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The State of Hydrogen Fuel in Germany

Germany’s Energy Strategy Today

Germany has long been a leader in technology and industry in the European market, and it boasts a modern, stable electrical grid. As part of its long-term energy strategy, Germany seeks to have a 5-gigawatt electrolysis capacity before the end of the decade. As a comparison, here’s a summary of hydrogen goals for other European governments:

  • France. The goal is 6.5 gigawatts of hydrogen electrolysis capacity by 2030.
  • United Kingdom. A 1.8-gigawatt hydrogen power station is slated for construction in Northern England by a Scottish utility company.
  • Norway. There is a strong focus on using hydrogen energy in maritime applications.
  • Portugal. The goal is to increase hydrogen’s share of total energy consumption by at least 5% by 2030.
  • European Union. Decarbonization guidelines in several phases will increasingly rely on hydrogen, with a state goal of 10 million tons by 2030.

Germany’s National Hydrogen Strategy, unveiled in June of 2020, is largely built upon the framework of broader climate change mitigation goals. Of course, this does not mean the inherent economic opportunities of a robust hydrogen market are not also a consideration for many of the parties who will be involved in the work of pursuing that strategy. Germany’s pursuit of a leadership position in Europe’s green hydrogen market represents a rare opportunity for environmental protection and economic interests to coexist symbiotically.

The National Hydrogen Strategy in Germany has ambitious goals and is largely funded by the country’s Package for the Future — special legislation passed in response to the COVID-19 crisis. The package includes $8.1 billion for facilitating the implementation of hydrogen energy technology throughout Germany and $2.3 billion for building mutually beneficial relationships with hydrogen partners outside of Germany.

Germany’s hydrogen strategy is also notable because 16 state governments within Germany, including Bavaria and North Rhine-Westphalia, have rolled out hydrogen strategies of their own. The combined effort of national and regional governments should help make the implementation of Germany’s ambitious plans smoother and more expeditious.

The German Hydrogen Strategy — The First Step

The first step in rolling out the tenets of the National Hydrogen Strategy will be establishing and supporting a domestic market for hydrogen. The planned 5 gigawatts of hydrogen electricity generation capacity will include the use of both onshore and offshore installations. That 5-gigawatt capacity is slated to be doubled to 10 gigawatts by 2040.

While it’s an impressive long-term benchmark, 10 gigawatts of production would still only power between 1/3 and 1/4 of Germany’s total energy needs. The National Hydrogen Strategy calls for importing additional hydrogen from other countries to make up part of the remainder.

As mentioned previously, significant funding under the National Hydrogen Strategy and Package for the Future is earmarked for international partnership programs. Since the unveiling of the strategy in 2020, Germany has already made progress to that end by signing hydrogen agreements with several other sovereign nations that play key roles in the global energy market, including Ukraine, Canada, Australia, Saudi Arabia, Chile, Namibia, and Morocco.

Of particular importance is Germany’s relationship with Australia. The deal signed between the two countries creates a renewable energy supply chain that provides a parallel energy supply not subject to oil prices. Since the beginning of the conflict in Ukraine (which has led to global volatility of energy prices), Germany, like many countries, has been ramping up its efforts to produce alternative energies. For Germany, pursuing the production of green hydrogen has been a major alternative energy focus. Some of Germany’s biggest resources for doing this are not based in Germany. Instead, they are Australian outfits like Woodside Energy Group and Fortescue Metals. The goal of the partnership is to have production ramped up to a viable commercial scale by the year 2030.

On a nuts-and-bolts level, the German National Hydrogen Strategy going into 2023 is essentially a list of 38 concrete measures to be taken. These measures are designed to build the infrastructure and the market to make Germany a European and global leader in the hydrogen sector. These measures range from strengthening investments in hydrogen projects and improving the efficiency of current renewable energy systems to assisting industrial entities in purchasing and installing emissions-capturing equipment.

In 2024, the National Hydrogen Strategy will enter a new phase focused on creating and reinforcing a domestic market for green hydrogen. Experts believe that if the 38 measures laid forth in the previous phase can be implemented, the cost of producing green hydrogen in Germany can be reduced significantly.

