Australia poised to jointly fund a €400m H2Global green hydrogen subsidy auction with German government

The funds in question are intended to serve as subsidies for green hydrogen production in Australia, earmarked specifically for export to Germany. Australia appears poised to participate in the H2Global green hydrogen subsidy auction initiative, and discussions with the German government indicate a collaborative effort to finance a substantial €400 million ($436 million) auction for the importation of renewable Australian H2 into Germany. The management of the H2Global auction program has officially confirmed these talks, shedding light on Germany's efforts to engage various international governments. The objective is to encourage joint funding for auctions on H2Global or the establishment of similar programs in other regions. Presently, Berlin is engaged in dialogues with Australian authorities to explore a proposed arrangement, put forth late last year, wherein each nation would contribute €200 million.

H2Global auctions provide an opportunity for producers to bid for subsidies, effectively bridging the financial gap between the cost of producing green hydrogen and the market price of environmentally detrimental grey H2, derived from unabated fossil fuels. The upcoming announcement of the winners of the first €900 million tranche, based on the lowest bids, is anticipated in the coming weeks. Subsequently, a separate auction within the H2Global framework will transpire, where the imported green hydrogen will be sold to the highest bidders in Germany.

Timo Bollerhey, the CEO of the Hydrogen Intermediary Network Company (Hint.Co), an organization funded by the German government overseeing the H2Global auctions, informed the Australian Financial Review (AFR) that Canberra is currently evaluating the proposal but has not yet delivered a definitive response. A spokesperson from the H2Global auction platform, however, conveyed that the discussions have progressed since Bollerhey's initial remarks to the newspaper. The spokesperson expressed confidence in securing, at least in part, the funds allocated by the German authorities. Additionally, H2Global is engaged in discussions with the United Arab Emirates (UAE) concerning a similar proposition. This would involve the importation of UAE-produced renewable hydrogen and its derivatives into Europe.

Several nations, including Japan, Austria, and the UAE, have displayed interest in adopting or utilizing the auction platform developed by H2Global. Austria's interest suggests a potential role in funding an auction for its own supply of green hydrogen and derivatives. H2Global is actively advising the Japanese government on establishing a domestic mechanism to subsidize renewable hydrogen imports. Memoranda of understanding (MOUs) are being established with key Japanese entities, representing both public and private interests, to guide them in establishing mechanisms akin to the H2Global platform. This collaboration could be of particular interest to Australian producers, as they might also participate in any future Japanese program.

The specifics of the discussions with officials in Tokyo remain unclear. It is uncertain whether the talks are exclusively focused on establishing a Japanese auction system or if there is consideration for financing an auction on the H2Global platform for imports into Japan. The unique double-sided auction model employed by H2Global allows producers to bid for subsidies, facilitating the delivery of green hydrogen and its derivatives to Germany through ten-year contracts. Subsequently, these volumes are sold to end users via one-year offtake agreements. Notably, the Dutch government has already committed to jointly financing a €600 million "funding window" with Germany for deliveries into the Netherlands commencing in 2027, exemplifying the broader international collaboration in the green hydrogen sector.