The German government has announced plans to provide €550m ($571m) for two new green hydrogen funds — to be set up this year — to help grow the sector both globally and in emerging markets.

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The €250m Ptx Development Fund will promote H2 investments in emerging nations, while the €300m PtX growth fund “is intended to accelerate the global market ramp-up and infrastructure for green hydrogen overall”, according to the announcement at COP27 by the Federal Ministry for Economic Cooperation and Development (known as BMZ in German).

Ptx — Power-to-X — generally refers to the production of hydrogen made from electrolysis and its derivatives such as ammonia, methanol and synthetic fuels, or even steel produced using green H2.

The PtX funds are designed to complement German government’s €4bn H2Global tender scheme, which will subsidise and purchase green hydrogen from outside the EU before selling it on to local users, with both parts of the process subject to auction.

“The new funding offer, which is managed by KfW [Germany’s national development bank], closes an important funding gap: while the double auction model ‘H2Global’ promotes hydrogen imports to Germany, the new funds are intended to significantly accelerate the establishment of a global hydrogen value chain and, in particular, support projects in development and finance emerging markets,” said the BMZ press release.

“The funds are to be set up this year to enable timely investments and significantly accelerate the ramp-up of the global hydrogen value chain.

“They are intended to help reduce the financing gap for large-scale green hydrogen projects. The funds subsidize investments along the entire value chain: from the production of green hydrogen, through processing, to storage and the transport infrastructure for hydrogen and hydrogen derivatives.

“The secondary products can be used in the partner countries or exported, among other things, for the production of fertilizers from green ammonia, as a natural gas substitute for CO2 — free steel and metal production or as e-kerosene for air traffic, shipping or heavy loads.”

Federal development minister Svenja Schulze said: “Many developing countries offer the best conditions for [green hydrogen] production, but there is a risk that they will still be excluded from the value chains of the future.

“So far, funding programs have mainly existed in rich countries. The new green hydrogen economy must become fairer than the old fossil economy. This means that the developing countries must also benefit from the value chains of the future. That is why we want to use the new development fund not only to promote the production but also the use of green hydrogen in developing countries.”

The Ptx Growth Fund — which will come under the responsibility of the Federal Ministry for Economics and Climate — will support German (or European companies with permanent German operations) by subsidising “cyclical investments that can contribute to the global market ramp-up of green hydrogen”.

Stefan Wenzel, parliamentary state secretary at the economics and climate ministry, explained: “Due to the current energy crisis, the hydrogen ramp-up is progressing faster than previously thought. The task now is to create the framework for the emerging international market for green hydrogen.”

KfW has already established a website for the two new funds here.