You can download the full submission here.
Federal Ministry for Economic Affairs and Energy
German Government
Scharnhorststraße 34-37, 10115 Berlin, Germany
To the Federal Ministry for Economic Affairs and Energy,
Re: Market consultation for the Bilateral German-Australian H2Global funding window
The Australian Hydrogen Council (AHC) welcomes the opportunity to input into the design process for the Australia-Germany H2Global Joint Tender.
The AHC is the peak body for the hydrogen and derivatives industry in Australia, and our membership includes companies from across the value chain. Our members are at the forefront of Australia’s hydrogen industry, developing the technology, skills and partnerships necessary to ensure that hydrogen and its derivatives play a meaningful role in decarbonising Australian industry.
The Australia-Germany H2Global Joint Tender (the programme) is a welcome bilateral collaboration. This €400 million mechanism aims to match Australian hydrogen supply with European customers, aiming to bridge the gap between the production cost and sales price. The AHC has been closely involved in this process, including through targeted industry consultation, the formal announcement was delivered at our 2024 conference, and our CEO was a selected reviewer in Germany earlier last year.
The AHC responded to the consultation questions based on our submission to the Australian Government’s September 2025 consultation[1] and have printed these answers below for transparency.
We remain supportive of this programme and look forward to further announcements through 2026.
If you wish to discuss any element of this submission, please contact me at [email protected].
Kind Regards,
Dr Fiona Simon
Chief Executive Officer
Australian Hydrogen Council
a. Subsidies for renewable hydrogen products and market distortion
Do you have any concerns regarding imports of renewable hydrogen and hydrogen derivatives from Australia to Germany or its relevance for the decarbonisation of the German/European economy? If yes, please set them out in detail.
We do not have concerns regarding the import of renewable hydrogen or hydrogen derivatives from Australia to Germany, nor regarding their relevance to the decarbonisation of the German and broader European economy. International trade in renewable hydrogen and hydrogen-based products will be a necessary component of net-zero pathways, particularly for economies with limited scope for large-scale domestic production.
Australia recognises that early market formation for renewable hydrogen will rely on pragmatic approaches that balance cost, technological maturity, and system efficiency. In this context, hydrogen derivatives that can be transported and utilised directly – without requiring reconversion to molecular hydrogen – are likely to represent more cost-effective and lower-risk options for long-distance trade in the near to medium term. This reflects current market readiness rather than any constraint on the long-term role of hydrogen across industrial and energy applications.
Initiatives such as H2Global play an important role in bridging the gap between emerging supply and demand by reducing offtake risk, supporting price discovery, and enabling first-mover transactions at scale. From Australia’s perspective, such mechanisms are highly complementary to the development of export-oriented hydrogen supply chains and to building confidence among producers, financiers, and end users.
Australia strongly supports Germany and the European Union engaging with a portfolio of international partners as part of a diversified and resilient hydrogen import strategy. We particularly welcome collaboration with partners that share common values around market transparency, sustainability, and long-term industrial cooperation. In this context, Australia sees itself as a reliable and aligned partner capable of contributing to Europe’s renewable hydrogen and derivatives markets as they mature.
Do you have any concerns regarding the necessity of subsidies for green hydrogen and hydrogen derivatives to ramp-up the market? If yes, please set them out in detail.
No, the sector is still in a nascent phase in which first-mover projects face a material cost gap and non-trivial execution risk, and demand is still developing in parallel. Mechanisms that bridge the gap between production costs and achievable sales prices play a vital enabling role to support price discovery, de-risk early offtake, and to help establish durable supply chains.
Programmes should be structured to maximise eligibility, competition and bankability, including by recognising the practical realities of project timelines and risk allocation in an emerging market. For example, requiring bidders to price and carry all key risks at the application stage (including exchange rate and inflation) can suppress appetite and competition, and may reduce the probability that the mechanism achieves the intended market making outcome.
Do you have any concerns that the German-Australian Bilateral H2Global funding window will have a significant market distorting effect? If yes, please set them out in detail.
No, provided it is implemented in a transparent and competitive manner consistent with its stated objective of bridging the cost gap and catalysing early trade.
If eligibility settings and timelines are too narrow, the tender may unintentionally limit participation, particularly given Australia’s current project pipeline characteristics (limited near-term mid-sized export-ready projects, with a stronger skew toward larger projects further out).
Similarly, if the mechanism implicitly assumes cracking/reconversion pathways, it risks drawing funding into avoidable complexity and cost rather than prioritising direct-use derivatives and long-term supply chain development.
