- The 2023 update of the National Hydrogen Strategy
- The role of hydrogen vs. the direct use of renewable electricity
- Which forms of hydrogen will receive state support?
- What are the targets for 2030?
- Measures to reach the 2030 targets
- The original 2020 National Hydrogen Strategy
Find the 2023 update to the National Hydrogen Strategy here (in German).
1. The 2023 update of the National Hydrogen Strategy
Germany first presented its hydrogen strategy in mid-2020 under the government of then-chancellor Angela Merkel. The strategy already stipulated an in-depth evaluation and possible update after three years. In addition, the incoming government coalition after Merkel of the Social Democrats (SPD), the Green Party and the Free Democrats (FDP) agreed to present an “ambitious update” to the strategy to make the country a leading market for hydrogen technologies by 2030.
In July 2023, the government presented this update. While the original strategy “remains valid in principle” (find more information on the original strategy below), the update aims to further speed up the market ramp-up and introduces adjusted targets and new measures.
The update “shows how the hydrogen market ramp-up can be accelerated through concrete and re-sharpened measures to contribute to Germany’s transformation into a climate neutral economy by 2045,” says the document. The government argued that against the backdrop of the energy crisis and the war in Ukraine, the supply security goal of the 2020 strategy has gained in importance from a security policy perspective. The update would also send an “important industry policy signal” to the world, strengthening Germany as a business and industry location and helping to create future-proof jobs.
2. The role of hydrogen vs. the direct use of renewable electricity
The strategy says that increasing energy efficiency and speeding up the expansion of renewable energies are indispensable for reaching Germany’s ambitious climate targets. It also emphasises that using renewable electricity directly is preferable in most cases, for example in electric mobility or heat pumps, as it is associated with lower conversion losses compared to the use of hydrogen. It “should be used where possible if it is the most economical option in terms of overall system efficiency and security of supply, as well as from an economic and environmental perspective,” says the strategy update.
3. Which forms of hydrogen will receive state support?
The 2020 strategy identified green hydrogen made from renewable electricity as the only sustainable form in the long-term. Other forms of hydrogen are produced from fossil gas – currently the main source – sometimes in connection with capturing CO2 and storing it (CCS). [Find more information on the “colours” of hydrogen here.]
The strategy update says that in order to ensure a rapid ramp-up of the hydrogen market and to meet the expected demand, “other colours of hydrogen will also be used, at least until sufficient green hydrogen is available.” This would especially be low-carbon hydrogen from waste or natural gas in combination with CCS.
When it comes to state support for hydrogen projects, the government differentiates between the “colours” of hydrogen, and between generation and application:
- “Direct financial support for hydrogen production is limited to the production of green hydrogen”
- Support for green hydrogen, but if necessary during market-ramp-up “to limited extent” also blue (from fossil fuels with CCS), turquoise (from fossil gas, generating solid carbon) and orange (on basis of waste and residual materials) hydrogen, “taking into account ambitious GHG limits, including upstream emissions, as well as meeting the legal target of climate neutrality”
4. What are the targets for 2030?
The 2023 strategy update defines several targets for the years until 2030:
- Speed up market ramp-up
- Increase target for domestic electrolyser capacity for green hydrogen production from 5 GW to 10 GW by 2030
- Build 1,800 km of refurbished and new “hydrogen start-up grid” via IPCEI support by 2027/2028 (also connection with neighbouring countries through “European Hydrogen Backbone” initiative)
- Establish applications in industry, heavy-duty commercial vehicles, air and shipping transport, H2-ready gas power plants
- Make Germany “lead supplier for hydrogen technologies” by 2030
- Create the right framework conditions also at European and international level (e.g. efficient permit procedures, joint standards and certification systems)
5. Measures to reach the 2030 targets
The strategy update presents a list of measures in four different fields of action for the short (by 2023), medium (2024/2024) and long term (until 2030).
