Hydrogen provides credible climate solutions by decarbonising high-emitting sectors where direct electrification is not possible. Targeted use of hydrogen, by reviewing alternatives on a case-by-case basis, results in an efficient EU energy system. There is a need to look beyond the hydrogen hype to realise more efficient forms of resource use. This means deploying direct electrification wherever possible.

Public support for hydrogen production under the Innovation fund should be granted only under the following conditions:

1. Hydrogen is produced in a way that does not increase emissions in any other part of the energy system. Only hydrogen meeting the taxonomy threshold of 3 gCO2/gH2 should be supported. For this to be accounted for properly, the methodology should look at full lifecycle assessments including the effect of hydrogen production on the rest of the energy systems. For what renewable hydrogen is concerned, special attention should be given to whether the production of hydrogen increases the emissions in another part of the power sector or if the additionality principle is respected. For “blue” hydrogen this should include the upstream methane emissions and the capture rates of CO2. Given that definitions under RED delegated acts and gas market package are still not in place, a methodology including these points should be developed for financing purposes.
2. Hydrogen is used in a sector that does not have other decarbonisation pathways. Wherever different (and more efficient) decarbonisation pathways exist for hydrogen they should be prioritised. For this reason, public support should be given to hydrogen only if it’s used to decarbonise targeted industrial sectors, such as the chemical sector (in application such as ammonia production), the metal industry, and applications needing high temperature heat such as glass or ceramic.

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Competitive Bidding schemes for hydrogen under the Innovation Fund