ARKANSAS, Oct 13 (Future Headlines)- Portugal is set to embark on an unprecedented journey by conducting an auction for the rights to sell green hydrogen for injection into the national gas grid. This innovative approach aims to jumpstart Europe’s emerging market for green hydrogen and assist in the fight against carbon emissions while enhancing energy security. Ana Fontoura, the energy secretary at the environment ministry, announced this groundbreaking development and revealed that discussions are ongoing with the European Commission regarding crucial state aid. The auction, believed to be the first of its kind in Europe, represents a significant milestone in the quest for cleaner energy.

The upcoming auction in Portugal will encompass both green hydrogen and biomethane with the purpose of injecting these clean gases into the natural gas grid. Although the exact amount of state aid hasn’t been disclosed, the government is actively engaging with the European Commission to address this aspect.

In a pioneering approach, energy giant Galp will engage in contracts to purchase green hydrogen mixed with natural gas from producers. The company will subsequently resell this gas to meet the surging demand. This model of operation is designed to stimulate investments in production by offering suppliers a guaranteed buyer. It streamlines the process by eliminating the need for multiple bilateral contracts between individual suppliers and consumers.

Portugal is resolute in its ambition to become a significant producer and exporter of green hydrogen generated through the process of electrolysis, utilizing renewable energy. To further this vision, Floene, the country’s largest gas distributor, conducted extensive testing on the suitability of its polyethylene pipelines to transport hydrogen. The tests demonstrated that the pipelines are capable of carrying gas mixed with up to 5% hydrogen without any leaks. Portugal has plans to gradually increase this hydrogen blend to 20%.

In July, the government revealed plans to enhance the country’s electrolyzer capacity dedicated to green hydrogen production. The goal is to reach 5.5 gigawatts (GW) by 2030, a substantial increase from the earlier projection of 2.5 GW. This upward revision is driven by a surge in investment intentions.

Prominent companies like Galp and EDP-Energias de Portugal are actively working on green hydrogen projects. Galp is in the process of constructing a green hydrogen unit, while both companies are collaborating on another plant. In addition to these major players, consortiums such as Madoqua—a collaboration between Portuguese, Danish, and Dutch entities—and a group formed by Portugal’s primary glass producers and the two largest cement manufacturers have expressed their interest in green hydrogen production. Together, they account for a significant share of the country’s industrial carbon emissions.

Portugal’s move to launch the auction for green hydrogen and biomethane could serve as a catalyst for the European green hydrogen market. This emerging industry is crucial for the transition to cleaner energy sources, carbon neutrality, and enhanced energy security. By streamlining the production and distribution process and fostering collaboration between key players, the auction could help overcome some of the obstacles in the path to a greener future.

As Portugal seeks to position itself as a leader in green hydrogen production, the nation is aligning itself with the broader European goal of achieving a sustainable and carbon-neutral future. The investment and developments in green hydrogen are not just local endeavors but are part of a larger global shift toward cleaner energy sources, decarbonization, and environmental stewardship. In the coming years, as the state aid discussions progress and the auction unfolds, Portugal’s pioneering efforts in the green hydrogen sector will be closely watched as an indicator of how the energy landscape is evolving in Europe and beyond.

Reporting by Kevin Wood; Editing by Sarah White