstream to invest in new clean industrial processes or transport 
technologies that run on renewable hydrogen instead of fossil fuels.  

Based on this communication, the Commission intends to operationalise all four pillars of the 
European Hydrogen Bank by the end of the year. In this period, it will further refine the design, 
activities and institutional set-up of the European Hydrogen Bank, in continued dialogue with 
Member States and stakeholders.  

27  Regulation (EU) 2021/240 of the European Parliament and of the Council of 10 February 2021 establishing a 

Technical Support Instrument (OJ L 57, 18.2.2021, p.1). 

16 

 
 
 
                                                           
The currently envisaged auction design includes the following elements: 

ANNEX I 

High-level Auction Design Parameters 

Auctioned Good 

Renewable Hydrogen as defined in the DA of REDII 

Constraining Value for 
auction clearing 

Innovation Fund budget allocated to the respective auction. 
Indicative budget for the first auction in 2023: EUR 800mn 

Remuneration Form 

Fixed Premium (bids in EUR/kg of H2), 

Remuneration Type 

Output-based support. Payments on delivery of verified and 
certified volumes. No payments before Entry into Operation (as 
opposed to regular Innovation Fund grants) 

Bid ranking / award criteria  Price-only (single-criteria auction) 

Support duration 

10 years 

Auction type 

Pricing rules 

Minimum price 

Ceiling price 

Maximum realisation 
period 

Prequalification 
requirements 

Static auction, single-stage 

pay-as-bid 

None 

Disclosed ceiling price, to be determined through final 
consultation and market sizing 

To be determined through final consultation and market sizing  

Key permits (environmental, building), Memoranda of 
Understanding or Letters of Intent on PPAs for renewable 
power and HPAs for hydrogen offtake, general financial health 
and capacity checks, option of bid and/or completion bonds 
(instead of heavy documentary checks) 

Cumulation with State Aid  No cumulation with State Aid for the same costs to safeguard a 

Termination reasons and 
penalties 

Implementing authority 

level playing field between Member States 

Termination reasons will include failure to enter into operation 
within the maximum realisation period, and significant volume 
under-delivery for prolonged periods. 

European Climate, Infrastructure and Environment Executive 
Agency (CINEA) 

17