Spain, Latvia and Austria to increase budget for second European hydrogen auction

The European Commission, Spain, Latvia and Austria jointly announced that the EU member states will use the “Auctions as a Service” mechanism to increase the planned budget for the upcoming European hydrogen auction by at least EUR 716 million. The total budget for the second hydrogen auction, which is due to start on 3 December, will therefore be around EUR 2 billion.

The second hydrogen auction, the main instrument of the European Hydrogen Bank (EHB), will provide financial support to hydrogen producers that meet the criteria for renewable fuels of non-biological origin (RFNBOs). It is scheduled to launch on 3 December 2024. The initial allocation announced was EUR 1.2 billion, of which EUR 1 billion is earmarked for renewable hydrogen production projects and EUR 200 million for projects with offtakers in maritime transport. This represents an increase of EUR 400 million compared with the pilot auction held last year.

The EUR 1.2 billion is to be funded through the Innovation Fund, which receives funding from the EU Emissions Trading System (EU ETS). The newly announced increase of at least EUR 716 million in the auction budget will be used for projects in the countries providing the support. If the original budget of EUR 1.2 billion is fully allocated, projects in Spain will have an additional EUR 280–400 million available, projects in Latvia EUR 36 million and projects in Austria EUR 400 million.

“With these new financial commitments, Spain, Latvia and Austria are demonstrating their commitment to achieving national and European goals for clean energy development and the decarbonisation of European industry,” the European Commission said.

The Commission added that Germany was so far the first and only country to use the “Auctions as a Service” mechanism. It provided an additional EUR 350 million for the first hydrogen auction.

Projects successful in the auction will receive a fixed premium on the hydrogen they produce for a period of 10 years. The premium is intended to bridge the gap between production costs and the price consumers are willing to pay for renewable hydrogen. Successful projects in the first hydrogen auction secured premiums ranging from EUR 0.37 to 0.48/kg.