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National hydrogen strategy 2.0

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October 25, 2023

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National hydrogen strategy 2.0

German government steps up the pace

Coordination was hard enough when there were “only” four German ministries dealing with hydrogen – now there are six involved in updating the national hydrogen strategy, plus the chancellery. This participation of so many different departments is surely conclusive proof that hydrogen has become a key plank in the energy transition.

“Being a versatile energy carrier, hydrogen will assume a key role in achieving our ambitious energy and climate targets.” This statement shows the German government’s recognition of hydrogen’s immense importance in the future energy supply and in tackling the climate crisis. It’s for good reason that, three years after the national hydrogen strategy was adopted in June 2020, a redraft has now been approved with content and targets adjusted to match changed conditions.

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The update to the national hydrogen strategy, which was enacted by the federal cabinet in July 2023, has, in the government’s words, “created a coherent framework for action for the entire hydrogen value chain – from production to transport through deployment and reuse.” The strategy, also referred to as the NWS, is designed to ensure certainty in financial planning, which provides the foundation for future investment, so that the market for green hydrogen technologies can be successfully ramped up.

At the same time, the NWS recalls that the creation of a hydrogen economy is “a task for the whole of society” whose success “requires contribution from all stakeholders.”

“Hydrogen technologies are not only an important instrument for climate change mitigation. They can enable the creation of new branches of industry with a large number of viable long-term jobs and extensive export opportunities. […] The NWS will thus also help German industry retain and further expand its strong position in hydrogen technologies.”

German government

Specific targets defined

The main 2030 targets outlined in the NWS focus on achieving an accelerated ramp-up of hydrogen and securing sufficient availability of hydrogen and its derivatives. Accordingly, the previous goal of 5 gigawatts of electrolyzer capacity has been raised to at least 10 gigawatts. Remaining demand will be covered by imports which will be the subject of a specially developed import strategy.

What’s more, effective hydrogen infrastructure is to be put place. According to the plans, a hydrogen starter network stretching across more than 1,800 kilometers (1,120 miles) will be got underway by 2027/2028 and supported by funding from Brussels. The network will be composed, in part, of repurposed natural gas pipes as well as newly constructed hydrogen lines. It will form a key part of the European Hydrogen Backbone which will involve hydrogen pipelines covering a total length of around 4,500 kilometers (2,800 miles).

In addition, various hydrogen applications are to be established in different industries – in the power and industrial sectors, in heavy-duty vehicles as well as in aviation and shipping. To allow this to happen, the intention is to create suitable framework conditions, specifically planning and approvals procedures, appropriate standards and certification systems. The stated aim is for Germany to become the leading supplier of hydrogen technologies by 2030.

“We have once again significantly upped the level of ambition.”

German economy minister Robert Habeck

“Hydrogen is the missing piece in the energy transition puzzle. It offers a huge opportunity to join up energy security, net-zero and competitiveness.”

German education and research minister Bettina Stark-Watzinger

“The global market for hydrogen must be fair and different than how the global fossil fuel industry once was.”

German development minister Svenja Schulze

 

The German government has now departed from its original approach of only financing green hydrogen through tax revenue, a move that has been particularly welcomed, unsurprisingly, by the gas lobby. Other colors of hydrogen are now also set to receive subsidies, albeit only to a limited degree and under certain conditions defined in the small print.

The update to the NWS states: “We also intend to fund the use of green and, insofar as it is needed in the ramp-up phase, low-carbon blue, turquoise and orange hydrogen on the deployment side to a limited extent while taking into account ambitious greenhouse gas limits, including emissions in the upstream chain and the ability to meet statutory net-zero targets.”

Bettina Stark-Watzinger, German education and research minister, called this a “pragmatic and technologically unbiased” decision that allows initial use of “all climate-friendly types of hydrogen.” This, she explains, will help Germany on its way to becoming a hydrogen nation.

