Global hydrogen ramp-up Germany and the Netherlands prepare international hydrogen purchases – BMWK facilitates new round of auctions

The Federal Ministry for Economic Affairs and Climate Action (BMWK) is making €3.53 billion available from the Climate and Transformation Fund for the period from 2027 to 2036 for imports of green hydrogen and its derivatives from a variety of regions.

Federal Minister Habeck said: "Germany is working on the establishment of a viable hydrogen market. In future, green hydrogen will be a crucial fuel. We want to be able to import large amounts of hydrogen for our industry and energy supply from the end of this decade. Working closely together with the European Hydrogen Bank, we are joining forces with the Netherlands to accelerate the hydrogen ramp-up and to open up attractive cooperation projects for partner countries."

The vision of the Federal Government is that German demand for hydrogen to foster the decarbonisation of industry amounts to 95-130 TWh annually by 2030. Thereafter, demand, more than half of which presumably needs to be met by imports, will continue to rise. The support measure aims to bring supply in line with demand, both in terms of volumes and prices, and to incentivise investments on both sides.

It is based on the "double auction model": the difference between two prices, i.e. the higher price of hydrogen on the global market and the lower price at which hydrogen can be sold at regional level and used economically, is compensated for.

Specifically, international auctions take place for purchases of green hydrogen and its derivatives on behalf of a subsidiary of the H2Global Foundation. As a result, long-term contracts are awarded to the bidders who submit the most economically advantageous tenders. This creates planning security for the providers to invest more in hydrogen production. In the second auctions, the hydrogen amounts thus purchased are sold to buyers in the EU at a competitive price. This also gives them a reliable basis on which to plan investments for the use of hydrogen.

The funding made available will be used to compensate for the difference between the supply price and the demand price. The funds are covered by the financial planning in the context of the Climate and Transformation Fund.

The measure is based on the experience gained in the context of the first purchasing auction which was launched at the end of 2022.

Details of the use of the new funds are currently being coordinated between the Federal Ministry for Economic Affairs and Climate Action and the Directorate-General for Competition of the European Commission.