The measures include:
a) Ensure sufficient hydrogen supply by 2030
The strategy update assumes total hydrogen demand in 2030 will be 95-130 terawatt hours (TWh), including derivatives like ammonia, methanol or synthetic fuels. Today’s demand is around 55 TWh, supplied using fossil gas. The strategy says that demand will strongly increase after 2030.
The country will have to import 50-70 percent of this by 2030, later an even higher share, the document says. Import until 2030 will largely happen through shipping, for example ammonia. After 2030, the strategy aims for the expansion of pipeline transport from neighbouring countries and possibly adjacent regions. Imports of green methane, synthetic methanol, LOHC (Liquid Organic Hydrogen Carrier) and liquid hydrogen “may play a role in the medium to long term,” says the document.
- Electrolyser capacity to produce green hydrogen doubled to 10 GW by 2030 (previously 5 GW)
- Goal: green light for IPCEI state support programmes for 2.5 GW in 2023
- Incentivise investments in 2 GW electrolysers for application in transport sector through national implementation of the EU Renewable Energy Directive (RED II)
- Overhaul support programmes for projects in second half of 2020s
- Present Import Strategy for Hydrogen and Hydrogen Derivatives in 2023
- Goal: establish diversified supply, avoid new dependencies, establish sustainable standards, become technology partner for exporting countries
- Make best use of European production potential, but also establish cooperation with third countries
- Take into account sustainability criteria and local value creation in exporting countries
- Take into account “geopolitical effects” of diversification beyond today’s (fossil) energy exporting countries, but also the wish of these countries to take part in hydrogen economy
- Rising demand for hydrogen “must not hamper or inhibit” local value creation and climate and environment protection; human rights violations must be avoided
- Support projects to research and test ways to transport and store hydrogen
- Further develop existing programmes to finance price difference between grey hydrogen and green hydrogen (e.g. H2Global)
- Intensify cooperation at EU level to make use of potential to produce hydrogen in southern Europe, the North Sea, Baltic Sea, Mediterranean and Black Sea
- Strengthen EU cooperation on imports from third countries through instruments like the European Hydrogen Bank
- Strengthen existing and create new bilateral partnerships
- Support especially developing and emerging economies that aim to build up a hydrogen export market
b) Establish potent hydrogen infrastructure
- Grid operators propose core hydrogen grid, to be accepted by the Federal Network Agency (BNetzA) in 2023
- Extend regular gas grid planning to planning for gas and hydrogen grid; first plan developed in 2024/2025
European Hydrogen Backbone
- Government pushes for clear framework conditions for hydrogen grid development at EU level beyond IPCEI projects; with implementation of measures from gas market and hydrogen packages implemented already in 2023
- Rapid negotiations with partner countries on cross-border pipeline projects
- Focus corridors: North Sea and Baltic Sea areas, connections to Northern Africa (via France, Spain, Portugal (H2Med), or via Austria and Italy (SouthH2Corridor)) – talks with all governments about joint production and distribution clusters
Infrastructure for import from third countries
- Draft Hydrogen Acceleration Act (e.g. for possible construction of hydrogen import terminals); government wants to have terminals built especially for hydrogen and derivatives
- LNG terminals should be convertible to import hydrogen or derivatives
c) Establish hydrogen applications
- Support through “climate contracts” (carbon contracts for difference – CCfD), IPCEI projects and other support programmes
- Present concept on “Green Leading Markets,” showing instruments to create demand for climate friendly basic materials
- Support programmes on hydrogen and fuel cell technologies
- Development of an overall strategy for the hydrogen transformation of shipping within the framework of a “National Climate-Friendly Shipping Action Plan”
- Auctions for 4.4 GW hydrogen/ammonia “sprinter power plants” from 2023-2026, and other hydrogen power plants
- Use waste heat potential of electrolysers
d) Create effective framework conditions
Planning and permit procedures
- Present Hydrogen Acceleration Act in 2023
Sustainability standards and certification
- Define sustainable carbon sources to use for hydrogen derivatives
- Push for development of certification and origin schemes at EU level
- Advocate for uniform, practicable and ambitious criteria with the setting of a threshold for GHG emissions for blue hydrogen at EU level
- Present Carbon Management Strategy
Research, innovation and training for skilled labour
The original 2020 National Hydrogen Strategy
In June 2020, the government coalition presented Germany’s first National Hydrogen Strategy, which placed a large bet on hydrogen produced using renewable energy at the expense of support for using controversial carbon capture and storage (CCS) to produce hydrogen from natural gas. While environmental activists mostly welcomed this approach, industry was critical.
