Hydrogen geopolitics, electrolysers, CCS and more

Probably the least surprising news this week was that the EU has decided to “change its hydrogen project auction rules to limit Chinese presence”.

This had been lobbied for and trailed for quite some time, but came as part of the announcement that the European Hydrogen Bank “will run its second renewable hydrogen auction on December 3rd to provide up to 1.2 billion euros ($1.34 billion) in grants to new projects”.

A new tweak to the rules for this auction is that “projects cannot have parts sourced from China exceeding 25% of the plant's production capacity”.

Described as a ‘resilience criteria’, the rationale for this requirement is to avoid the “significant risk of increased and irreversible dependency of the EU on imports of electrolysers originating in China, which may threaten the EU’s security of supply”. Or, put another way, to give European manufacturers a protected market in which to scale before they risk being swept away by a tsunami of low-cost Chinese kit.

Other aspects of the upcoming auction remain the same as the last one: winners will receive a fixed €/kg premium for their renewable hydrogen, guaranteed for up to ten years of operation. In addition to the Chinese restrictions, another significant new addition is that there is now a “dedicated budget of €200 million for projects supplying production to off-takers in the maritime sector”.