MEPs propose changes to the European Hydrogen Bank

Hydrogen is central to reaching climate neutrality by 2050. Under RePowerEU, EU should produce 10 million tons of renewable hydrogen and import the same amount by 2030.

To support domestic production and facilitate imports, the European Commission set up the European Hydrogen Bank with an initial budget of 3 billion euros.

MEPs advocate for more funding to close the gap with the US Inflation Reduction Act, regional auctions to secure fair allocation of resources across Member States and a one-stop shop approach to simplify procedures

MEPs advocate a boost in European Hydrogen Bank (EHB) funding and a strategic focus on climate goals and sustainability, in a report adopted on Tuesday.

In the report adopted in response to the communication, MEPs from the Industry, Research and Energy committee endorse the Commission’s proposal while suggesting key improvements. They propose a substantial increase in the budget of the EHB and advocate for adequate funding that matches the industrial policy of China and the US under the Inflation Reduction Act.

Hydrogen is central to the EU's aim for climate neutrality by 2050, decarbonisation of EU industries, for the EU's strategic autonomy and for reducing dependency on fossil fuels. The EU targets substantial renewable hydrogen production, leading to the proposal of a European Hydrogen Bank by the European Commission with an initial budget of 3 billion euros. The aim is to close the investment gap, boost domestic production and facilitate imports.

Additionally, the report recommends the EHB should prioritize domestic production and evolve into a one-stop-shop, streamlining support for all renewable hydrogen activities across the European Union, thereby simplifying processes for stakeholders and accelerating projects.

Focus on hard to abate sectors and heavy transport

MEPs emphasize the need for the EHB to focus on sectors that are hard to decarbonize, such as heavy transport, steel and fertilizers with significant carbon footprint and where electrification is particularly difficult.

Regional auctions to secure balanced allocation across Member States

To promote equitable opportunities across the Union, MEPs suggest setting up regional auctions within the EHB to ensure a fair and balanced allocation of funds across all Member States. This approach aims to foster competition and prevent deepening of existing regional development disparities.

Renewable hydrogen as the only sustainable form of hydrogen in the long-term

In recognition of the long-term sustainability of the hydrogen sector, MEPs underline that renewable hydrogen is the only viable option in the long run, with low-carbon hydrogen serving merely as a bridge during the transition to a net-zero economy.

Furthermore, MEPs call for the incorporation of robust environmental and social sustainability criteria into the allocation process.

Accountability and transparency

MEPs further call for a functional hydrogen market that should not rely on public subsidies in the long term. The Commission should introduce a review mechanism to avoid overcompensation, they say.

Quote

“Hydrogen will play a key role in the decarbonisation efforts and I am glad the European Hydrogen Bank aims to boost the support for renewable hydrogen" said EP rapporteur Robert Hajšel (S&D, SK).

"If the EU wants to become a competitive global player, we need robust financing and in this context, the initial budget of 3 billion euros for EHB is not enough. Priority should be given to domestic production to increase the EU’s strategic autonomy. We need to support EU industries, especially hard-to abate sectors and heavy transport that have significant carbon footprint. To prevent deepening of existing disparities, I advocate for regional auctions that would ensure a fair allocation of resources across all Member States. In a pathway to a net-zero economy, renewable hydrogen is the only sustainable form in the long term, while the role of low carbon should remain transitional” he added.

Next steps

The own Initiative report was adopted in the Industry, Research and Energy committee with 45 votes to 4, with 6 abstentions. The text will be put to a vote by the full House during a forthcoming plenary session. Once adopted, the Commission will have three months to reply.

Background

The European Commission communication highlights that hydrogen will play an essential role in the EU’s transition to climate neutrality by 2050 and in the objective to increase its strategic autonomy. Hydrogen is one of the strategic areas of the Commission’s New Industrial Strategy, with significant potential for quality job creation. The European Hydrogen Strategy from 2020 set out the objective to produce up to 10 million tonnes of renewable hydrogen in the EU. The REPowerEU plan proposes to complement this goal by 10 million tonnes of renewable hydrogen imports by 2030.

The Communication describes the concept, tasks and structure of the initiative. The main objective of the facility is to unlock private investments in hydrogen value chains, both domestically and in third countries, by connecting renewable energy supply to EU demand and addressing initial investment challenges. It will establish an initial market for renewable hydrogen, offering new growth opportunities and jobs.