backOn January 15, 2026 the European Commission (“Commission”) approved the €400 million H2Global joint Canada-Germany H2Global auction concept under State aid rules.1The Commission’s decision is under SA.118372; and the Commission’s press release is available here. The Commission’s decision authorizes Germany to contribute €200 million towards the scheme, which will be matched by Canada, to support Canadian production of renewable hydrogen and its derivatives, known as renewable fuels of non‑biological origin (“RFNBOs”).
The €400 million joint funding, known as the “Bilateral Window”, is expected to support the construction of approximately 300 MW of electrolysis capacity in Canada.2Germany expects the scheme will lead to the avoidance of approximately 2.47 million tonnes of CO2 equivalent over its lifetime.The RFNBO products produced will be imported into Germany, contributing towards the goals of Germany’s hydrogen import strategy.
How the Canada-Germany H2Global bilateral window will work
Contracts will be awarded via a competitive bidding process, which is planned to conclude in 2027 and which is therefore expected to go through final design and roll-out during 2026.
The Bilateral Window will follow H2Global’s double-sided auction approach, with Hint.Co (the government-backed intermediary) acting as market-maker, bridging the cost difference between buy-price and sell-price for the imported RFNBO. However, unlike the other H2Global tenders previously launched, the Bilateral Window will run simultaneous auctions on the producer-side and the customer-side.
Hint.Co will auction ten-year Hydrogen Purchase Agreements (HPAs) and Hydrogen Sales Agreements (HSAs) under separate auctions but on parallel timelines. Winning bids on each side will then be matched, so that producer and customer have a contractual relationship. The precise details of the contractual terms and auction structure are still to be developed. Getting those details right will be important to ensure the Bilateral Window fulfills its potential and responds to the lessons-learnt from the other H2Global tenders.
Benefits of the Bilateral Window
A key benefit of Bilateral Window’s simultaneous auction approach is that, in principle (if structured appropriately), it should allow for the available funding to go much further. Since the actual cost difference between supply and purchase prices will be known upfront (at the point the bids are matched) Hint.Co should be able to support much larger volumes than would be the case if the funding had to allocated to cover the full production cost of the RFNBO (as has been the case in earlier H2Global auctions).
The scheme will be product-agnostic across RFNBOs, enabling bids for supply of renewable hydrogen, ammonia, methanol, renewable methane and other green hydrogen derivatives, with evaluation expected to be based primarily on price per MJ of energy. This is interesting, since it means there is no competitive benefit for a producer that can “beat” the carbon intensity RFNBO threshold (i.e., offering an even lower-carbon intensity product than the RFNBO threshold). To the contrary, assuming production of the lowest-possible carbon intensity RFNBO would be more expensive, producers are actually disincentivized from reducing carbon intensity of production below the RFNBO threshold since those additional costs will make them less competitive in the auction.
Whether or not this disincentive (which is also a feature of the other H2Global tenders) is changed remains to be seen. Meanwhile, Canadian producers should take note since this may factor into their project development and supply chain structuring plans.
Development decisions for Canadian hydrogen projects to take note of
Canadian producers will be eagerly awaiting the full eligibility criteria as well as other details for the scheme. However, one requirement is already clear that Canadian developers should take note of: developers will be excluded from the auctions if they have already commenced development of the electrolyser facility components of their projects.
No start of electrolyser works: The precise definition of this so-called incentive effective test for the Bilateral Window remains to be seen. However, the equivalent test under the ongoing H2Global regional tenders requires that producers have not yet signed binding contracts for the supply of electrolysers or commenced construction on their electrolyser facilities (although commencing balance of plant works is permitted).
Interaction with other H2Global auctions: Another key structuring requirement for Canadian producers to take note of is how the other two ongoing H2Global windows (the North American regional lot and the Global lot, both of which Canadian hydrogen producers are eligible for) interact with this Bilateral Window. This will require further clarification from the two governments. However, again, because of the fundamental requirements of the EU state aid rules incentive effect condition, it is already clear that the same electrolyser capacity cannot be awarded under more than one auction.
Canadian producers will need to keep this in mind, and potentially implement structural solutions to demonstrate separation of electrolysis capacity, if they plan to bid into the Canada-Germany Bilateral Window as well as any of the other H2Global auctions.
Other expected eligibility conditions: These include, amongst others, obtaining RFNBO certification and transparent disclosure of all other incentives received for the production of the RFNBO and its components (such as the Canadian Investment Tax Credits (“ITCs”) for clean hydrogen and clean power) as part of the H2Global assessment that projects are not over-subsidised.. These aspects need to be factored in by Canadian producers from an early stage since they have an impact on project setup and economics. The Canadian ITCs should, in principle, be able to be combined with an award of the H2Global contract, but the subsidies will need to be disclosed as part of the assessment of the overall returns to the project.
Next steps for the Bilateral Window
The next step for the two Governments is to finalise and issue the contract documents and auction terms to implement the Bilateral Window. These are expected to benefit from the experience earned with the contracts under the previous H2Global tenders, though the specific bilateral nature of the Canada-Germany window may necessitate differences. Developing these based on inputs from producers, customers and financiers will be important next steps in the early part of 2026. With a plan to award contracts in 2027, significant involvement from stakeholders will be required to operationalise the scheme during 2026.
The King & Spalding Global Energy Team has been advising clients in relation to H2Global since its inception. The Team is supporting several projects under ongoing H2Global auctions as well as on participation strategies in H2Global windows, auction readiness and RFNBO compliance. Among these, King & Spalding advises the project supplying green hydrogen to the winner of Hint.Co’s first international auction for green ammonia, the Egypt Green Hydrogen Project.