EU announces 'full switch' of existing grey hydrogen production to green H2, backed by carbon contra

The European Commission (EC) will roll out carbon contracts for difference (CCfD) subsidies for green hydrogen using cash from its Innovation Fund “to support a full switch of the existing hydrogen production in industrial processes from natural gas to renewables and the transition to hydrogen-based production processes in new industrial sectors such as steel-making”.

As previously announced, the new REPowerEU plan sets a target for ten million tonnes of green hydrogen to be produced in the EU by 2030, with a further ten million tonnes imported. The combined 20 million tonnes would require approximately 600GW of new wind and solar power, and 200GW of electrolysers.

“The Commission will roll out carbon contracts for difference to support the uptake of green hydrogen by industry and specific financing for REPowerEU under the Innovation Fund, using emission trading revenues to further support the switch away from Russian fossil fuel dependencies.”

Repeated mentions of “renewable and fossil-free hydrogen” suggest that there is no room for blue H2 subsidies in the EU plans.

The EC says it will “consider” a joint purchasing mechanism to buy in renewable H2 at scale at a low price.

“Hydrogen imports will be facilitated by a new dedicated work stream under the EU Energy Platform which should operationalise the European Global Hydrogen Facility and support Green hydrogen partnerships, which will kick-start the global renewable hydrogen market,” it said.