The 2023 update says that the original strategy “remains valid in principle,” although some elements and targets have been adapted. In the info boxes below, you can find information on the 2020 strategy (Note: the content has not been updated since 2020).
You can find the government’s hydrogen strategy in English here and the German original here. Also, read the article German hydrogen strategy aims for global leadership in energy transition, published when the original hydrogen strategy was presented.
Hydrogen potential and opportunities
The strategy says that hydrogen is a multi-purpose energy carrier that can be used in fuel cells to power hydrogen-based mobility and serve as a basis for synthetic fuels, but also as a medium to store renewable energies. "Hydrogen is an essential element of sector coupling. In those areas where electricity cannot be used directly from renewable energies, green hydrogen and its downstream products (Power-to-X) open new paths to decarbonisation." It adds that hydrogen can also be used as a raw material for industry production processes without current alternatives for deep emission cuts, citing steel and cement making as examples. "For hydrogen to become a central component of our decarbonisation strategy, the entire value chain - technologies, production, storage, infrastructure and use, including logistics and important aspects of quality infrastructure - must be considered," the paper urges.
According to the strategy, "only hydrogen produced on the basis of renewable energies ('green' hydrogen) is sustainable in the long term."
"Therefore, it is the goal of the German government to use green hydrogen, to support a rapid market ramp-up, and to establish corresponding value chains. At the same time, however, the German government assumes that a global and European hydrogen market will develop over the next ten years. CO2-neutral (e.g. "blue" or "turquoise") hydrogen will also be traded on this market. Due to Germany's close integration into the European energy supply infrastructure, CO2-neutral hydrogen will therefore also play a role in Germany and, if available, will also be used on a transitional basis," the paper says.
"Hydrogen offers both a growing industrial policy potential and an opportunity to support the German and European economy in coping with the consequences of the coronavirus pandemic. The aim of the National Hydrogen Strategy (NWS) is therefore also to exploit the associated economic opportunities."
The strategy lists existing government programmes supporting hydrogen technologies. It adds: "In addition to this, the [stimulus package agreed on] 3 June 2020 provides for a further 7 billion euros to be made available for the market ramp-up of hydrogen technologies in Germany and a further 2 billion euros for international partnerships." The paper states that Germany will use its EU presidency to push the topic of hydrogen.
"From today's perspective, it will not be possible to produce the large quantities of hydrogen that will probably be needed for the energy transition in Germany, since renewable generation capacities within Germany are limited. Germany will therefore have to remain a major energy importer in the future. This is why we will establish and intensify international cooperation and partnerships around the topic of hydrogen."
The strategy's "aims and ambitions"
- Assume global responsibility in emissions reductions by establishing hydrogen as an option for decarbonisation
- Make hydrogen competitive by pushing cost reductions with a fast international market ramp-up, which would enable technological progress and scaling effects. "A particular focus is on areas that are already close to economic viability and where greater path dependency is avoided or which cannot be decarbonized in any other way, for example to avoid process emissions in the steel and chemical industries or in certain areas of transport. But we are also looking at parts of the heating market in the longer term."
