Interview with Elena Hof, Paul Karzel and Jörg Starr from CEP

The Clean Energy Partnership or CEP is a consortium of various stakeholders that includes members from the automotive and energy sectors especially. On April 27, 2024, it issued a joint statement alongside the German hydrogen association DWV, making a powerful appeal to the German government.

Open letter from CEP

H2-international: Ms. Hof, Mr. Karzel, Mr. Starr, what in your view was the straw that broke the camel’s back? Why did your open letter come at this precise moment?

CEP: At the time we published our open letter to the federal government, there had been no official announcement of a halt on funding. However, major infrastructure projects were being repeatedly pushed back. When the government states that no more budgetary resources will be made available for hydrogen mobility and no new funding programs are planned, this signals a standstill. It’s a serious situation which is why we are seeking dialog with representatives of the government and its ministries. Our goal is to work together to find viable and sustainable solutions. Otherwise the consequence will be a migration of the hydrogen industry to other markets, in other words to other countries such as those in Asia, which will jeopardize Germany’s strong position as an economic and industrial base.

H2-international: You ask for “the immediate resumption of reliable funding for hydrogen mobility as needed to achieve climate targets and secure Germany’s position as a center of commerce and industry.” Officially, there is not and has not been an ax on funding, just a prolonged verification of the facts. Or have I misunderstood the situation?

CEP: Your understanding is correct. Even if funding hasn’t yet been officially axed, the signs are unmistakable. Postponed infrastructure projects and the statement that no further funding programs will be made available are a clear indication of the situation we are highlighting. In these circumstances, it’s no longer appealing for companies in Germany to invest. We need reassurance from the government that hydrogen will play a key role in the transition to cleaner energy and transportation and that this transformation will be borne jointly by both industry and the political establishment.

H2-international: So you doubt that the original funding mechanisms will ever be reinstated? Is there evidence that could back up this suspicion?

CEP: We focus on the facts. Looking at the current situation, we see a very real need for action. Reliable funding for hydrogen mobility needs to be quickly resumed. The current halt on funding is affecting industry at a sensitive time when much has already been achieved, but the transformation cannot be fully realized without political support. For us, that’s what counts. Investment needs to happen now, not least so that AFIR requirements can be met, for example.

H2-international: Recent communications from the government show clearly that battery electric mobility and charging infrastructure will be funded. The technology-neutral approach that was always promoted by the FDP party in particular is no longer evident. Is that your criticism?

CEP: Our criticism is that, by continuing along the current path, commercial and industrial opportunities for Germany will be squandered and the ability to meet climate targets will be lost. At the moment, Germany plays a pioneering role within Europe in the area of hydrogen mobility and sets global standards for other countries to follow. This leadership position is based on a strong technological and innovative capability that is founded upon one key premise: That hydrogen is a versatile energy carrier which is able to connect different sectors such as industry, heat, housing and mobility and alleviate the burden on electricity grids. Should one of these components not be in place, for instance mobility, it would put the further ramp-up of the hydrogen market at risk, thus endangering the renewables transition as a whole.

H2-international: Could you give us some examples?

CEP: Industry is planning to put over 40,000 hydrogen trucks on the road by 2030 and build up to 400 hydrogen refueling stations, which will massively reduce the CO₂ emissions in the transport sector so as to meet the climate targets agreed in Paris. What is underestimated, here, are the numerous synergies with other sectors. If the automotive industry produces fuel cell systems and this then increases demand for electrolyzer systems, costs will fall due to scaling effects, meaning that other areas will benefit too. For industries that intend to use hydrogen as a feedstock, falling production costs are an essential requirement for success. This interconnection between sectors shows how important the integration of hydrogen technologies is for the entire energy transition.

H2-international: You say that the current pause on funding stifles the ramp-up of hydrogen mobility and jeopardizes investments which have already been made. Do you know of any projects that have already been canceled? Could you name some examples?

