Germany and Europe on the road to hydrogen - Who promotes what?

​published on 04th December 2020

With the adoption of the „National Hydrogen Strategy” in June 2020, the German government has set itself ambitious goals to put Germany at the top of the global hydrogen market. Europe, too, should become a leader in green hydrogen technology. What does this mean for project developers?

Hydrogen color theory

„Green” hydrogen is produced by the electrolysis process. Water molecules get split into hydrogen and oxygen. Both products can be collected and marketed separately. If the required electricity comes from renewable energy sources, no climate-damaging emissions are emitted during this process.

Currently, however, more than 90 percent of the hydrogen consumed worldwide is so-called „grey” hydrogen, which is produced by the emission-intensive steam reforming process. This process converts natural gas into hydrogen and carbon dioxide at high temperatures.

If the resulting carbon dioxide is separated and stored by carbon capture technologies, it is referred to as emission-neutral, „blue” hydrogen.

There is also „turquoise” hydrogen, which is produced by the thermal splitting of methane. If the resulting solid carbon is permanently bound, the technology is CO₂-neutral.

Strategic future markets

Green hydrogen is not only climate-friendly but can also be used in a variety of ways and can promote the energy turnaround, especially in those sectors that are difficult to electrify.

To achieve the target set in the climate protection program, a 55 percent reduction in CO₂ emissions by 2030 compared to 1990, the German government's hydrogen strategy focuses primarily on industry and transport.
An important point in the German strategy is the substitution of grey hydrogen by climate-neutral green hydrogen in material applications in the chemical industry.

Another point is the use in the steel industry, which is one of the most CO₂-intensive industries in the country. In the production process, the blast furnace route has particularly high emissions, as large quantities of coke are required. According to the Federal Environment Agency, the steel industry alone is responsible for around 6.5 percent of Germany's CO₂ emissions. An alternative to blast furnaces is the direct reduction of iron ore and subsequent processing into steel in an electric arc. This new method allows almost all process-related CO₂ emissions to be avoided directly. Leading manufacturers such as ThyssenKrupp, ArcelorMittal, and Salzgitter are already planning a complete conversion of their production facilities by 2050.

Hydrogen is also to be used in the form of environmentally friendly synthetic fuels in the road, rail, air, and sea transportation. Also, hydrogen can be used directly in fuel cell vehicles, which are to be used in public transport. For this purpose the development of a tank infrastructure is essential.

The expected demand of 90 to 110 TWh until 2030 will be covered by electrolyzers with a total capacity of 5 GW, some of which are newly built. Also, wind farms at sea and on land are to be expanded for the required energy production.

Not only Germany is to establish itself at the top, but all of Europe is also to become the market leader in hydrogen technology.

After all, the technology is a good opportunity to reach the 55 percent CO₂ reduction target also set by the „EU Green Deal” and remain competitive.

EU hydrogen targets

Within the framework of the EU Green Deal, the European Hydrogen Strategy was presented in July 2020, which consists of three phases. From 2020 to 2024, at least 6 GW electrolyzer capacity is to be installed, mainly near the steel and chemical industries, and refining to support the decarbonization of the industry. Also, existing conventional hydrogen production plants are to be made climate-neutral through CC technologies.
In the second phase until 2030 it is assumed that the production of green hydrogen will be competitive compared to other types of production. By 2030 a free hydrogen market with cross-border trade should be established. A total of 40 GW of capacity within the EU, and another 40 GW in non-EU countries are to be added, and further measures such as the expansion of storage technologies, infrastructure, and CC technologies are to be promoted.

The necessary investment measures will be supported by the „European Clean Hydrogen Alliance” with 430 billion euros by the end of 2030.

In the third phase from 2030, the technology is to be fully economically and technically mature and will be used in all sectors that were previously difficult to decarbonize. A quarter of all electricity from renewable energy plants is to be used for hydrogen production and renewable energies are to be strongly expanded.

In the first week of October Germany invited to an international - corona-related virtual - conference from Berlin within the framework of the EU Council Presidency. Peter Altmaier emphasized that public funding is of central importance in projects for the rapid ramp-up of European hydrogen technology. Large projects should be classified as IPCEIs - projects of special interest - for which higher public funding is allowed. Altmaier mentioned the conversion of a blast furnace as an example. Other possible support measures were CO₂ differential agreements with companies, a CO₂ border tax, or compensation schemes.

Market development through „colored” hydrogen

With the use of CCS technologies, Europe is focusing on a „colorful” hydrogen approach, at least for the time being. Representatives of the industry recently demanded that one should not get hung up on the „perfect color theory”. A „colorful” approach would support market ramp-up and market development. One should not get lost in discussions lasting for years. Many scientists, on the other hand, are calling for a completely green strategy with a focus on the increased expansion of renewable energies and are calling for an end to subsidies for fossil fuels.

Conclusion

Although Germany and Europe have set themselves good goals that can contribute to climate protection, they are still relatively in their infancy. In Germany less than 2 percent of the total primary energy is covered by hydrogen, of which again only 7 percent is covered by the electrolysis process.

Other countries also see great potential in the technology and want to become market leaders. Although Germany has 20 percent of the world's electrolysis capacity, Japan is the market leader and has already developed a hydrogen strategy for 2017. South Korea and Australia have also embarked on the hydrogen course ahead of Germany and Europe, China and Russia are preparing to enter the market. It is therefore important to implement the hydrogen strategies soon by concrete and effective measures.

For project developers, it means above all not to lose sight of the hydrogen option. If the appropriate funding is available for projects (see also the table below), interesting projects can be developed, especially those that still require high investment costs for electrolyzers. Especially in the public sector - keyword public transport, buses - there is a lot of pressure to set a sign for a traffic turnaround with hydrogen buses. In such decentralized projects, the turnaround in energy and transport will bring together what belongs together, whatever should be thought of together.

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