Green light for “low-carbon” hydrogen to help jumpstart market in Germany – industry

A new law aimed at accelerating hydrogen production, which was passed by parliament, could mark a decisive breakthrough for the technology in Germany, energy industry group BDEW has said. By relaxing requirements on production emissions and including the use of “low-carbon” solutions, the law sets the right conditions for the initial phase of Germany’s emerging hydrogen market, said BDEW head Kerstin Andreae. She added that using other forms of hydrogen, not just the “green" variety made with renewable electricity, would be “an important supplement” in the early stages of market development, Andreae argued. 

However, the lobby group said that more needed to be done to ensure a successful launch of the country's hydrogen market, which is expected to become a key pillar of industry decarbonisation. Andreae said Contracts for Difference (CfDs), which compensate companies for climate-friendly production, were needed to bridge cost uncertainties and price gaps at the beginning, alongside a faster ramp-up of distribution and storage infrastructure.

Mahmut Özdemir, hydrogen expert for the Social Democrats (SPD), who are in a coalition government with chancellor Friedrich Merz's conservatives, called the law “a signal of political support for hydrogen producers, retailers, and industrial consumers.” The new regulation should make the implementation of new projects faster and more reliable. “The law puts procedures in order, creates clarity and avoids projects failing due to unnecessary hurdles,” Özdemir said. The lawmaker said the government’s ambition remains to make Germany not only a leading market for hydrogen production, but also for the associated technologies. 

Local utility association VKU also said the new law is likely to accelerate the rollout, but stressed that the protection of water resources must remain a key consideration amid the technology’s expansion. “Faster licensing is important, but only if municipal water suppliers are roped in early and reliably,” said VKU head Ingbert Liebing. “This is the only way to prevent conflicts over shrinking water resources,” he argued. 

The expansion of electrolyser capacity to produce green hydrogen continues only at a slow pace: The previous government had aimed to have 10 gigawatts (GW) of hydrogen electrolysers in use by 2030 to help decarbonise heavy industry, yet the country currently has only 181 megawatts in operation. Germany’s ambitious ramp-up plans are facing difficulties, as supply and demand have remained well below expectations despite billions in subsidies. The new law adopted by parliament earlier this week will in future classify hydrogen production as being of “overriding public interest” in a bid to facilitate the licensing and implementation of new projects.