The European Commission has announced a new five-year pilot mechanism will be put in place to accelerate investments in the hydrogen market.
Part of the recently adopted Decarbonised Gases and Hydrogen package, the pilot mechanism will “collect, process and give access to information on demand and supply for renewable, low-carbon hydrogen and derivatives,” according to a statement released.
This will allow European off-takers to match with both European and foreign suppliers, collecting and processing market data on the development of hydrogen flows and prices.
A procurement process has now begun to find a service provider to develop an IT platform to operate the mechanism. H2 View understands the Commission will sign a contract by the end of the year, so operations can begin by mid-2025.
“This new mechanism will play a critical role in kick-starting a functioning hydrogen market,” explained Kadri Simson, Commissioner for Energy.
“There are still too few projects moving towards final investment decisions (FID), and too few off-takers signing contracts to switch to hydrogen. This mechanism will help us better understand and identify where hydrogen demand and supply are emerging.”
Across the globe, only 4% of announced renewable and low-carbon hydrogen projects have reached FID, with 12% identifying an off-taker for the hydrogen produced, according to the European Commission.
The mechanism will form part of the Commission’s wider work to establish the European Multiproduct Platform for the joint purchase of strategic commodities, which could cover strategic raw materials in the future.
With currently 254 renewable hydrogen projects in the EU, the Commission aims to have a fully functioning hydrogen market by 2030 and the Decarbonised Gases and Hydrogen package set out clear rules to achieve this, providing legal certainty and long-term visibility to investors across the value chain.
Simson continued, “The information that will be available will help us create bridges between European off-takers and hydrogen suppliers both within and outside the EU, preparing the ground for future auctions under the European Hydrogen Bank.
“It will also allow us to guide the planning and development of the necessary transport infrastructure through Projects of Common European Interest (IPCEI) and its funding through the EU Connecting Europe Facility for Energy.”
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