Hintco confirms lower budget of Eur2.5 billion for second H2Global auction

Hintco -- the company running the H2Global hydrogen auction mechanism -- has confirmed a lower budget for its second import auction to supply renewable hydrogen and its derivatives to Germany and the Netherlands, with a value of up to Eur2.5 billion.

Germany's Federal Ministry for Economic Affairs and Climate Action will provide up to Eur2.2 billion in a first phase of the second auction, with Eur300 million coming from the Dutch government, Hintco said in a statement Jan. 7.

On Dec. 18, the EC approved Eur3 billion of German-Dutch state aid for the scheme, which itself was below the Eur5.83 billion initially allocated by the two countries.

Part of the second round of funding will be distributed via regional auctions in North America, South America and Australia, Asia, and Africa.

"To enhance flexibility, all regional procurement lots will be product-open, enabling bidders to offer a variety of hydrogen derivatives," Hintco said.

The global lot co-financed by Germany and the Netherlands will target "exclusively molecular hydrogen," though it will be "vector-open," as to the carrier used, Hintco said.

The company plans to publish further details on the timeline, eligibility criteria and application process in the first half of 2025.

It said additional funding allocations from Germany for European production tenders are under discussion with the European Commission.

The H2Global model is based on a double auction system, bringing together mostly non-EU producers with buyers in Germany and the Netherlands.

Contracts will be awarded to the lowest sellers on the production side and the highest bidders on the buy side, with state support to bridge the cost gap. Tenders will cover long-term purchase agreements over 10 years, backed by government funding.

The auction bridges the difference between the cost of green hydrogen production and the price consumers are willing to pay.

A second phase of sale auctions for offtakers will take place after the purchase auction.

The two countries expect the program to avoid up to 5.75 million mt of CO2 emissions.

Fertiglobe won the first German H2Global ammonia import tender in July, at a price of Eur1,000/mt for delivery to Northwest Europe from its Ain Sokhna plant in Egypt.

Platts, part of S&P Global Commodity Insights, assessed green ammonia costs delivered to Northwest Europe from the Middle East at $997/mt Jan. 6, compared with conventional ammonia CFR Northwest Europe at $600/mt.

The government estimates German demand for hydrogen and its derivatives of 95-130 TWh in 2030 with 50%-70% (or 45-90 TWh) likely to be imported from abroad.