- Develop a "home market" for hydrogen technologies in Germany and pave the way for imports. "As a first step towards the market take-off of hydrogen technologies, strong and sustainable domestic hydrogen production and use - a 'home market' - is essential. A strong domestic market also creates an important signalling effect for the use of hydrogen technologies abroad." … "The Federal Government sees a hydrogen demand of about 90 to 110 TWh until 2030. In order to cover part of this demand, generation plants with a total capacity of up to 5 GW, including the necessary offshore and onshore energy generation, are to be built in Germany by 2030. This corresponds to a green hydrogen production of up to 14 TWh and a required renewable electricity quantity of up to 20 TWh. It must be ensured that the demand for electricity induced by the electrolysis plants does not result in an increase in CO2 emissions. For the period up to 2035, a further 5 GW will be added if possible, by 2040 at the latest."
- Establish hydrogen as an alternative energy carrier to enable the decarbonisation of hard-to-abate sectors
- Make hydrogen as a raw material for industry sustainable by switching current production on the basis of fossil energies to renewable energies, and push the decarbonisation of emission-intensive industry processes using hydrogen and its derivatives. "German industry offers excellent conditions to become a driver in the market ramp-up of hydrogen and an international pioneer for hydrogen technologies due to the already existing and strongly increasing future demand."
- Enhance the transport and distribution infrastructure by using Germany's existing gas infrastructure, but also by extending dedicated hydrogen networks or building new ones.
- Support research and train qualified personnel in order to systematically get industrial scale solutions to application maturity by 2030.
- Design and accompany transformation processes in dialogue with businesses, science, and citizens.
- Strengthen the German economy and secure global market opportunities for German companies. "Germany now has the opportunity to play an important role in international competition in the development and export of hydrogen and power-to-x (PtX) technologies."
- Establish international hydrogen markets and cooperation because Germany will have to import sizeable amounts of hydrogen in the medium and long term.
- Understand global cooperation as an opportunity
- Further develop and secure quality infrastructure for hydrogen production, transport, storage and use and create confidence given the special physical and chemical properties of hydrogen
- Constantly improving framework conditions and taking up current developments
Status quo, fields of action and future markets
The paper says Germany's current use of hydrogen equals around 55 TWh. "By 2030, the initial increase in demand for hydrogen is expected to occur particularly in the industrial sector (chemicals, petrochemicals and steel) and, to a lesser extent, in transport, as a result of the impetus of the market ramp-up. Conservative estimates assume an additional demand of 10 TWh in industry. Furthermore, the demand for fuel cell powered electric mobility is expected to grow. Other consumers (e.g. parts of the heat supply in the longer term) could be added." The paper cites other studies suggesting that the demand for electricity-based fuels will increase to a range of between 110 TWh and 380 TWh by 2050.
The strategy aims at the following "strategic future markets":
- Hydrogen production: "A strong, sustainable domestic hydrogen production and use - a "home market" - that contributes to the energy transition is indispensable for the market uptake of hydrogen technologies and their export."
- Industry: The chemical industry's existing hydrogen infrastructures such as grids can continue to be used and if necessary optimised and extended for other uses, for example in the steel industry.
- Transport: "Hydrogen- and PtX-based mobility is an alternative for applications where the direct use of electricity is not practical or technically not feasible," the strategy states, adding that demand for climate-neutral fuel will develop in aviation and shipping in particular. The introduction of fuel cells can complement battery-electric mobility in public transport (busses and trains), parts of heavy duty transport, and logistics. "The use of hydrogen can also be an alternative in certain areas of passenger cars. The use in road traffic requires the demand-oriented construction of the necessary refuelling infrastructure."
- Heating: "Even in the long term, once the efficiency and electrification potentials in process heat production or in the building sector have been exhausted, there will still be a demand for gaseous energy sources."
- Hydrogen as a European joint project: Given that many preconditions and questions regarding the market ramp-up can only be resolved in the EU domestic market and legal framework. "The EU has high-yield sites for wind energy in the North Sea in particular, and in Southern Europe there is great potential for photovoltaics and wind. These potentials can represent a great opportunity for the production of renewable hydrogen in the long term. The well-developed European gas infrastructure can also offer points of contact for the transport of hydrogen." Establishing a domestic hydrogen market in the EU a focus of its EU presidency.
