Unveiling the hype: Hydrogen and EU funding
Amidst the dynamic landscape of renewable energy, hydrogen seems to have emerged as a silver lining. With an inherent versatility and high potential for decarbonising various sectors, hydrogen has quickly been placed at the forefront of global efforts to tackle climate change. Not the least in the EU, financial instruments and alliances have been introduced to coordinate efforts along the entire hydrogen value chain. Just last week, the European Commission, Hydrogen Europe, and the Clean Hydrogen Partnership hosted the second annual European Hydrogen Week at the Brussels Expo. Throughout the five days, visitors were introduced to innovative hydrogen companies, industry trends, challenges, and opportunities, allowing for the exchange of knowledge across multiple actors.
But why has hydrogen taken over the agenda? Keep reading as Elisabeth Galster Pedersen, Innovation Consultant and our resident LCA specialist, and Ana M. Martín González, Partner and Head of our Energy and Sustainability team, delve into the unique characteristics of hydrogen and explore the European funding landscape supporting its development.
What is hydrogen and what role does it play in the energy transition?
Hydrogen is a highly versatile energy carrier that can be produced from various sources, including renewable energy, natural gas, and biomass. Hydrogen produced through the electrolysis of water using exclusively renewable energy (green hydrogen) is a net-zero alternative that can be converted into electricity or syngas and other derivates, enabling both the direct electrification of assets as well as the phasing-out of conventional fossil fuels. This versatility and potential application across all sectors are what makes hydrogen a pivotal part of the solution to meet the European Green Deal’s goal of climate neutrality by 2050.
Despite this undisputed potential, its adoption is associated with significant challenges, mainly related to the cost of production and infrastructure development. Overcoming these barriers requires large investments in research and development to boost the competitiveness of hydrogen against traditional energy sources. Support is also needed for establishing comprehensive networks to solve the logistical and financial challenges met with retrofitting existing infrastructure and building new facilities. In the EU, such networks are envisioned through the Trans-European Networks for Energy (TEN-E) regulation, seeking to implement a robust hydrogen infrastructure to secure its widespread adoption. For this purpose, the EU has allocated substantial funding to support hydrogen development, scaleup, and deployment throughout various sectors. Initiatives include the Clean Hydrogen Partnership (or the Clean Hydrogen Joint Undertaking), which is a European partnership between the European Commission, the fuel cell and hydrogen industries, Hydrogen Europe, and Hydrogen Europe Research. They represent the interests of all industry actors across the hydrogen value chain, with a vision to propel global carbon neutrality through the delivery of clean hydrogen. Efforts are also being commenced on national levels, with governments within the EU playing a crucial role in providing financial incentives and supporting mechanisms to accelerate the hydrogen transition.
As the EU and its individual nations begin to embrace hydrogen through strategic frameworks, collaboration, and targeted funding, the hydrogen industry is positioned for substantial growth. Overcoming challenges and capitalising on the presented opportunities will require concerted actions from governments, industries, research institutions, and developers. With the right platforms, hydrogen technology can play a key role in shaping a carbon-neutral future for Europe and the rest of the world.
Funding opportunities for the hydrogen sector in the EU
Under Horizon Europe, there are various relevant funding programmes and calls within the hydrogen area. Currently, hydrogen projects on lower Technology Readiness Levels (TRLs) can seek funding through Cluster 4 “Digital, Industry, and Space” and Cluster 5 “Climate, Energy, and Mobility”, under the Clean Hydrogen Partnership and the European Innovation Council.
- Cluster 4 invests in the initiatives to grow European industry in key areas such as low carbon and clean industries, specifically targeting hydrogen through the call Renewable hydrogen used as feedstock in innovative production routes (RIA) and CO2-neutral steel production with hydrogen, secondary carbon carriers and electricity (…) (RIA).
- Cluster 5 supports research and innovation actions that contribute to achieving climate neutrality, including driving sustainable secure and competitive energy supply through the call Development of next-generation synthetic renewable fuel technologies.
With a €1Bn budget between 2021-2027, the LIFE Clean Energy Transition sub-programme aims to contribute to achieving an energy-efficient, renewable energy-based, climate neutral and -resilient economy in the EU through cooperation actions between multiple actors. Financial support is given to pilot, demonstration, and best practice projects aiming at clean energy transition for greenhouse gas emissions reductions, thus pertaining to hydrogen-related projects.
EU Innovation Fund
The EU Innovation Fund (EUIF) is the largest European fund for the demonstration of first-of-a-kind low-carbon technologies that can contribute to the EU’s climate policy. Funded by the EU Emissions Trading System, the EUIF is expected to provide support of around €40Bn between 2020 and 2030 in the form of grants and auctions. Aside from being a key instrument to deliver on the EU ambitions defined in the Paris Agreement, REPowerEU, and the Green Deal Industrial Plan, projects funded by EUIF will boost economic growth and reinforce European presence on the global clean energy stage. Actors across the hydrogen value chain, from production to end-use, are invited to apply. In particular, the first two auction calls under the EUIF with the collaboration of the European Hydrogen Bank will focus on the production of RFNBO hydrogen, with a combined budget of €3Bn and deadlines in early 2024.
Connecting Europe Facility
Connecting Europe Facility (CEF) supports the strategic development of sustainable and high-performing transport, energy, and digital infrastructure networks at a European level. The programme runs between 2021-2027 with a total funding budget of €20.73Bn. Projects are implemented in cooperation with financing entities such as the European Investment Bank.
- CEF Energy (CEF-E) focuses on establishing a connected and smart energy infrastructure by implementing the TEN-E Regulation and is perceived as a key enabler for achieving the decarbonisation objectives by 2030 and 2050. Types of projects are demonstration projects, studies, and co-financing of the development of energy infrastructure. Hydrogen-related projects have become eligible to apply for funding since 2022 with the revision of the TEN-E Regulation to now support the deployment of cross-border hydrogen infrastructure, certain types of electrolysers, and smart gas grids.
- The CEF Transport (CEF-T) programme funds projects to upgrade existing infrastructure and remove bottlenecks for the implementation of the Trans-European Transport Network (TEN-T). The purpose of CEF-T is to support innovation and reduce the environmental impact of transport, enhance energy efficiency, and increase safety. Hydrogen-related projects eligible for funding under CEF-T are e.g., the deployment of hydrogen refueling infrastructure on the TEN-T road network and for public transport, and the deployment of hydrogen alternative fuels for TEN-T maritime ports.
Finally, the InvestEU Fund offers support to high-risk projects within four policy areas from thirteen European financial instruments and the European Fund for Strategic Investments in a single instrument. Clean hydrogen projects may apply under the InvestEU policy window Sustainable Infrastructure which targets a range of areas, e.g., sustainable transport modes, improvement of energy infrastructure interconnection levels, and the deployment of innovative technologies to enhance the environmental climate resilience.