CEP: It’s difficult to determine since projects are only announced once they have been approved. However, what we can say is that of the 303 projects submitted as part of the national hydrogen and fuel cell innovation program NIP from 2016 to 2023, only 99 have been approved thus far. The funding calls for hydrogen refueling stations and electrolyzers, in particular, were highly oversubscribed, highlighting the enormous interest and the potential which has now been lost. In the coalition agreement, the government stressed the significance of the hydrogen economy. This ambition must now be translated into action, otherwise the danger is that investments already made will be devalued and climate targets will be missed.

H2-international: It’s also often heard said that battery-based e-mobility is already further advanced and shows more development potential. How do you respond to that?

CEP: Likewise here, we are focused on our own area. The Clean Energy Partnership represents hydrogen mobility. In our organization, companies work across various sectors to ramp up the market for hydrogen mobility. We work together on standards covering all modes of transport. The reason for this is that CEP members recognize the huge potential of hydrogen for mobility, for the transformation of transportation, for the energy transition. That’s what counts. Hydrogen is an essential part of successfully transforming transportation and energy systems. Hydrogen opens up fantastic opportunities for Germany as a center of commerce and industry and is a vital element in meeting climate targets.

H2-international: It’s also been said that it’s not the job of the state to sort out the building of infrastructure. Yet this is what it’s doing for charging points but not any more for H₂ refueling stations. Are you after preferential treatment or do you just want to be treated equally?

CEP: We believe it’s unproductive to compare the treatment of different technologies. If you look at our membership list, you’ll see it actually includes companies that focus on both technologies. It’s a matter of recognizing and utilizing potential. We’re advocating for a resumption of reliable, targeted, sensible hydrogen funding. For constructive cooperation between politics, industry and science.

H2-international: We’re talking here about the mobility sector. Do you see parallels in other energy sectors?

CEP: We don’t just see parallels here, but a real symbiosis. The technology is ready, but at the same time there are key challenges to overcome in order to get to the next level. In the context of electrolysis, there’s still potential for optimization and that means more work to do in developing the system further. We also know that in the future large quantities of hydrogen will be needed in the steel industry, for example. That’s why we now need to bring down system costs, which is only possible through a mass market. And this is where mobility comes in – as a sector where this next important step can be taken. That’s the way to achieve a steady ramp-up and investment in large-scale production capacity.

H2-international: How do you see Germany’s position globally? Didn’t China push ahead as the lead H₂ market long ago?

CEP: At the moment, Germany clearly holds a leading position. Germany could lose this status to markets such as China, or indeed the US or Japan. The result would be a migration of expertise and jobs which would not be in the interests of German industrial policy. We should learn from the mistakes that we made previously in solar policy. Here, Germany was also affected by migration abroad after initially playing a pioneering role.

H2-international: You call your open letter an “appeal.” Why the restraint, why are there no demands?

CEP: In our open letter to the government we laid out several key demands. However, what’s more important than these demands is that we initiate a productive dialog to now find solutions. Specifically, we’re asking for the national hydrogen strategy to be implemented, including all measures to support hydrogen mobility projects and the continuation of promised funding. As part of this, the swift approval of funding will help meet AFIR targets for the construction of hydrogen refueling infrastructure which is binding under European law. We also want initial funding for heavy-duty H₂ vehicles, the introduction of a reliable OPEX funding program for heavy-duty goods transport and a ministerial structure between the federal government and states that supports the ramp-up of hydrogen mobility to the year 2030 and adjusts funding arrangements in line with actual market needs. Finally, regulatory hurdles must be removed and consistent funding provided for research for technological advancement.

H2-international: You have written expressly to Chancellor Scholz, economy minister Habeck, finance minister Lindner and transportation minister Wissing. Who do you think could or should be the most likely to act quickly?

CEP: We have written to key political figures – at the same time our demands are, of course, also directed toward the political establishment, the federal government. All the people we specifically addressed are crucial in terms of this issue; their areas of responsibility are highly significant. We are hoping for a broad show of support and are ready and willing to engage in discussions at any time.

Interviewer: Sven Geitmann