- International trade: Germany will also rely on the import of renewable energies beyond the European market to reach its climate targets until 2030 and greenhouse gas neutrality by 2050. "International trade in hydrogen and its derivatives is therefore an important industrial and geopolitical factor." The role of current fossil fuel export nations will be particularly significant if they have a large potential for making hydrogen, the paper says.
- Transport and distribution infrastructure in Germany and beyond: Germany already has an extensive infrastructure for natural gas, part of which should be in a position to use hydrogen in the future. In addition, exclusive hydrogen grids are to be built. "Against the backgdrop of Germany's geographical location and its role as an important transit country in Europe, these processes of change can only be shaped in cooperation with its European neighbours and associated third party countries."
- Research, education and innovation: "German companies and research institutions play a pioneering role in hydrogen and other PtX technologies […] We focus on research funding for key technologies and new approaches along the entire hydrogen chain: from production, storage, transport and distribution to application." The aim is to turn laboratory innovations into industrial-scale applications faster.
A committee of state secretaries of affected ministries will ensure implementation of the strategy. In addition, the government will establish a national hydrogen council made up of 25 representatives from business, science, and civil society that will support the state secretary committee [find a list of members here].
The government will also establish a hydrogen coordination centre to support ministries and the hydrogen council, and to monitor progress in a yearly report. Every three years, a more expensive report will evaluate the strategy and the action plan (see below) in its entirety, and propose improvements to ensure a permanent adaption to market developments, and achieving the targets. A new working group will be set up to ensure smooth cooperation between the federal level and Germany's states.
The strategy presents an action plan enumerating a total of 38 measures the government plans to take in a first phase of a market ramp-up by 2023. In a second phase starting in 2024, the domestic market will be consolidated and European and international dimensions established.
- Improve framework conditions for the efficient use of renewable power. The government says it will "look into" removing taxes and levies from power used for hydrogen production. "In particular, we are striving to exempt the production of green hydrogen from the EEG renewables levy. We will make sure that the EEG levy does not increase as a result."
- Check possibilities for new business and cooperation models involving the operators of electrolysers and gas or electricity grid operators
- Support for electrolysers in industry
- New measures to make investments in offshore hydrogen production worthwile
Areas of application
- Priority is given to certain areas of transport and industry where the use of hydrogen is already near profitability and where this doesn't create path dependencies, or where there is no alternative to decarbonise
- To push hydrogen use in transport, the government plans to support making renewable kerosene, and wants to build up an infrastructure for hydrogen refuelling suited to heavy duty transport, but also for trains and ships, among many other steps. The government will assess a renewable fuel quota in aviation kerosene of at last 2 percent in 2030.
- To push hydrogen use in industry, the government supports the switch from conventional fossil technologies to low-emission alternatives with a variety of programmes. It also plans a pilot programme for Carbon Contracts for Difference (CfD) primarily aimed at process emissions in the steel and chemicals industries. The strategy also proposes the development of sector-specific long-term decarbonisation plans for energy-intensive industries.
- Support for highly efficient fuel cell heating systems will be continued and possibly expanded to boost the use of hydrogen in the heating sector.
- "When developing new infrastructure, special attention is paid to the demand-oriented expansion of the hydrogen refuelling station network, both in road traffic and at suitable points in the rail network and in waterways. This addresses both individual users and operators of fleets with a large number of hydrogen or fuel cell powered vehicles."
Research, education and innovation
- Germany plans a roadmap for establishing a hydrogen economy with an international signalling effect to become a leading producer of hydrogen technologies on world markets
- A new research initiative "hydrogen technologies 2030" will tie together a variety of programmes
- Framework conditions will be improved to boost innovation
Need for action at European level
- The government sees the need to introduce reliable sustainability standards and proofs of origin for renewable power, green hydrogen and its derivatives
- An option to boost research and development at European level is to make hydrogen technologies an Important Project of Common European Interest (IPCEI)
- Against the backdrop of the European Green Deal, the government will push for a rapid implementation of the European hydrogen initiative