In that sense, any distortion risk is best managed through design choices that maximise access, preserve competitive tension, and avoid embedding unnecessary cost drivers into the procurement logic, so the mechanism functions as intended: a pragmatic bridge to a self-sustaining market.
b. Main auction design process, timing and eligibility
Do you have any concerns regarding the envisaged general auction design of the German-Australian Bilateral H2Global funding window? Please set them out in detail.
No, the structure looks credible. The main considerations are operational/design settings rather than principle:
- Maximising competition and participation: the mechanism will work best if eligibility and delivery terms do not inadvertently narrow the field to a small subset of projects, reducing bid pressure and price discovery.
- Bankability and risk allocation: the more the producer is required to carry hard-to-price risks at bid stage (e.g., certain cost escalation and logistics risks), the more bidders will defensively price, potentially reducing the mechanism’s effectiveness as a market maker.
- Product pragmatism: where possible, procurement logic should remain open to direct-use derivatives (i.e., products that do not require reconversion), as these are more likely to support cost-effective early trade.
Certain elements of the current design may unnecessarily constrain participation. In particular, the narrow eligibility window creates tension between limiting projects that have progressed too far while simultaneously requiring early delivery to maximise funding value. In practice, this may disadvantage otherwise credible projects that are best positioned to deliver at scale.
Similarly, first-of-a-kind projects require an appropriate degree of flexibility to manage unforeseen technical, regulatory, and commercial risks. The current total funding envelope is unlikely to support a large-scale project on a standalone basis, necessitating additional capital from other sources. Taken together, these factors increase overall project risk and may dampen appetite to participate.
Furthermore, as noted in our previous advocacy, extending the offtake agreement to fifteen years would materially improve bankability. We recognise, however, that this factor may be constrained by legislative parameters.
Do you have any concerns that only Australian RFNBO producers will be eligible for funding under the German-Australian Bilateral H2Global funding window?
We do not have concerns in principle with restricting eligibility to Australian RFNBO producers in the bilateral funding window, given the co-funding arrangement and the stated objectives of the measure. However, we note that the practical application of RFNBO requirements remains complex and subject to ongoing interpretation, including in Germany, and may affect the ability to procure compliant products at scale in the near term. Eligibility settings should therefore allow sufficient flexibility to avoid unnecessarily limiting participation or increasing costs, while remaining consistent with the intent of RFNBO rules.
We note that previous consultation considered the inclusion of green metals. Additional hydrogen derivatives could be eligible to participate if they fulfil the objectives of the programme.
Do you have any concerns regarding the eligibility criteria of the German-Australian Bilateral H2Global funding window that intend to allow a wide range of companies to participate in the auction, while at the same time ensuring that projects with a high chance of realization are identified? Do you consider the administrative aspects of confirming eligibility as reasonable for a bidder?
No, we do not have concerns with the broad intent of the eligibility criteria, noting that supported projects are to be pre-FID and a minimum of 10MW. We note that prequalification should be proportionate to project maturity and avoid turning early participation into a quasi-FID standard.
Do you have any concerns regarding the Point of Sale being exclusively in Germany?
No, we do not have a concern with Germany as Point of Sale in principle. However, there are a few considerations worth noting:
- Cost and risk allocation: placing delivery responsibility to Germany on the producer may increase bid prices due to logistics risk premia (shipping availability, port/terminal interfaces, insurance, delays). This does not undermine the model, but it will influence bidding behaviour.
- Infrastructure realism: the design will benefit from ensuring Point of Sale requirements are aligned with practical import and handling pathways for the relevant derivatives, addressing avoidable constraints that could reduce participation.
If these are managed through clear delivery definitions and sensible risk settings, Point of Sale in Germany is workable and consistent with the instrument’s intent.
Do you have any concerns regarding the envisaged flexible timing of the German-Australian Bilateral H2Global funding window (up to ten-year funding within 2030-2041/42)? Please set them out in detail.
We do not have concerns with the flexible timing in principle, and note the time extension compared to what was proposed in the Australian consultation. A long window is consistent with the reality that hydrogen project development cycles are lengthy and that market formation requires continuity and credibility over time.
The main design consideration is maintaining:
- predictability (so projects can finance against it),
- option value (so projects at different stages can compete), and
- alignment with industry development (so the auction occurs when there is a meaningful pipeline able to participate).
Taking into account that no final investment decision must be made for projects applying for this measure, which period of time would you consider reasonable from the signing of the contract to the first delivery of the product to Germany from a producer´s perspective?
