The Ukraine war has triggered a kind of gate-keeping panic among many governments. More government subsidies are being hawked for e-fuels and hydrogen.
According to a survey by the German Energy Agency (Dena), the number of public programs providing subsidies for e-fuel and hydrogen projects rose from 116 in 31 countries at the start of 2022 to 224 in 44 countries earlier this year. The financial volume of the programs increased from 200 to 660 billion euros.
However, not all of the programs are available exclusively for this purpose; some are also available for other energy transition projects. Despite the extensive support measures provided for by the American Inflation Reduction Act (IRA), the EU continues to lead the way with subsidies of 300 billion euros for the energy turnaround.
Within the EU, Germany is the country in which green technologies receive the most lavish support. In Africa and South America, too, individual countries are trying to improve their chances on the hydrogen market through subsidies.
Most subsidies are provided for the market introduction of hydrogen and synthetic fuels. Only half as much tax money is available for research and development.
When looking at individual products, the most tax money, one-third, is for hydrogen projects. Significantly less funding is available for e-fuels (126 billion euros) and methane (102 billion euros). Most of the funding goes to investments in the necessary plants: 78 percent. In 22 percent of the projects, there are also subsidies to cover running costs.
In most cases, investors or operators receive a foregone grant (70 percent), and less often a low-interest loan (27 percent), a tax credit (2 percent), or a market-based premium.
However, Dena continues to believe that the programs announced to date are insufficient. In view of the new subsidy programs, more projects with a significantly higher capacity would indeed be planned. However, only every tenth investment decision has already been made. To achieve the European hydrogen targets alone, investments of between 700 and 1,200 billion euros would be necessary. Measured against this, there is still a considerable financing gap.
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