EU Allocates €1 Billion to Scale Renewable Hydrogen in Five Nations

The European Commission has granted €992 million (around $1.13 billion) to fifteen renewable hydrogen initiatives in five nations, speeding up the EU's transition away from fossil fuels and expanding clean energy infrastructure. The funds, released under the announcement of the second auction of the European Hydrogen Bank (EHB), were made in a larger effort to decrease greenhouse gas emissions and achieve 2030 climate objectives.

The chosen projects will generate 2.2 million tonnes of renewable hydrogen over the course of the next decade. The production will avoid over 15 million tonnes of carbon dioxide emissions, with significant contributions to the EU's decarbonisation process. The investment will bridge the cost difference between renewable hydrogen and market prices, enabling scale-up at an industrial pace, as well as technology adoption.

Twelve of the projects are to be awarded fixed premium support, subsidized from €0.20 to €0.60 per kilogramme of hydrogen produced. Additionally, three shipping hydrogen projects have been chosen for the first time, with €96.7 million total support and premium ranging from €0.45 to €1.88 per kilogramme. The grants range from €8 million to €246 million per project and will be paid over a period of ten years.

In addition to the basic EU funding, some member states are also providing topping-up financing under the "Auctions-as-a-Service" scheme. Spain, Austria, and Lithuania will offer up to €836 million national co-financing to the projects that were eligible under EHB but did not get direct EU grants because of the budget cap. The co-financing option allows member states to use the auctioning infrastructure of the EU while supporting local energy projects.

The shortlisted bidders and the European Climate, Infrastructure and Environment Executive Agency will now enter into negotiations, the contracts to be finalized in September or October 2025. The funded projects need to achieve financial closure within two and a half years and start hydrogen production within five years of contract award. Payments under the subsidy are to be phased over a period of ten years depending on independently verified renewable hydrogen production.

The third EHB auction, with a funding budget of up to €1 billion, will take place in later 2025. In addition, the European Commission will also initiate the "Hydrogen Mechanism," an internet platform that will connect hydrogen producers and final consumers. The internet market place will be established to create demand, facilitate supply chain development, and speed up market maturity.

These projects are crucial to the success of the EU's REPowerEU goals, one being to supply 10 million tonnes of renewable hydrogen in the Union by 2030. Innovation Fund—funded from the revenues of the Emissions Trading System (ETS)—will mobilize a total of €40 billion from 2020 to 2030. It is one of the EU's key financial tools for driving climate-related innovation and aiding the roll-out of clean technologies.

In its first auction in 2023, the European Hydrogen Bank allocated €720 million in grants to six hydrogen projects. The EU is looking to lay solid foundations for its green hydrogen economy and encourage private investment by mitigating risk to early-stage clean energy projects through the 2025 funding round.

This round of finance is a critical milestone in building an extensive hydrogen value chain across Europe. By enabling production and linking it with expanding demand markets—transport, ammonia, chemicals, and shipping industries—the EU aims to build a cleaner, more independent, and more resilient energy system. Ultimately, the vision is cross-border hydrogen shipping, industrial decarbonisation, and building a common hydrogen market that complements the EU Green Deal.

Source: European Commission through EU Innovation Fund