The H2Global Mechanism





H2Global is an auction-based mechanism to promote a timely and effective PtX market ramp-up on an industrial scale. Currently, there is a market failure not only in terms of lack of investment in corresponding production capacities, but also in terms of the availability of climate neutral energy sources, which prevents the large and economically important CO₂ emitters in the EU from decarbonizing quickly and consistently. To help overcome this market failure, an intermediary, Hydrogen Intermediary Company GmbH (hereafter HINT.Co,), will conclude long-term purchase contracts on the supply side and short-term sales contracts on the demand side. Based on a mechanism similar to the Contracts for Difference (CfD) approach, the difference between supply prices (production and transport) and demand prices will be compensated by grants from the German Government. 

On the purchase side and on the sales side the price is determined via competition based bidding procedures. In line with sustainability criteria, the lowest bid price and the highest selling price are awarded the contract, so the price difference to be compensated is as low as possible. Thanks to short-term sales contracts, H2Global can benefit from expected increases in market prices for substitute goods. This means the funds required to compensate the price difference will decrease over the course of the funding period. 

With H2Global, operators and investors receive the planning and investment security necessary for the development of large volume electrolysis capacities, as they can base their business and financing model on long-term purchase agreements with a solvent contract partner at cost reflective prices. 

On the offtake side of HINT.Co, it enables the integration of PtX products into the economic cycle at market reflective prices.

H2Global currently addresses number 37 of the German government's economic stimulus programme. According to this, foreign trade partnerships will be established with countries in which Green Hydrogen can be produced efficiently due to their geographical location. In addition, green technologies will be established in partner countries where the local energy transition will be supported, and a contribution made to meet the massive demand for PtX products in Germany and Europe. The German Government is providing funding of EUR 900 million for H2Global.

The H2Global funding instrument is perspectively designed for further bidding procedures beyond the EUR 900 million applied for here. In compliance with EU state aid law, new bidding procedures may differ in the selection of products and the requirement criteria.

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