Germany and the EU are striving to become pioneers in the development of hydrogen technologies. In June of this year, the Federal Ministry for Economic Affairs and Energy published the much-anticipated National Hydrogen Strategy. The action plan lays out policy measures to enable a successful long-term transition from fossil fuels to renewable energies, driven by set climate protection goals and taking into account all sectors of industry and society. Green hydrogen, produced entirely with electricity from renewable energy sources, is considered as the ultimate key to a decarbonised and competitive future economy.
The enormous potential of hydrogen lies in its varied applicability, as well as high efficiency in terms of transportation and storage. Hydrogen could be stored and distributed through existing gas infrastructure, and could provide an attractive supplement to renewable energy sources from the electricity sector that are subject to seasonal fluctuations, such as photovoltaics and wind power. For instance, surplus electricity from wind turbines that is not fed into the power grid could be utilised for the production of hydrogen for industrial use.
Hydrogen can be differentiated into four types, based on the respective production process. Grey hydrogen is produced from fossil hydrocarbons and thus has a significant CO2 footprint. Blue hydrogen production incorporates a carbon capture and storage (CSS) system that prevents any CO2 generated in the process from being released into the atmosphere. Then, there is so-called turquoise hydrogen, which is the product of methane pyrolysis. The process, in which natural gas is split into hydrogen and solid carbon, is only carbon-neutral so long as it uses renewable energy sources and the generated carbon is subsequently sequestered.
Green hydrogen, meanwhile, is produced through the electrolysis of water using only electricity generated from renewables, and is thus not just carbon-neutral, but entirely carbon-free. While green hydrogen is therefore the only fully sustainable type, it currently still has the highest production cost by far when compared to the other types. In order for companies to decide to utilise carbon-neutral hydrogen in their industrial production in the future, green hydrogen has yet to be established as a reliable market product that can deliver on the highest quality and safety standards and, crucially, cost efficiency.
The National Hydrogen Strategy presents 38 measures that are centred around building up the market for hydrogen technologies, prioritising certain application sectors such as mobility and automotive, creating new financing directives, investment subsidies, driving continuous R&D and innovation efforts, and further promoting hydrogen on the European level under Germany’s EU Council Presidency. To support the Federal Government in the implementation and further development of the strategy, a National Hydrogen Council has been established as an advisory body. The council comprises of around 25 leading representatives from research institutes, environmental associations and industrial companies, and is tasked with providing consultation and actionable recommendations to the State Secretaries’ Committee in charge of directing the strategy.
German industry has been anticipating the hydrogen development push for some time. Shortly after the strategy’s announcement, German industrial engineering company thyssenkrupp announced a capacity expansion for water electrolysis, as well as a partnership with energy company E.ON to integrate electrolysis plants for the production of green hydrogen into the electricity market. European competitors are likewise aiming to establish themselves as suppliers on the European hydrogen market in the years ahead.
The Association of German Chambers of Commerce and Industry (DIHK) gave 12 recommendations for action to German and EU policymakers in June to create sound framework conditions for producers and buyers of hydrogen and boost long-term investments in the market. These include reinforcing Europe as an industry location along the entire value chain, pursuing an EU strategy for carbon-neutral gas imports and eliminating barriers for cross-border hydrogen trading. Likewise, Hydrogen Europe, the European association of the hydrogen industry, published a set of recommendations to strengthen the EU hydrogen ecosystem with market stimuli and innovative funds.
Coinciding with the inaugural meeting of the German National Hydrogen Council in early July, the European Commission released its “hydrogen strategy for a climate neutral Europe,” outlining the vision to implement the Paris Agreement and achieve EU-wide carbon neutrality by 2050. In line with the European Green Deal presented in late 2019, the strategy is to be rolled out in three stages: By 2024, it aims to install green hydrogen electrolysers and produce up to 1 million tonnes of green hydrogen. Between 2025-2030, the EU strives to establish green hydrogen as an “intrinsic part of the integrated energy system” with production capacity increased to 10 million tonnes. From 2030 onwards, green hydrogen will then be widely applied across the carbon-heavy industries in the EU.
The German and EU hydrogen strategies are important steps in promoting the transition to clean energy across Europe. Co-ordinated efforts for its successful implementation will be essential in order for the EU to reach its climate goals, as well as hold its own against global competition in the 21st century – especially from China, the world’s largest producer of hydrogen.
China has long recognised the potential of hydrogen and has invested heavily in the development of related technologies as part of its own climate strategy, albeit green hydrogen has not been prioritised as much as in Europe thus far. In September, Shanghai-based SAIC Motor was the first automotive company in China to release a hydrogen strategy plan. The company’s subsidiary Jieqing Technology, a developer of fuel cell technology, aims to achieve a market value of US$1.5B and a sales target of 10,000 hydrogen-fuelled cars per year by 2025. SAIC is working with several industrial partners and the Shanghai municipal government to develop hydrogen infrastructure in Shanghai and the Yangtze Delta, and build up China’s hydrogen economy.
In Hong Kong, the policy discourse on hydrogen has been relatively muted so far, given that space restrictions in the Special Administrative Region render the development of renewable energy infrastructure and hydrogen plants largely unfeasible. However, importing hydrogen from the Mainland could potentially be a future solution to gradually phase out fossil fuel sources, shift towards a hydrogen economy and help implement Hong Kong’s own climate action plan.
By Hendrik Hillebrecht
Related Links
- Source: BMWi – National Hydrogen Strategy (German language)
- Source: BMWi – Hydrogen Element for the Energy Transition (German language)
- Source: BMWi – Members of the National Hydrogen Council
- Source: DIHK – Hydrogen Brochure (German language)
- Source: DIHK – Guidelines for a Hydrogen Market (German language)
- Source: EC – A Hydrogen Strategy
- Source: EC – Q&A: A Hydrogen Strategy
- Source: Hydrogen Europe – Top 10 Key Recommendations
- Source: SAIC Motor – Press Release
- Source: thyssenkrupp – Press Release
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