Lot 1: Renewable ammonia
This lot covers the purchase side (HPA) of renewable ammonia in the €900m pilot tender.
Ammonia (NH3) is a globally traded commodity, which is usually transported by ship, train or truck. It is mainly used in the production of fertilizers and in the chemical industry. Today, ammonia is produced almost exclusively in the Haber-Bosch process where hydrogen is mixed with nitrogen and together processed at high temperature and pressure with a catalyst. The most common current process for producing hydrogen is unabated steam methane reforming (SMR), using natural gas or coal.
Renewable ammonia can be produced using the traditional Haber-Bosch process, but with the distinction that the fossil-fuel based hydrogen is replaced with renewable hydrogen. This form of ammonia can be used to replace fossil ammonia in its traditional uses, such as fertilizer production, and can also be used to produce sulphur- and carbon-free fuel for shipping. Renewable ammonia can also be a transport vector for renewable hydrogen, benefiting from the existing - albeit limited - infrastructure.
€300 million were offered by Hintco to purchase renewable ammonia in its pilot tender launched in 2022. Over 1,000 interested parties in 65 countries across five continents downloaded the tender documents on Hintco’s auction platform. Twenty-two companies submitted non-binding bids, five entered negotiations, and one company was the winning bidder.
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Product specifications for ammonia
Additional product specifications
In addition to the above-mentioned technical specifications, the product must comply with additional product specifications pertaining to the renewable and emissions savings characteristics of the product. They are based on the RED II and the Delegated Acts (2023/1184 and 2023/1185) and fulfil the requirements resulting from the grant decision and additional instructions given by the provider of funds, BMWK.
They include the following criteria:
- All hydrogen atoms must be derived from water electrolysis
- The electricity used in the production process must derive from renewable sources
- The GHG emissions savings (including transportation) must beat least 73 per cent in comparison to the fossil fuel comparator as set out in the Delegated Regulation (EU) 2023/1185 at 94 gCO2eq/MJ
Environmental and social sustainability
Find out here about the range of tools we use in our pilot tender to ensure that climate protection goes hand in hand with environmental and social sustainability.
Frequently asked questions
Why were ammonia, methanol, and e-sustainable aviation fuels chosen for the first tender?
The hydrogen derivatives in the pilot tender – renewable ammonia, renewable methanol, and eSAF – were selected by BMWK, based on a market analysis and a market consultation carried out in 2021.
The products auctioned in future tenders may vary according to the individual objectives of the respective funding bodies.
Who determines how the H2Global instrument is being applied, e.g. hydrogen criteria, geography, etc.?
The provider of the funds determines the conditions under which Hintco receives financial support to offset the expected cost difference arising from its trading activities. These conditions are outlined in a grant agreement, specifying key parameters such as the hydrogen's "color" classification (or other criteria for defining clean hydrogen), the geographic focus, and any potential additional requirements.
The H2Global mechanism, along with Hintco, is designed to be highly flexible and adaptable - remaining "color-agnostic" in its approach. However, all terms and conditions must align with H2Global’s overarching commitment to promoting environmental and social sustainability while contributing to global climate action.
Does Hintco only auction one-year contracts on the demand side?
Short-term contracts on the demand side play a key role in ensuring the efficient use of concessional (governmental) funding, while fostering price transparency and market liquidity. For this reason, many lots in the current H2Global auctions will feature one-year Hydrogen Sales Agreements (HSAs). These short-term agreements are essential to establish H2Global reference prices and indexes, laying the groundwork for a more mature hydrogen market.
At the same time, some off-takers, particularly in certain sectors, may require volume security over a longer horizon but struggle with fixed-price exposures. To address these needs, the H2Global mechanism is exploring models that allow Hintco to enter into longer-term sales agreements by adding additional layers to the existing structure. Detailed concepts for such models are already being developed and foreseen for upcoming tender designs.