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EU Innovation Fund for Hydrogen
Breakthrough for the European Financial Instrument
The European Commission's Innovation Fund is set to launch a Competitive Bidding Program to fund low-carbon energy technologies. The new financial instrument is in line with the Innovation Fund's objectives of supporting innovative low-carbon technologies that are held back by the lower costs of incumbent fossil-based technologies and high-risk perception by financial markets. The scheme aims to achieve cost-efficiency in awarding support and minimize public costs while maximizing the leverage of private capital.
Brussels, 3 April 2023 - 5 MINUTES READ
The Competitive Bidding Program will expand the Innovation Fund's portfolio of support mechanisms, which currently provides grants, project development assistance and blending with other financial instruments.
This expansion will enable a faster rollout of the technologies needed for the green transition. The proposal to set up a competitive bidding instrument is part of the wider proposal to revise the Emissions Trading System directive, one of the 'Fit for 55' proposals presented by the Commission in July 2021 to make the EU's climate, energy, land use, transport, and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
The Commission is currently considering three types of support to be awarded by competitive bidding to hydrogen producers or purchasers.
1. The first is a Contract for Difference, which provides the producer with support from the Innovation Fund by covering the difference between the auction's winning price (the strike price) and a reference price derived from the price of the produced low-carbon product or the market price of a close substitute.
2. The second is a Carbon Contract for Difference, which provides the producer with support from the Innovation Fund by covering the difference between the winning price and a reference price derived from an average price of the EU ETS allowances.
3. The third is a Fixed Premium Contract, which provides the producer with support in the form of a fixed amount per unit of the produced product.
On 31 March 2023, the Commission has published the Draft Economic Terms and Conditions of the 2023 Innovation Fund pilot auction for renewable hydrogen production. The pilot and possible future auctions for hydrogen production form a key pillar of the EU Hydrogen Bank, focused on EU-domestic market creation.
Stakeholders, particularly renewable hydrogen producers, hydrogen project developers, and consumers, are invited to share their feedback on the draft economic T&C with the Commission via email. To do so, you can use the feedback table for concise, focused and evidence-based input.
In summary, the European Commission's Innovation Fund is set to launch a competitive bidding program to fund low-carbon energy technologies. The new financial instrument aims to support innovative low-carbon technologies that are held back by the lower costs of incumbent fossil-based technologies and high-risk perception by financial markets.
The Commission is currently considering three types of support to be awarded by competitive bidding to hydrogen producers or purchasers. The Commission has published the draft economic Terms and Conditions of the 2023 Innovation Fund pilot auction for renewable hydrogen production, and stakeholders are invited to share their feedback with the Commission via email.
More on Inoovation Fund here
This expansion will enable a faster rollout of the technologies needed for the green transition. The proposal to set up a competitive bidding instrument is part of the wider proposal to revise the Emissions Trading System directive, one of the 'Fit for 55' proposals presented by the Commission in July 2021 to make the EU's climate, energy, land use, transport, and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
The Commission is currently considering three types of support to be awarded by competitive bidding to hydrogen producers or purchasers.
1. The first is a Contract for Difference, which provides the producer with support from the Innovation Fund by covering the difference between the auction's winning price (the strike price) and a reference price derived from the price of the produced low-carbon product or the market price of a close substitute.
2. The second is a Carbon Contract for Difference, which provides the producer with support from the Innovation Fund by covering the difference between the winning price and a reference price derived from an average price of the EU ETS allowances.
3. The third is a Fixed Premium Contract, which provides the producer with support in the form of a fixed amount per unit of the produced product.
On 31 March 2023, the Commission has published the Draft Economic Terms and Conditions of the 2023 Innovation Fund pilot auction for renewable hydrogen production. The pilot and possible future auctions for hydrogen production form a key pillar of the EU Hydrogen Bank, focused on EU-domestic market creation.
Stakeholders, particularly renewable hydrogen producers, hydrogen project developers, and consumers, are invited to share their feedback on the draft economic T&C with the Commission via email. To do so, you can use the feedback table for concise, focused and evidence-based input.
- Send your feedback via email to [email protected] by 11 May 2023.
- The Commission will host a workshop on 16 May 2023 to discuss the feedback received.
- Please register to join the hybrid workshop by 1 May 2023.
In summary, the European Commission's Innovation Fund is set to launch a competitive bidding program to fund low-carbon energy technologies. The new financial instrument aims to support innovative low-carbon technologies that are held back by the lower costs of incumbent fossil-based technologies and high-risk perception by financial markets.
The Commission is currently considering three types of support to be awarded by competitive bidding to hydrogen producers or purchasers. The Commission has published the draft economic Terms and Conditions of the 2023 Innovation Fund pilot auction for renewable hydrogen production, and stakeholders are invited to share their feedback with the Commission via email.
More on Inoovation Fund here
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