The EU Commission is taking further steps to support the development of the European hydrogen market by launching work on a pilot mechanism, Report informs referring to the European Commission website.
The new mechanism was created under the recently adopted decarbonized gases and hydrogen package and aims to accelerate investments by providing a clearer picture of the market situation of both off-takers and suppliers and facilitating contacts between them. It will be in place for five years and will be part of the European Hydrogen Bank.
The hydrogen pilot mechanism will collect, process, and give access to information on demand and supply for renewable, low-carbon hydrogen and derivatives, allowing European off-takers to match with both European and foreign suppliers. It will collect and process market data on the development of hydrogen flows and prices. A procurement process has started today to find a service provider to develop an IT platform to operate the pilot mechanism. The Commission plans to sign a contract by the end of this year so that it can start its operations by mid-2025.
In Europe, the first large-scale electrolyzers are already under construction and the first off-take agreements have been signed. Improving demand visibility between suppliers and consumers will help accelerate final investment decisions in Europe and contribute to securing off-take agreements. Hydrogen will play an important role in achieving our Green Deal targets, phasing out Russian fossil fuels, and supporting the decarbonization and competitiveness of European industry.
The pilot hydrogen mechanism forms part of the Commission's ongoing work to establish a European Multiproduct Platform for the joint purchase of strategic commodities, which, in the future, could cover commodities such as strategic raw materials.
The EU has put in place a comprehensive and integrated regulatory framework to support the development of a fully functioning hydrogen market by 2030. The Decarbonised Gases and Hydrogen package set out clear market rules, providing legal certainty and long-term visibility to investors across the entire hydrogen value chain. On the demand side, the revised Renewable Energy Directive introduced targets for renewable hydrogen in the industry and transport sectors. The EU has also set up rules to define what renewable hydrogen is and how it can count towards these targets, and the Commission plans to propose a legal definition of low-carbon hydrogen by the end of the year. In addition, hydrogen supply chain projects are now considered of strategic interest, and thus eligible for faster permitting and other supportive measures, under the Net-Zero Industry Act.
In addition to the enabling regulatory framework, the Commission has been supporting the development of hydrogen infrastructure and related investments. The first Union list of Projects of Common and Mutual Interest under the revised TEN-E Regulation contains several hydrogen corridors that are expected to connect consumers with producers from across the EU as well as internationally. More specifically, the list gives PCI status to a set of new and repurposed pipelines, 16 large electrolyzers of more than 50 MW, as well as hydrogen storage facilities and terminals.
The Commission has also established the European Hydrogen Bank to boost investments in hydrogen projects and facilitate the establishment of a full hydrogen value chain in Europe. The first domestic auction was a success, receiving 132 proposals, out of which seven have been selected to receive nearly €720 million in financial support from the Innovation Fund. The Commission plans to launch a second domestic auction by the end of this year and is working on developing possible international auctions in cooperation with the Member States.