Germany plans to promote ‘green’ hydrogen with €7 billion

The German government adopted its national hydrogen strategy yesterday (10 June), with plans to ramp up production capacity to 5 GW by 2030 and 10 GW by 2040. To achieve this, €7 billion will be invested in new businesses and research. EURACTIV Germany reports.

When he presented Germany’s hydrogen strategy in Berlin yesterday (10 June), economy minister Peter Altmaier (CDU) called the 28-page document the “greatest innovation since the EEG”, a reference to the landmark German renewable energy sources act which came into force in 2000.

With this “quantum leap,” Germany wants to become the world leader in hydrogen technologies, added Altmaier, who was speaking alongside three other ministers.

This is the first time that Germany has set itself quantitative targets for the production of hydrogen.

By 2030, Germany aims to have generators with a total capacity of up to 5 GW, which corresponds to hydrogen generation of about 14TWh. By 2040, capacity should be increased to 10 GW.

Powered by offshore wind

Most of the energy required will be provided by offshore wind farms, while the 14 TWh would require about 20 TWh of green electricity.

The Social Democrats (SPD) had demanded twice that amount. However, when the federal government presented its economic stimulus package last week, the cabinet quickly reached an agreement.

Of the €130 billion promised in the economic stimulus package, €7 billion will now be spent to create a demand-driven market for hydrogen produced at competitive costs.

So far, the production of hydrogen from renewable energies has only been possible in small quantities in so-called “real laboratories” that determine how electrolysis can be scaled up.

In addition, the German government is providing €2 billion for international partnerships, for example with North Africa, where it has already concluded several agreements to participate in production facilities there.

And a 25-member national hydrogen council consisting of industry, science and civil society representatives will provide regular advice to the government.

The hydrogen strategy is accompanied by an action plan containing 38 measures. They include creating better conditions for renewable energies and more attractive conditions for the construction of offshore wind farms.

“Whoever says yes to hydrogen must also say yes to wind energy. That is why we must and will consistently expand renewable energies,” Environment Minister Svenja Schulze (SPD) stressed yesterday (10 June).

Demand quotas in aviation

Hydrogen will be used first where processes cannot be electrified – for example, in heavy goods transport, steel production, the chemical industry and aviation.

Companies in these sectors will receive financial aid if they invest in electrolysis plants to transform their production processes. To this end, a pilot programme for so-called Carbon Contracts for Difference (CfD) will be launched, which is aimed at the steel and chemical industries.

Hydrogen will also be used in the transport sector, an idea that was originally rejected by the environment ministry. And to support the production of renewable energies, infrastructure for hydrogen refuelling, among other things, will be established.

In addition, the German government wants to examine whether a 20% quota for renewable energies in aviation can be implemented by 2030.

For Oliver Krischer, deputy chairman of the Green Party, this point is essential: “Large production capacities are to be built up without it being clear who will buy this hydrogen in the first place”. Mandatory blending quotas are needed, for example in air traffic or in the natural gas network.

However, according to him, hydrogen is misplaced in the automotive sector.

“The planned money for hydrogen filling stations is wasted money, because electric cars are much cheaper and their efficiency cannot be matched,” he said.

Subsidies for green hydrogen only

The debate over how much “green” hydrogen produced from renewable energies should be promoted in Germany was particularly controversial. 99% of hydrogen today comes from fossil fuels and the oil and gas industry argues that the “grey” sort produced from natural gas should also play a role, at least in the initial stages, in order to ramp up production.

In the end, a compromise solution was found: Although the German government strongly promotes green hydrogen, it does not exclude the “grey” sort.

“We will of course experience transitional steps when we replace grey with green hydrogen,” Altmaier said.

The strategy also anticipates a Europe-wide hydrogen market to develop in the next ten years, where “blue” and “turquoise” hydrogen will also be traded. Both “blue” and “turquoise” hydrogen are produced from natural gas. But while “blue” hydrogen uses carbon capture and storage to burry CO2 emissions underground, “turquoise” uses pyrolysis to separate hydrogen from natural gas, leaving solid carbon as a by-product instead of CO2.

Since Germany is integrated into the EU’s energy networks, “CO2-neutral hydrogen will also play a role in Germany and, if available, will also be used on a provisional basis”.

Strong focus on green hydrogen

Germany has declared the creation of a European hydrogen infrastructure as one of the greatest priorities of its upcoming EU Council Presidency, in the hope of establishing itself as an export champion in the coming years.

“Green hydrogen technologies should soon bear the ‘Made in Germany’ seal”, said Research Minister Anja Karliczek (CDU).

Representatives of the business community and civil society have largely welcomed the strategy and praised the strong focus on green hydrogen.

At the same time, the long negotiations within the government highlighted the difficulties in transitioning away from fossil-based hydrogen.

“The German hydrogen strategy shows that one of the world’s largest fossil gas consumers is preparing for a future without it,” wrote Felix Heilmann, a researcher at the climate think tank E3G, who added that electrification and energy efficiency must be pushed forward simultaneously.

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