Her colleague, German development minister Svenja Schulze, went one step further by saying: “Wherever wind and solar power is produced for hydrogen, momentum will be given to the energy transition at ground level and the local population will be supplied with electricity. And wherever seawater is desalinated for hydrogen, the nearest town will be supplied with drinking water. From a development perspective it’s clear: Hydrogen from renewables is not only the best choice for the environment, it is a cost-effective domestic energy source that also leads to better development in the Global South. We will therefore help our partner countries have a fair share of involvement in the new international market for hydrogen.”

Existing structures remain

To allow all this to happen, recourse is being made to existing institutions. For example, a “hydrogen guidance center” has already been set up that enables inquirers to receive advice on funding by phone or email. The committee of state secretaries for hydrogen acts as a decision-making body for the NWS and takes corrective action where necessary. It meets on a case-by-case basis as and when needed, which in the past was only rarely. The central body is the National Hydrogen Council, an independent, cross-party advisory committee with 26 high-ranking experts from industry, academia and civil society. The council is supported by the Coordination Office for Hydrogen.

Chair of the National Hydrogen Council, Katherina Reiche, explained: “It is an important milestone that the German government is ambitiously extending its national hydrogen strategy. […] Only hydrogen allows us to maintain value chains and ensure that key industries remain in Germany. […] Companies only invest if they have long-term planning certainty. We must therefore already look beyond 2030. According to council forecasts, the need for hydrogen and hydrogen derivatives will, by 2045, have risen to between 964 and 1,364 terawatt-hours. The Inflation Reduction Act in the USA and similar regulations around the world will accelerate the development of comprehensive value chains on an industrial scale. In view of rapid progress made in other countries, the German government should move away from exclusively focusing on flagship projects. What is more important is to create effective incentives to quickly scale the hydrogen economy and the development of new business models.”

On the subject of the – at times – fierce debate about the use of hydrogen in the heating sector, the council said that it endorses municipal heating plans as a crucial planning tool for encouraging the heating sector to shift away from fossil fuels. In its view, a successful transformation of the heating sector would require all technology options: heat pumps, heating networks, renewable heat and hydrogen. Thus all technologies should be granted equal footing as compliance options in Germany’s building energy law and be considered when undertaking infrastructure expansion.

The council added that rigorous training is needed for the specialist workforce required, both at university level and within the area of vocational training and continuing education.

Criticism and ideas for improvement

While the German government proudly unveiled the NWS update, the opposition, as expected, deems the 34-page document to be a flop. The CDU’s vice chairman, Andreas Jung, explained to German newspaper Tagesspiegel: “Hydrogen is so important for the economy and net-zero that it now needs a double-whammy.” Here Jung apes the “double-whammy” expression used by Chancellor Scholz when announcing his EUR 200 billion relief package to help with the cost of living. Jung’s criticism that the government was acting “halfheartedly” and would operate on the basis of “centrally controlled allocation” falls flat, however, since the targets set are highly ambitious and the NWS is ultimately only putting a framework in place – and does not include technical guidelines.

For example, it is understood that a “hydrogen acceleration law” will get off the ground this year to enable the installation of “further terminals only for hydrogen or its derivatives” as previously with LNG terminals. A “national port strategy” is expected to pinpoint the relevant hubs for the future hydrogen economy.

Jorgo Chatzimarkakis, CEO of Hydrogen Europe, therefore believes Germany is on the right course to be able to achieve “the broad use of green hydrogen in industry and the heating sector within nine years.” However, he thinks specific improvement measures are necessary, for instance better integration of H2 Global into the EU’s hydrogen bank in order to leverage European Union tendering processes as well as off-take agreements for temporarily nationalized companies, such as Uniper, that can contribute toward security of supply.

Additionally, Chatzimarkakis sees the need to shorten the IPCEI approval times at EU level and in Germany. He also suggests launching an “EU tax credit club” for hydrogen – as a semi-response to the Inflation Reduction Act in the USA, which cannot be introduced in the EU in a similar form due to tax regulations.

Contributions to the NWS 2.0 were made by the following German government departments: the economy ministry, the transportation ministry, the education and research ministry, the environment ministry, the development ministry as well as the foreign office and the chancellery.

Author: Sven Geitmann

Kategorien: Germany | News | Policy

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