The report’s findings are based on consultations by the EIB’s Advisory Services with nearly 50 market participants, at the request of the European Commission under the InnovFin Advisory programme.
Besides providing key insights into the main drivers behind the European hydrogen market, the report provides results and recommendations to inform the European Commission’s investment agenda for hydrogen under the EU Green Deal and the Horizon Europe programme.
The findings confirm that the international investment community recognises both the large market opportunity hydrogen represents as a zero-carbon-emission fuel and the current challenges to its large-scale deployment. Improvements in the economic and regulatory conditions of hydrogen-based projects will be required - to reduce the risks they face and their cost of capital - to mobilise the financing needed to meet the European Union’s ambitious targets. The interconnected nature of the hydrogen sector also calls for a more coherent value chain-based approach to ensure that the various components of such projects develop in an optimal way and to support the broader development of the hydrogen-based ecosystem.
To address these challenges, the report highlights some of the solutions to emerge from the market consultation: the introduction of new credit enhancement and risk-sharing mechanisms to facilitate bank financing of hydrogen projects; initiatives focused on ecosystem development and the coordination of market participants; and advisory services to prepare hydrogen projects for investment.
“Hydrogen is among the technologies with the greatest potential to reduce global carbon emissions, especially in hard-to-abate industrial sectors” said Jean-Christophe Laloux, Director General, Head of Operations at the EIB. “As the EU climate bank, we acknowledge both the potential of hydrogen and the many challenges in front of us. This new report provides important findings and recommendations for investors and policymakers to help them overcome some of the challenges and scale up financing for hydrogen projects. At the EIB, including through our Advisory Services, we will continue to work with our partners at the European Commission and project promoters to make hydrogen happen.”
Jean-Eric Paquet, Director General for Research and Innovation at the European Commission, added that the report carried out by the European Investment Bank in partnership with the European Commission represents an important step to take forward the European Union’s hydrogen agenda and that it will better equip policymakers in their efforts to strengthen and expand a sector of such strategic importance for Europe’s decarbonisation, technological sovereignty and energy autonomy in the years to come.
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
Since 2014, the EU bank has provided over 550 million euros in direct financial support to hydrogen-based technologies, which has helped mobilise total investment of over 1.2 billion euros. Through these financing operations, the Bank has supported key technologies (such as electrolysers and fuel cells) and financed hydrogen production and applications (including mobility and energy storage).
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