As the last votes are being counted and the EU started looking “left and right” for who will drive EU’s Climate resilience forward,  the EHA was invited to particpate at a June 12, 2024 EU Commission consultation on the upcoming, second EU Hydrogen Auction of domestically produced green hydrogen in the European Economic Area.

Priority of the first pilot H2 Auction, issued last November 2023, was to demonstrate that an Auction is a good instrument to develop a cost competitve green hydrogen markt.

Main changes proposed after the first Auction:

1. Lower target H2 proce from Euro 4,5 to Euro 3,5 per/kg: as median bid price of first Auction was Euro 2.9
2. Electrolyzer needs to be in production in 3 years not 5 years

Many comments were received in relation to the sense of urgency as the requirement for industries such as ammonia and chemicals production, oil refining and green steel in the new REDIII  directive calls for for at least 42% of their hydrogen use to be renewable by 2030, rising to 60% by 2035.

Historically the take-off price for green hydrogen used in transport could be significantly higher than for industrial demand, as was also demonstrated in the first EU H2 auction (Euro 8,34 compared to resp. 5,67 transport). In addition RED III also sets a 2025 target of all fuel supplied to this sector to be either biofuel or a so-called Renewable Fuel of Non-Biological Origin (RFNBO) — green hydrogen and its derivatives, such as ammonia or methanol — by 2025, with at least 1% RFNBOs by 2030. The Fuel EU Regualtion even has a target of 80% GHG emission reduction by 2050 and 2% of RFNBO of bunker fuels in 2034.

Small pilot auctions as an instrument to boost mobility applications on EU’s inland transport corridors might look promising as well. Even more in inland shipping, as  “multipliers” in the directive allow every 1MJ of RFNBOs used in the aviation and shipping sectors to be counted as 1.5MJ towards the target. According to Hydrogen Europe, Europe’s H2 Business association only 360,000 tonnes of H₂ would actually be needed to hit the 1% target…… so which new government coalition would pick up the ball?