How Hydrogen Funding Supports the Cities of the Future
Major Investment Signals a Shift in Energy Strategy
The European Commission recently announced nearly €1 billion in funding for 15 renewable hydrogen projects across five countries. These projects are expected to produce 2.2 million tonnes of renewable hydrogen over the next ten years and could prevent more than 15 million tonnes of CO₂ emissions. Backed by the EU Innovation Fund, this investment signals a shift in how European cities and regions will approach energy, transport and industry.
Urban Relevance: Where Hydrogen Fits in
The hydrogen produced will support sectors such as transport, chemicals, methanol and ammonia production. Many of these are closely linked to urban and regional economies. Cities remain critical players in decarbonisation, and hydrogen could offer solutions where electrification may not be enough. This includes public transport fleets, port logistics and heating for industrial zones.
The Auction Model: Bridging the Cost Gap
For planners and city officials, this new wave of hydrogen support provides clear signals. The European Hydrogen Bank auction model offers producers a fixed subsidy per kilogram of hydrogen, helping to close the cost gap between renewable and fossil-based fuels. Twelve of the selected projects secured fixed premiums between €0.20 and €0.60 per kilogram. In addition, three maritime-focused projects received €96.7 million in grants, reflecting the importance of clean fuel solutions for port cities.
A Flexible Funding Mechanism for Member States
One feature worth noting is the 'Auctions-as-a-Service' model. This allows countries to use the EU’s auction framework while providing their own national funding. Spain, Austria and Lithuania are already doing this, with a combined €836 million earmarked for eligible projects. This model reduces the administrative burden and allows more projects to move forward, especially in countries where hydrogen infrastructure is still emerging.
The Role of Cities in Hydrogen Integration
From a city planning point of view, this shift is significant. Hydrogen networks require land, pipelines, refuelling stations and integration with existing transport and industrial assets. Cities have a role to play in zoning, permitting and long-term infrastructure strategies. Hydrogen can also support energy resilience at the city scale by complementing electricity grids and offering clean storage options.
Local Implementation Will Drive EU Goals
The EU has set a target of producing 10 million tonnes of renewable hydrogen by 2030. This cannot be achieved without local implementation. Cities and regions are well-positioned to host pilot projects, develop use cases and support adoption through procurement, partnerships and land-use decisions.
What’s Next: Scaling Up and Connecting Markets
The new funding builds on the first European Hydrogen Bank auction held in 2023, which awarded €700 million to six projects. A third auction is planned for late 2025 with a further €1 billion in funding. The Commission also plans to launch an online Hydrogen Mechanism to connect producers and buyers. This could simplify market access and support the wider adoption of renewable hydrogen across sectors.
Final Thoughts: Cities as Hydrogen Enablers
Hydrogen is becoming a serious part of the European energy system. The task now is to connect these projects to the places that can use them. For planners, this is a chance to rethink how urban and industrial systems are designed — and how they can support the shift to clean energy.
