Germany’s Federal Ministry of Economic Affairs and Climate Protection (BMWi) has approved €900 million for the innovative funding instrument H2Global. The aim of the project is to advance the international market ramp-up of green hydrogen and to use double-auction procedures for this purpose. This means that hydrogen or hydrogen derivatives are bought cheaply on the world market and sold at the highest bid in the EU.
Green hydrogen plays a central role in the transformation of our economy. In the future, we will have a high demand for green hydrogen and will also need imports in addition to production in Germany. Therefore, we are already starting the international ramp-up of the hydrogen economy and building long-term value creation and supply chains through the H2Global instrument.
The core idea of H2Global is a double-auction model: Hydrogen or hydrogen derivatives are purchased in non-EU countries at the lowest possible price with 10-year contracts via a competitive process. The contracts are processed via the intermediary HINT.CO. HINT.CO is a subsidiary of the H2Global Foundation founded by the private sector. Through the intermediary, products are sold to German and European companies through short-term auctions at the highest possible price, which can thus drive their decarbonization.
Since the production price of green hydrogen is still relatively high in the current market ramp-up phase, HINT.CO is expected to pay more in purchasing than it can collect through sales. The resulting losses are compensated by the federal government’s grant for a maximum of 10 years. Over time, losses will decrease as the willingness to pay for sustainable energy sources will increase in the foreseeable future.
The producers of renewable hydrogen and hydrogen derivatives such as green ammonia, green methanol, and e-Kerosene wishing to participate in the tenders will have to strictly comply with the sustainability criteria for renewable hydrogen and hydrogen derivatives production, set by the revised Renewable Energy Directive (RED II). They will also have to contribute to the deployment or financing of the additional renewable electricity needed to supply the electrolyzers producing hydrogen under the scheme.
After the funding instrument was approved by the European Commission under state aid law on 12/20/2021, the first acceptance contracts under H2Global are to be concluded as early as 2022. The first deliveries of sustainable hydrogen-based energy sources to Germany and Europe are planned for 2024.