Hydrogen market internationally – Developments, opportunities, challenges

An overview of the strategies and plans formulated so far as well as the major projects are illustrated in the following chart. 

Japan was the pioneer country which first published its hydrogen strategies at the end of 2017. It was followed by Germany, Spain, France, and the EU, which published their strategies in 2020. The EU plans to install renewable hydrogen electrolysers with a cumulative capacity of 80 GW by 2030, half of which will be installed in eastern and southern regions of Europe. In addition to the published strategies, projects were also planned in countries which have not adopted any hydrogen strategy. They were developed mainly as a result of energy partnerships between countries or individual companies. For example, Germany has hydrogen diplomacy offices in Nigeria, Angola, Saudi Arabia, and Ukraine. Another was opened in Kazakhstan at the beginning of 2023. In addition, alliances and agreements regarding green hydrogen have been concluded with Canada, New Zealand, the United Arab Emirates, and Namibia. The latter gave rise to the Hyphen Project in Namibia, which comprises an electrolysis facility with a capacity of 3 GW, which in turn is supplied with green electricity from wind and PV power plants with a total capacity of 5 – 6 GW. Due to the large number of sunshine hours of 3,500 kWh/a (Germany: 1,650 kWh/a), Namibia offers low hydrogen production costs of 1.50 – 2 EUR/kg (Germany 2050: 3.80 EUR/kg) and would thus be a potential hydrogen supplier for Germany.  The German government has also strengthened its climate partnership with Kenya in the field of renewable energies for green hydrogen and carbon-neutral fertiliser production (ammonia). In 2022 alone, it promised to invest 400 million euros in the expansion of renewable energies in Kenya. This amount is expected to increase even further this year. However, it is not only Germany that has concluded hydrogen partnerships. Numerous hydrogen alliances have been established across the globe, which are shown in Figure 2. 

In the future, most of Germany's hydrogen demand will be imported. For this reason, the Federal Ministry of Economics and Climate Protection (BMWK) has launched the "H2Global" project and thus planned to invest a total of 3.6 billion euros in hydrogen projects across the globe to date. The German government hopes that further EU states will join the project as the imported hydrogen is also intended for the entire EU. So far, however, only the Netherlands is planning to participate financially in the initiative. The first auction was launched at the end of 2022, in which 360 million euros were earmarked for each of the imported substances (ammonia, methanol & e-kerosene). The funding mechanism is based on a double auction model in which federal grants offset the difference between the buying and the selling price for a certain period. The most favourable offers are determined in an international auction for the purchase of green hydrogen or its derivatives and subsequently get a long-term contract. In turn, these quantities are also offered in Germany through an auction procedure for one-year contracts. By covering the costs of the difference through HINT.CO, it is hoped that the market will accelerate considerably, as the sales price risk is eliminated from the market. A 10-year off-take commitment (from the first auction) should secure the financing of projects for this period. KfW Development Bank has also established two funds which are intended to support PtX projects.  The PtX Growth Fund of the Federal Ministry for Economic Affairs and Climate Protection (BMWK) aims to promote local value chains and the use of hydrogen in developing countries and emerging economies. The BMWK's PtX Growth Fund is intended to support projects outside the EU, but with the participation of European companies based or operating in Germany. The "AfricaConnect" scheme of the German Investment and Development Corporation (DEG) supports European companies in their investments in Africa by providing loans at attractive conditions. As part of the scheme, loans from 750,000 to 5 million euros are granted for the term of 3 to 7 years. In addition to this scheme, DEG also supports German companies in feasibility studies or pilot projects in selected countries. 

Apart from the aforementioned initiatives, a large number of electrolysis projects is currently in the planning phase. The largest and most important ones are listed in the following table.

Tabelle 1: Übersicht der bisher angekündigten Großprojekte

By comparison: In 2019, the energy industry consumed approx. 300 million m³ of drinking water. Based on this, the association came to the conclusion that no water shortage should be expected in Germany until 2030. According to the expansion plans, one third of the electrolysis capacities in the North Sea will be installed directly at the wind farms. It seems reasonable to build desalination plants at these locations in order to conserve drinking water. In the international context, large-scale projects are located near the coast, given the amount of water available locally. For example, the above-mentioned "Hyphen" project has also planned a desalination plant that will also supply the local population with drinking water. An international team of researchers has developed a method to directly use seawater in electrolysis. This could eliminate the desalination step and thus also save costs. The secret is a Lewis acid coating, which prevents corrosion of the electrodes. However, this method has so far only been successful in the laboratory conditions and therefore still needs to be tested on larger facilities. 

The transportation and storage of produced green hydrogen pose major challenges. Produced hydrogen can be stored in pure form or alternatively combined with energy carriers. The different alternatives and their advantages and disadvantages are listed in the following table.

Table 2: Advantages and disadvantages of the individual storage options

According to the transmission system operators, a 5,100 km long hydrogen network is planned for Germany in 2030, of which about 3,700 km will be based on converted natural gas pipelines. In 2050, the H2 network is expected to be 13,300 km long, of which about 11,000 km will be based on converted gas pipelines. Both network plans are shown in Figure 4.  In Germany, the network operators are already in the starting blocks and are only waiting for the EU Commission's funding approval. Furthermore, the German government's proposal to establish a state-owned hydrogen grid company caused an uproar and was widely criticised and consequently removed from the draft update of the National Hydrogen Strategy. 

The globally active container shipping company Maersk has declared its support for carbon-neutral propulsion on the water and has already entered into partnerships with Spain and Egypt to increase the use of methanol, which is produced from green hydrogen. The company has ordered 19 container ships able to operate on methanol, which are scheduled to go into operation in 2025. Maersk has set itself the goal of transporting a quarter of all containers on low-emission ships by 2030. Maersk currently has 713 ships in its fleet, so they need about 170 more methanol-capable container ships to reach their set target. The commodity giant Trafigura also aims to reduce transport emissions by 25% by 2030. However, the company tends to rely on ammonia as a carbon-neutral fuel. The aircraft manufacturer Airbus wants to bring a passenger plane that can run entirely on hydrogen to market by 2035. US start-up Universal Hydrogen has completed a first test flight of its H2-powered aircraft in early 2023. The company plans to deliver its first passenger aircraft to airlines from Europe and the USA in 2025. 

According to the report published by DVGW at the end of 2020, a 20 percent admixture of hydrogen into the existing gas grid is technically possible.  As a result, H2 admixture was tested in several projects and positive results were obtained. In Hamburg, for example, the heat supply of the "Am Schilfpark" housing estate was switched to hydrogen-mixed operation for 15 months. Within the scope of the project, a hydrogen share of 30 % was not a problem for the cogeneration plant involved. EnBW has placed an order for two turbines with a capacity of 62 MW each at the end of 2022. Particularly noteworthy is that they will be able to handle up to 75% hydrogen admixture as soon as they are rolled out in 2024.  

The market for the production, transportation and use of hydrogen is currently being divided.