Introducing Hydrogen to the European Energy Market: Subsidies, Funding, and Other Instruments for the Ramp-Up of the Hydrogen Economy

To facilitate the achievement of the ambitious green hydrogen targets as adopted by the EU, support for the hydrogen uptake is granted through various mechanisms. Producing renewable hydrogen – as the EU hydrogen policy envisages – is currently more expensive than producing hydrogen from fossil fuels or producing energy from fossil fuels. Therefore, hydrogen projects currently require governmental support to bridge the cost gap until the hydrogen economy takes off to the extent that economies of scale and technological advancements reduce costs. At the EU level, the legislative framework seeks to initiate the hydrogen economy take-off by setting targets for renewable hydrogen that are designed to create necessary demand for the markets to spur investments, whereas the EU Hydrogen Bank serves as the main financing mechanism. In addition to these EU level measures, the State aid framework provides the rules for Member State market intervention. This chapter examines the various mechanisms employed in the EU to support green hydrogen. It provides an overview of the current mechanisms and analyses the existing regulatory framework within which such support can be granted in the EU.