German vice-chancellor Robert Habeck and the European Union’s energy commissioner Kadri Simson have sent a joint letter to the heads of member states inviting them to join the H2Global hydrogen imports scheme.
This implies that 25 member states have so far been reluctant to sign up to H2Global, which Simson and Habeck announced in May would be expanded to the whole of Europe.
One possible reason for this reluctance could be a lack of clarity on whether the rollout of H2Global will be EU-led or down to individual member states.
Hintco, the intermediary company operating the double-sided auctions (see factbox below), has described two possible routes to Hydrogen Insight earlier this summer.
The first so-called “Team Europe” approach would see individual countries commission Hintco or a subsidiary to run the auction to support both imports and domestic production of hydrogen in their respective borders by covering the cost-gap of offtakers.
Each government would set their own rules for the auction, although definitions for renewable H2 are unlikely to deviate significantly from the EU’s recently passed delegated acts.
The Netherlands has already committed to running a €300m auction through the platform at the end of this year or beginning of 2024.
The second approach would be the European Commission directly backing H2Global as a bloc-wide import instrument with a budget pooled by member states.
However, the joint letter from Habeck and Simson implies that the Team Europe route is being prioritised, as this EU-led option could take years to set up.
In order to be allowed to manage EU funds, Hintco would first need to pass a so-called “pillar assessment”.
Exactly how long this process takes can vary depending on the applicant, with extra scrutiny on organisations planning to provide funding to third parties.
However, Dutch educational non-profit Nuffic has publicly disclosed that its pillar assessment application in April 2020 was only approved in October 2022 after more than 400 documents were examined.
As such, if the EU wants to kick off imports in the short term, rather than only starting auctions from the mid-2020s, the Team Europe approach could be the fastest way to kick off this market.
Hintco auctions ten-year purchase agreements for hydrogen or its derivatives from suppliers, who competitively bid to offer the lowest possible price.
H2 buyers then bid for sales agreements from the intermediary, with the difference in buy and sell prices covered by government funding.
The first three H2Global auctions for imports of green ammonia, methanol and e-SAF respectively are currently evaluating bids, with deliveries from winners expected by the end of 2024.