The EU sees renewable hydrogen (H2) as one of the key technologies for decarbonising some of the sectors with the highest emissions. Renewable H2 should make a decisive contribution to achieving the Union's climate targets.

As renewable H2 is not yet competitive, the European Hydrogen Bank was founded. It is to invest up to 3 billion euros in this technology to promote the market for renewable hydrogen by stimulating investment and bridging the gap between supply and demand. Auctions will be held to determine which projects require the lowest subsidies - in the form of a fixed premium per kilogramme of renewable fuel of non-biological origin (RFNBO hydrogen) produced - which will be granted for a maximum of 10 years of operation in order to make the project economically viable.

The European Hydrogen Bank is part of the EU's wider strategies and missions, such as the European Green Deal and the RePowerEU target of producing 10 million tonnes of renewable hydrogen annually in the EU by 2030 - in addition to 10 million imported tonnes.

The European Hydrogen Bank's first EU-wide auction ended on 8 February 2024 and seven projects were selected from 132 projects to receive a total of €720 million in funding over 10 years with surprisingly low amounts of €0.37 to €0.48 per kg of renewable hydrogen produced (RFNBO). Electrolysers with a total capacity of 1.5 GW are to be built for this purpose.
The first round of auctions was criticised by some of the eastern EU MS because - in their view - projects in countries with abundant renewable energy resources, such as Scandinavia and the Iberian Peninsula, were given preference.
In the second auction in 2025, 15 projects with a total funding requirement of €992 million were selected. The required premiums were between €0.2 and €0.6/kg RFBNO. With the help of these projects, 2.2 million tonnes of CO2 emissions are to be avoided over ten years.

Key projects are now withdrawing from this funding programme, namely

• the German project in Lubmin (DeutscheReGas) with an electrolysis capacity of 200 MW and a funding commitment of € 112 million;
• the Zeevonk project in Rotterdam with a planned electrolysis capacity of 1 GW (Vattenfall and Copenhagen Infrastructure Partners) and a funding commitment of € 247 million. The electrolysis capacity is to be reduced to 500 MW. Completion has been postponed to 2032;
• the Spanish Catalina project (Copenhagen Infrastructure Partners) with a planned electrolysis capacity of 500 MW and a funding commitment of € 230 million.
• the German Kaskade project (Meridiam SAS) with an electrolysis capacity of 368 MW and a funding commitment of € 159 million. According to Meridiam SAS, work is continuing on the project, which is making good technical progress.
  

This means that none of the hydrogen projects in Europe's largest economy are currently utilising these EU subsidies. The chart below shows that the target set by Germany, namely an installed electrolysis capacity of 10,000 MW by 2030, is very difficult - if not impossible - to achieve.

In total, projects with a capacity of around 1.6 gigawatts were withdrawn from the European Hydrogen Bank funding programme, compared to around 3.8 gigawatts of auctioned capacity.
The reasons given for the withdrawal from the funding programme are as follows:

• regulatory uncertainties in many EU MS, such as the fact that the Renewable Energy Directive (REDIII) has not yet been implemented into national law;
• too stringent regulations for the production of RFNBO hydrogen;
• Transport sector must be included;
• too tight a timeline as some of the pipeline infrastructure projects - such as the Delta Rhine Corridor project - have been significantly delayed, meaning that some of the renewable H2 produced cannot be transported to consumers in time.

The arguments listed should be seen against the background that the selected projects must reach financial closure within 2.5 years and start producing renewable hydrogen within five years of signing the grant agreement.