Disputes with the EU: Germany scraps hydrogen auction worth hundreds of millions of euros

Germany has cancelled a planned 350 million euro renewable hydrogen auction that was to use the European “Auctions as a Service” scheme. The auction, designed along the lines of the European Hydrogen Bank model, fell through because of disagreements between Germany’s Ministry for Economic Affairs and the European Commission over strict specifications, Bloomberg reports.

The hydrogen auction is a key instrument of the European Hydrogen Bank (EHB), providing financial support to producers of renewable hydrogen that meets the criteria for renewable fuels of non-biological origin (RFNBO). Its aim is to support the production of hydrogen from renewable energy sources for European consumers.

The first pilot round of the hydrogen auction was launched on 23 November 2023 and concluded in February 2024. It supported seven projects set to produce up to 1.58 million tonnes of renewable hydrogen over ten years, with total electrolysis capacity of 1.48 GW. The winning projects received subsidies of between EUR 0.37 and 0.48 per kilogram of hydrogen, with individual awards ranging from EUR 8 million to EUR 245 million. A total of EUR 720 million was allocated in the pilot auction. The second hydrogen auction began on 3 December 2024, with total financial support increased to EUR 1.2 billion.

At the same time, the European Commission proposed the “Auctions as a Service” (AaaS) instrument, which allows member states to fund projects that failed to secure support in the hydrogen auction because of budget constraints. Under this mechanism, countries can support hydrogen initiatives from their own funds without having to organise separate auctions, reducing the administrative burden and costs.

Germany planned to be the first to use the system, allocating 350 million euros from its budget. The programme was intended to support domestic producers through a fixed premium per kilogram of hydrogen and contribute to achieving the 10 GW hydrogen production target by 2030.

According to BNN Bloomberg, however, Germany scrapped its plan just a year after announcing it. The reason is said to be disagreements between Germany’s Ministry for Economic Affairs and the European Commission over the auction’s “very strict specifications”, which the German side found unacceptable. The original allocation of 350 million euros will likely be redirected to other green projects or returned to the German budget.

The strict criteria were also recently criticised by the Czech Hydrogen Technology Platform (HYTEP). Before the launch of the second auction round, it said that Czech projects were unlikely to show interest because the auction prioritises the lowest possible subsidy request. HYTEP also described the “Auctions as a Service” model as unsuitable for the Czech Republic. It particularly criticised strict conditions, such as limiting member states to receiving no more than three times the auctioned price for supported projects, which significantly reduces the mechanism’s flexibility and appeal.

The cancellation comes amid political uncertainty, as Germany faces snap elections following the collapse of its three-party coalition government. Nevertheless, experts such as Dieter Keller-Giessbach of Charles River Associates argue that Germany’s hydrogen industry remains robust enough to weather the current political and economic turmoil.

Robert Habeck, Germany’s Minister for Economic Affairs and Climate Action, described the auction as a key step towards achieving the country’s hydrogen ambitions. Its cancellation, however, highlights the complexity of aligning national energy policies with broader EU strategies. While the European Hydrogen Bank supports green hydrogen projects across the EU through the Innovation Fund, differing national priorities and conditions, as in Germany’s case, are hindering the consistent implementation of policy.