Hydrogen Is Not About Subsidies, but About Demand

A subsidy for the equipment alone will not solve the question of how to get hydrogen to customers at a reasonable price. Karel Havlíček, 1st Deputy Prime Minister and Minister of Industry and Trade, discusses this issue. In the interview, he also explains why the Moravian-Silesian Region has a chance to become Europe’s first ‘hydrogen valley’ among coal regions.
He also discusses plans for a separate licence for hydrogen infrastructure, distinct from the licensing framework for the gas sector.

You launched the Czech Republic’s Hydrogen Strategy as Minister back in 2021. Looking back today, what do you consider its greatest successes, and where, by contrast, have expectations not been met?

I consider the greatest achievement to be that we began addressing hydrogen systematically, from research and production through infrastructure to its use in industry and transport. Even then, I also saw it as an opportunity for Czech companies. We have technical universities, research and development centres, and industrial companies capable of supplying their own technologies. This is precisely where the added value that the Czech economy needs is created.

Where expectations have not been met is the speed of the transition to normal commercial operation. It has become clear just how difficult it is to secure affordable electricity, hydrogen production, transport and a customer willing to purchase it over the long term at an acceptable price, all at the same time. A subsidy for the equipment alone will not solve this problem.

Today, I would therefore measure success primarily by how many projects have secured customers and a sustainable business model. We need to gain experience from real-world operations and adjust our next steps accordingly. With new technology, we need ambition, but also the ability to assess the results realistically.

The Moravian-Silesian Region wants to become the first ‘hydrogen valley’ among Europe’s coal regions. Does the state share this ambition, and what specifically will it do to support it?

The Moravian-Silesian Region has very good conditions for the development of hydrogen. It has an industrial base, technical education, research facilities and people with experience in demanding industrial operations. The transformation of a region like this must generate new contracts and skilled jobs. Hydrogen technologies can contribute to this.

For me, a hydrogen valley is first and foremost about effective cooperation. Producers need to know who they will sell their hydrogen to, industrial companies need to know the price, and transport operators need to be confident that they will be able to refuel every day. Bringing these needs together within a single region can make economic sense.

I see the role of the state in three specific areas: establishing clear rules, speeding up permitting processes and designing support so that production, infrastructure and consumption are genuinely interconnected. Alongside investment, we also need to support the development and testing of technologies. For the Moravian-Silesian Region, the key question will be how many of these opportunities local companies and their employees are able to take advantage of.

Your ‘Czechia: Country for the Future 2.0’ strategy focuses on industrial competitiveness. What role does hydrogen play in it?

Hydrogen has a place in this strategy as an industrial and technological opportunity. There are two important aspects. The first is its use in areas where it can help reduce emissions and where other options are technically or economically limited. The second is the ability of Czech companies to develop and manufacture equipment, components and control systems for the hydrogen economy.

I consider the second aspect particularly important. Czech companies can also benefit from the development of hydrogen as suppliers of technology or specialist services. This creates opportunities for mechanical engineering, electrical engineering and research, followed by exports.

At the same time, we must take into account the realities of the Czech energy sector. Producing hydrogen through electrolysis requires large amounts of electricity, and its price has a fundamental impact on the viability of the entire project. The idea that hydrogen could replace natural gas across the board in the short term is not realistic. I want to focus on specific applications where we can demonstrate the technical benefits, justify the cost and ensure long-term viability.

You have criticised European regulation for holding back competitiveness. How will the full CBAM regime, which applies to hydrogen as well, affect imports and prices for Czech companies from this year?

The principle that a European producer should not have to bear the cost of emissions while a competitor importing from a third country can avoid those costs altogether is understandable. At the same time, we need to monitor how the final framework affects the costs of companies that rely on imported raw materials for their own production.

In the case of hydrogen, it cannot be said that all imports will become more expensive by the same percentage. It depends on the emissions associated with its production, the price of certificates, the relevant adjustments and any carbon price already paid in the country of origin. The impact will therefore vary from one supplier to another. For Czech companies, this also means having to provide reliable data on the production of imported hydrogen.

It is also important to distinguish between the different dates. The regime applies to imports from 2026, but the sale of certificates will begin in 2027. This does not mean that the cost associated with this year’s imports will disappear.

My criticism of European policy is broader: border protection alone will not solve the problem of expensive energy or excessive bureaucracy within Europe. If we want a competitive industrial sector, we must address these costs as well.

Your ministry is preparing a separate licence for the transmission, distribution and storage of hydrogen, distinct from the gas sector. When will it take effect, and how much funding will the state realistically allocate to hydrogen in the coming years?

The purpose of a separate framework is to give investors clear rules for operating in the hydrogen infrastructure sector. They need to know the conditions under which networks and storage facilities will be operated, what obligations they will have and how customer access will work. For infrastructure with a long service life, legal certainty is essential.

When it comes to funding, we need to distinguish precisely between the total funding available under announced programmes, support awarded to specific projects and funds actually disbursed. We also need to distinguish between national and European funding sources. To give an example, the GREENGAS Call No. 1/2024 was launched with an allocation of CZK 3 billion to support electrolysers and related activities. However, this figure alone does not indicate the total amount of future funding for hydrogen.

I would prefer not to comment on any other dates until they have been finally approved.

What I consider important is that public support should help projects overcome initial investment and technological uncertainty and attract private capital. At the same time, we must also assess future operating costs and whether there is secured demand.

You have served as both Minister of Industry and Minister of Transport. Alongside battery technologies, hydrogen is increasingly being discussed in the transport sector. In which segments of public transport do you think it has a comparative advantage?

I see potential primarily in operations involving high daily mileage, short refuelling times and conditions where charging is difficult. In public transport, this could include certain regional bus routes. Another advantage may be that vehicles return to a single depot, where refuelling can be centralised and regular demand for hydrogen can be secured.

On the railways, hydrogen could be an option for certain non-electrified lines. However, it is essential to compare it very carefully with battery trains and potential electrification. The mere fact that a railway line does not have overhead electrification is not in itself an argument for hydrogen.

I would always want to see a detailed calculation for the specific operation: the cost of the vehicle, energy, infrastructure, servicing and backup solutions in the event of a disruption. The outcome may differ from one route to another. Regional authorities commission public transport services for passengers and must ensure both reliability and affordability. I would choose the technology based on these parameters.

In one sentence: why should a company in the Moravian-Silesian Region invest in hydrogen today rather than wait?

Because a company that develops an economically sound project today will gain experience, partners and customers before a wider range of competitors starts competing for the same contracts.