A range is appropriate, reflecting differing maturity levels at the time of contracting. From a producer perspective, a reasonable expectation would typically be:
- around 3-5 years for more advanced projects with permitting, key contracting pathways, and infrastructure interfaces already progressed; and
- around 5-7 years where projects are earlier stage and must still resolve approvals, financing, and full delivery chain arrangements.
What matters most is that the mechanism remains flexible enough to accommodate this variation, while still maintaining discipline around deliverability milestones.
Do you have any concerns regarding the existence of a bid cap for the German-Australian Bilateral H2 Global funding window or any advice regarding the potential ceiling price, that from your point of view would be appropriate?
We do not have concerns with the concept of a bid cap in principle, but note that any bid cap should be:
- credible and updatable close to the auction (as proposed),
- flexible to the pathway or technology within RFNBO compliance,
- and set in a way that avoids unintentionally excluding participation due to conservative assumptions about costs that are outside bidder control (notably logistics and integration costs embedded in delivery to Germany).
However, given the limited number of projects likely to both meet the programme’s eligibility criteria and be adequately supported within the available funding envelope (i.e. potentially smaller-scale projects with lower efficiency), the bid cap may further constrain the already narrow pool of viable participants. It will therefore be critical that proponents are able to access and stack complementary funding sources to enable a broader range of projects to proceed and compete effectively.
From an off-taker´s perspective, does the timeframe match your expected needs?
No comment from AHC
Do you have any concerns regarding the mentioned batch size?
In the Australian consultation, it was proposed that the batch size would be agreed between HINT.CO and the successful producer through the negotiation phase. We consider this flexible approach to be appropriate.
With respect to the batch size proposed in the current consultation, we understand from a member that the indicated volume may be too small to validate investment in a large-scale project. To better support bankability, consideration should be given to negotiating a minimum contract volume aligned with the scale of capital investment required.
c. Eligible hydrogen products and expected German demands
Do you have any concerns regarding the potential procurement volume of the German-Australian Bilateral H2Global funding window?
We note that the potential procurement volume is raised later in the consultation information, with an illustrative estimate of up to 360,000 tonnes of renewable ammonia under specific assumptions. We understand this to be an indicative calculation rather than a binding procurement target.
However, we have had member feedback that this illustrative estimate could be fulfilled by a single project in some cases. This risks concentrating the allocation and limiting participation, which would be inconsistent with the programme’s objective of fostering durable trade relationships between a diverse range of Australian producers and German offtakers.
From an off-taker perspective, which renewable hydrogen products would you see most needed for German and European imports – also given the envisaged time frames mentioned above?
No comment from AHC
From an off-taker perspective, would you expect that potential cracking of renewable ammonia to molecular hydrogen in Germany/Europe could be a feasible solution for German and European hydrogen demands?
As we are not an off-taker, we do not comment from an off-taker perspective. However, from a system and market-design perspective, we note that the potential cracking of renewable ammonia to molecular hydrogen involves additional cost, energy use, and infrastructure complexity.
In the context of early market formation, it is important that the mechanism does not implicitly narrow eligible offtake pathways to those requiring reconversion. Where ammonia or other derivatives can be used directly, these pathways are likely to be more cost-effective and operationally straightforward in the near to medium term. Maintaining flexibility across end uses and avoiding unnecessary costs supports efficient market development and competitive outcomes.
d. Incentive effect and emission savings of the measure
Do you have any comments regarding the necessity, suitability, proportionality or appropriateness of the measure? If yes, please set them out in detail.
No, the measure appears appropriately calibrated to support early market formation while remaining consistent with state aid principles. However, we reiterate the importance to maximise overall value by enabling broad eligibility and participation, avoiding unnecessary complexity that increases costs or consumes funding (e.g. ammonia cracking), and ensuring the programme can be effectively stacked with complementary funding sources to deliver genuine market-making impact.
Do you expect that renewable hydrogen projects (production as well as consumption) can be realised close to cost-covering prices or without state funding in the near future?
In the near term, we do not expect most renewable hydrogen production or consumption projects to be realised at cost-covering prices without some form of state support. While production costs are expected to decline over time and willingness to pay may increase as decarbonisation obligations tighten, there remains a material gap between current costs and market prices, particularly for internationally traded products.
Targeted, time-bound support mechanisms that improve demand visibility and reduce offtake risk are therefore likely to remain necessary in the near to medium term. Over time, as scale increases, infrastructure matures, and market confidence improves, reliance on state support is expected to diminish.
[1] AHC (2025) Australia-Germany H2Global Joint Tender, submission, 30 September, https://h2council.com.au/wp-content/uploads/2025/10/250930-H2Global-AHC-submission-1.pdf.