Germany to revise hydrogen subsidies, increase focus on imports – official
The German government will revise support programmes designed to boost the hydrogen economy and is set to bet stronger on imports of the fuel, said Hanna Schumacher, who heads the hydrogen and gas infrastructure department in the economy ministry.
“We will take another very close look at the funding framework,” Schumacher said at a hydrogen industry conference in Berlin. “We don't want to tear everything down, but given that the hydrogen ramp-up has not worked as well as we had hoped so far, it makes sense [to modify the framework].” She added that “it may also make sense not to do things quite so quickly and not quite so much, and instead to ensure that what we actually do is successful.”
Asked whether the government could introduce a feed-in tariff system, where producers receive a guaranteed price for the green hydrogen they supply, similar to the country's renewable support via guaranteed purchases of green electricity, Schumacher dampened expectations. The renewables support cost around 20 billion euros annually – an expense that had “traumatised” some policymakers, she said. “We must propose instruments for which we can credibly demonstrate that costs are under control. Instruments that cannot guarantee this are excluded from the discussion.”
The government would now focus on lowering overall energy system costs linked to hydrogen, Schumacher said. Electrolysers could be located strategically to help avoid electricity grid expansion, for example by making use of excess renewable electricity during especially windy periods. In turn, it could be acceptable that hydrogen production costs are slightly higher, said the official. “National production must serve the system,” she added.
In the fight against climate change, hydrogen made with renewable electricity is seen as a key tool to tackle emissions in hard-to-abate sectors, such as heavy industry and aviation. Germany has set out to become a global leader in the associated hydrogen technologies, and the previous government penned a National Hydrogen Strategy to fulfil these ambitions.
However, an early green hydrogen hype in Germany and Europe has run into serious headwinds. Numerous projects have been cancelled, including by German companies. Production is expensive, transport complex, and the market trapped in a chicken-and-egg dilemma of demand and supply for the clean fuel.
An even higher share of imports possible – official
Due to better conditions for renewables, hydrogen production is set to remain cheaper in sun-rich countries. North African countries like Morocco could become key suppliers to Europe. Germany’s previous government expected 50 to 70 percent of its green hydrogen to be imported by 2030. Schumacher emphasised that her ministry could place even more emphasis on imports.
“We will focus on imports, perhaps even more so than the last government because it is more cost-effective overall,” she said.
The slow roll-out of hydrogen infrastructure is a major weakness of Germany's energy transition, according to a recent government monitoring report. The current government last week agreed on a draft law to accelerate the lagging expansion of hydrogen infrastructure.
Hydrogen key for industry success, not just for climate action – industry
Industry representatives emphasised that hydrogen would be critical for Germany’s businesses.
Kerstin Andreae, head of energy industry association BDEW, said hydrogen should primarily be seen as an opportunity for industry that required the right policies. “Can we manage to build a new scalable and exportable part of a new industrial pillar?”, Andreae asked.
Mathias Koch, project manager for German hydrogen policy at think tank Agora Industry, cautioned that Germany should continue to largely focus on green hydrogen produced with renewable electricity to secure technological leadership, rather than so-called ‘blue hydrogen’ produced from fossil gas using carbon capture and storage (CCS).
“A widespread use of natural gas-based hydrogen with CCS puts the European electrolyser industry in danger,” said Koch. A focus on green hydrogen was needed for reasons of “resilience, technological leadership and jobs,” he said.
Germany’s new government has come out in favour of using CCS to produce hydrogen, especially to guarantee sufficient availability to kickstart the market ramp-up.
“A pure focus on green hydrogen is not my ministry’s line,” said Schumacher, who stressed the importance of reaching climate targets. “Green hydrogen is one component, blue hydrogen can be another, or low-carbon in general,” she said, adding these also had a role to play in bringing prices down.