Green Hydrogen vs. Blue Hydrogen

Much of the debate about hydrogen in Germany centers on the viability of green hydrogen versus blue hydrogen. Green hydrogen is fairly self-explanatory. It’s hydrogen fuel produced with renewable electricity. Blue hydrogen, on the other hand, uses natural gas, but it has the carbon emissions captured.

Blue hydrogen represents a bit of a viability paradox. Currently, fueling the electrolysis process through natural gas is more logistically and economically sound than performing totally green electrolysis using wind or solar. However, powering the electrolysis process is only one part of what makes blue hydrogen “blue” instead of just dirty. Blue hydrogen requires capturing carbon emissions from the energy used to power electrolysis. Carbon capture technology remains prohibitively expensive overall — and in the long run, it will be more expensive than developing clean energy alternatives by some models.

There is also a sort of in-between referred to as turquoise hydrogen, which aims to use more sustainable energy when available but is not produced on a completely carbon-neutral basis.

In light of Germany’s National Hydrogen Strategy and the long-term goals it sets forth, many experts argue that focusing on blue hydrogen as a “bridge” to cleaner energy is not a viable plan. These critics of blue hydrogen believe that time and resources would be better spent creating the infrastructure and market necessary to make green hydrogen more economically viable.

The argument makes sense. The future of energy in Europe and throughout the world is undoubtedly a transition away from fossil fuels entirely. Resources are best spent building that future today by putting in place systems and facilities that will be able to create and use clean hydrogen.

Germany and the Paris Accord

Germany’s greater climate goals are to achieve carbon neutrality by the target dates set forth under the Paris Climate Agreement. Under the accord, Germany, along with other European nations, had committed to achieving greenhouse gas neutrality by the year 2050. In 2021, however, the German government demonstrated global leadership by adjusting the nation’s goal for greenhouse gas neutrality forward by five years, to 2045. Hydrogen may come to play a key role in fulfilling this promise.

The world as a whole still has plenty of work to do before emissions are cut to the rates outlined in the Paris Climate Accord. Still, Germany is poised to take a hydrogen-focused leadership role in the race to emissions neutrality. Between their National Hydrogen Strategy, state-level hydrogen strategies, and aggressive commitment to outpacing the Paris Climate Accord, Germany is positioning itself for success in a hydrogen-powered future.

Germany’s Hydrogen History and Future

Germany has been investing in hydrogen programs at the state level since the 1980s. Because of this government support, Germany became a leader in producing electrolysis equipment, specifically through the firm Uhde and its parent company Thyssenkrupp. Currently, Germany enjoys a 20 percent share of the global market for electrolyzers.

Germany’s National Hydrogen Strategy puts much of the current research focus on green hydrogen, meaning hydrogen produced by an electrolysis process that isn’t powered by coal or some other fossil fuel. However, the technology and infrastructure to produce clean hydrogen at scale may not exist for several years.

Germany’s role in a hydrogen-powered future must also, of course, be contextualized through the lens of hydrogen strategies throughout the rest of Europe. Germany held the European Union Council Presidency for the latter half of 2020 and assertively leveraged this office to guide the European Union’s energy policy toward a hydrogen-focused plan in line with Germany’s own commitments and the National Hydrogen Strategy unveiled in that same period.

Before the end of Germany’s European Union Council Presidency, a coalition of 22 European Union member nations signed a sort of climate manifesto highlighting the need for clean hydrogen projects and establishing a framework for planning and implementing “important projects of common European interest” (or IPCEIs) specific to the hydrogen sector. The German government has pledged almost $10 billion toward funding these IPCEIs as part of its commitment to a hydrogen future involving partners outside of Germany.

Going into 2023, Germany looks to be largely meeting the checkpoints laid out in their National Hydrogen Strategy. The nation’s Economy and Climate Protection Minister, Robert Habeck, has lauded hydrogen as a key component of an upcoming energy transition. He has told workers at a carbon-neutral industrial park in Mecklenburg-Western Pomerania that hydrogen production is about to “ramp up very quickly in a short time.” In addition to the money the German government and individual state governments have pledged toward hydrogen projects, it is believed that European Union funding for further increasing hydrogen capacity will also become available by the end of 2022. This will lead to additional jobs, infrastructure projects, and more options for consumers in the energy market.

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