European Gas Operators Association, large-scale government support is urgently needed to promote the construction of hydrogen energy infrastructure in the EU and promote the early commercial use of hydrogen energy.
The report, jointly compiled by the European Network of Natural Gas Transmission System Operators (ENTSOG) and the European Network of Hydrogen Network Operators (ENNOH), calls on the EU to introduce a unified risk reduction mechanism to solve the investment dilemma faced by hydrogen infrastructure. According to
the report, early investment in hydrogen energy infrastructure construction is the key to breaking the current deadlock of "chicken laying eggs, egg laying chickens" in hydrogen energy production, transportation and demand. The report also warns that if we wait for the market to mature before taking action, it will drag down the development of the whole industry.
The report recognizes the role of national support policies in promoting national infrastructure, but emphasizes that a single financing or risk reduction tool cannot support the large-scale development of hydrogen infrastructure.
The EU must intervene to share the financial pressure and operational risks of cross-border complex projects.
The report proposes two supporting measures to speed up and reduce risks for infrastructure projects: one is to establish an EU inter-temporal cost sharing framework to provide revenue guarantee for pipeline network operators in the early stage of market cultivation; the other is to set up a special agency to lock in long-term hydrogen transportation orders before the demand is fully formed.
This approach is similar to the current amortization model in Germany, which allows operators to temporarily avoid the upfront revenue gap, provided that hydrogen demand and pipeline revenue increase steadily over time. The core difference between
the two is scale: Germany's national scheme has allocated €24 billion ( $28.2 billion) to operators; a similar mechanism at the EU level would be much larger than Germany's. Consistent with the German model, if hydrogen demand falls short of expectations, the funding gap will be covered by the EU. The Institute for
Energy Economics and Financial Analysis (IEEFA) recently published a report criticizing the German amortization model. The agency said that if the promotion of hydrogen energy falls short of expectations, German taxpayers may bear about $34.7 billion in bad debt costs for pipelines.
However, German policy makers, pipeline network operators and the two major European associations have the same position: moderately advance infrastructure construction in the early stage can not only stabilize long-term investment expectations, but also avoid supply bottlenecks in the future. Tobias Bunin, policy manager of the
European Natural Gas Infrastructure Industry Association, said at the H2 View online seminar that it is important to lay out infrastructure ahead of time, but the market is conservative in judging short-term demand, and it is difficult for operators to justify investment. "Invest today for tomorrow's needs,"
he said. If we wait 10 years and see the rapid growth of supply and demand before we start to build infrastructure, it will be too late.
"At present, the biggest bottleneck for infrastructure operators is financing and risk reduction."
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