The Agency for the Cooperation of Energy Regulators (ACER) has put forth a pivotal proposal advocating for a cost-sharing mechanism for nascent hydrogen networks across Europe, a strategic move designed to mitigate the burden of high initial tariffs on early adopters and stimulate infrastructure development. This initiative, detailed in a recent consultation paper, addresses a critical barrier to the widespread adoption of hydrogen as a clean energy carrier: the substantial upfront investment required for dedicated pipeline infrastructure.

Currently, the development of new hydrogen pipelines faces significant financial hurdles, primarily due to the uncertainty of demand in a nascent market. Without a clear and robust demand signal, the full cost of network construction would fall disproportionately on the initial users, leading to prohibitively high tariffs that stifle market growth. ACER’s proposal seeks to circumvent this 'chicken and egg' problem by allowing network operators to recover a portion of their investment costs through broader mechanisms, potentially involving cross-border solidarity or regulated asset base (RAB) models that spread costs over a longer period and wider user base.

The regulatory framework suggested by ACER emphasizes the need for a harmonized approach to network planning and financing across member states. This includes provisions for early-stage investment support, risk mitigation strategies, and mechanisms for allocating costs fairly among different regions and user groups. The objective is to ensure that hydrogen infrastructure can be built ahead of firm demand, providing the necessary backbone for industrial decarbonization and the integration of renewable hydrogen into the broader energy system.

Industry stakeholders have largely welcomed ACER’s proactive stance. Transmission System Operators (TSOs) have long highlighted the need for regulatory certainty and financial de-risking to commit to multi-billion euro pipeline projects. Industrial off-takers, such as steel and chemical manufacturers, who are poised to transition to hydrogen, view the proposal as essential for ensuring competitive and predictable hydrogen supply costs. The European Commission’s ambitious hydrogen strategy, targeting 40 GW of electrolyser capacity by 2030, heavily relies on the timely construction of dedicated transport infrastructure, making ACER’s proposal a cornerstone for achieving these targets.

While the specifics of cost allocation and regulatory oversight will be subject to further debate and refinement, the core principle of shared responsibility for critical infrastructure is gaining traction. This approach is vital for fostering a liquid hydrogen market, enabling cross-border trade, and ultimately reducing Europe’s reliance on fossil fuels. The proposal marks a significant step towards creating an investable environment for hydrogen infrastructure, paving the way for a robust and integrated European hydrogen economy.