The Federal Ministry for Economic Affairs and Climate Protection (BMWK) is set to allocate up to 3.53 billion euros from the Climate and Transformation Fund (KTF) to the H2Global hydrogen funding program. This initiative aims to boost the global green hydrogen market through purchase agreements and price signals.

Competitive bidding processes are being used to tender international supply contracts for green hydrogen. These products are then resold in Germany, with the federal government covering the risk of any additional costs that the market cannot absorb. HINT.CO GmbH is managing the bidding processes.

Plans are underway for a second call for proposals, building on the initial round of the H2Global instrument launched in 2022, which had a budget of up to 900 million euros. To shape this second call and comply with state aid regulations, the BMWK is conducting a public market consultation. This involves a questionnaire detailing the measures and posing specific questions to companies. All affected companies are invited to participate.

H2Global program

The H2Global Funding Window is currently under state aid review by the European Commission, following the Guidelines on State Aid for Climate, Environmental Protection, and Energy (CEEAG). Member States are required to hold public consultations on the competition impacts and proportionality of the measures.

The EU's hydrogen strategy aims to achieve at least 40 gigawatts of electrolysis capacity for renewable hydrogen by 2030 and expand the infrastructure for hydrogen transport and storage. However, an estimated 470 billion euros in investment is needed by 2030 to meet these targets.

Despite the first final investment decisions (FIDs) in 2022 marking significant progress, most hydrogen projects in Europe remain in the planning phase. Electrolysis-based hydrogen production is not yet competitive with conventional methods. The International Energy Agency (IEA) predicts that renewable and low-carbon hydrogen projects will produce about 10 million tons per year by 2030, with only 0.9 million tons per year earmarked for the EU.

To develop a sustainable hydrogen economy, it is crucial to overcome investment barriers and enhance market demand. This requires strong collaboration between governments, the private sector, and investors. The BMWK advocates for promoting hydrogen production from renewable sources and estimates that 320 to 458 billion euros will be needed along the hydrogen value chain to meet EU goals.

The BMWK believes the H2Global program, with its relatively small budget and the early stage of renewable hydrogen trading, will have minimal market-distorting effects. They argue that economies of scale, consistent price signals, and the development of transport routes will support the market growth for renewable hydrogen without negatively affecting competition and trade.